LOCAL GOVERNANCE BRIEF POLICY JOURNAL OF THE LOCAL GOVERNMENT AND PUBLIC SERVICE REFORM INITIATIVE Spring 2004 Anticorruption at the crossroads Corruption, no longer a taboo subject, is now universally referred to as a developmental problem by NGOs, development organizations, and governments alike. As the awareness-raising phase of the 1990s subsides, the focus is shifting to implementation of anticorruption reforms and enforcement of international conventions. In this issue, Local Governance Brief takes a look back at the history and evolution of the movement, and—through case studies—points to the road ahead. KOCSIS ESZTER KOCSIS

INTERNATIONAL STRATEGIES: Civic monitoring in Slovakia ...... 36 Seeking new approaches to fighting corruption...... 3 Tracking Peruvian elections...... 38 EU accession and the potential for graft ...... 12 Kyrgyzstan and the culture of corruption ...... 41 The rise of the anticorruption industry ...... 17 A new approach to gauging graft...... 44 DAC report on lessons of anticorruption efforts...... 26 Teaching transparency ...... 46 CASE STUDIES: Freedom of information laws promote transparency ...... 29 Glossary ...... 49 Indian workers use FOI laws to get benefits...... 33 LGI NEWS ...... 51 Protecting resources from fraud ...... 34 FINAL WORD: OSI monitors use of Iraq’s oil ...... 56 LOCAL GOVERNANCE BRIEF

FROM THE EDITORS LOCAL GOVERNANCE BRIEF Local Governance Brief is published quarterly in Budapest, Hungary, by the Local Government and Public The road ahead Service Reform Initiative, Open Society Institute–Budapest. The anticorruption movement is at a cross- Editor in Chief: Petra Kovács roads. After an initial period of largely focusing Editorial board: Adrian Ionescu, Gábor Péteri, Violetta on awareness raising, recipient governments Zentai Editor: Martin Tisné and donors must now concentrate on the cru- Associate Editor: Rachel Ambrose cial implementation stage. The commitment to Editorial Advisor: Ari Korpivara fight corruption must go beyond pledges on Production Editor: Tom Popper paper. It must be worked into the day-to-day Printing: Arktisz Ltd. practices of the state, in its interactions with © March 2004 Local Government and Public Service Reform Initiative / OSI Budapest. All rights reserved. citizens and business. OSI logo TM and © Open Society Institute. All rights The movement that grew in the mid-1990s reserved. now has a wealth of experience that will be ISSN: 1785-6078 instrumental in shaping and defining its future Articles included in Local Governance Brief do not reflect the opinion of LGI or OSI but those of the authors. directions and strategies. Two determining fea- Any comments or submissions should be directed to tures have emerged so far: First, there is the cru- Petra Kovács, [email protected]. cial role of politics in anticorruption reform—a For subscription requests, send an e-mail to better understanding of the politics of anticor- [email protected]. ruption and more awareness about local politics will enable donors to recognize and take advan- LGI Steering Committee tage of opportunities for reform. Second, there Robert Berne, New York University is a better understanding of the role of external Kenneth Davey, Institute of Local Government Studies, accountability, prompted by civil society organi- University of Birmingham zations and international pressure. Robert Ebel, World Bank Institute In this determining phase, local govern- Liviu Ianasi, Institute of Architecture "Ion Mincu," Bucharest ments’ relations with citizens will play a crucial Bohdan Krawchenko, (Chair) Ukrainian Academy of role. Decentralization and bottom-up account- Public Administration ability are vital factors, both for rooting out cor- Katalin Pallai, Adviser to the Mayor of Budapest ruption in the state’s day-to-day interactions Tomasz Sudra, UN-Habitat United Nations Human with the people and for restoring trust in that Settlements Programme crucial relationship. In this issue, we provide our readers with a LGI Staff short history of the movement—as illustrated Adrian Ionescu, Program Director by Heather Marquette’s opening piece on the Gábor Péteri, Research Director World Bank’s role in anticorruption efforts—as Scott Abrams, Project Manager well as examples of fresh and innovative work in Petra Kovács, Researcher Caroline Newman, Project Manager the anticorruption field, as demonstrated by the Irakli Rekhviashvili, Project Manager activities of the NGO Global Witness in the Ondrej Simek, Project Manager UK or TRANSPARENCIA in Peru. Kristóf Zoltán Varga, LOGIN Project Manager Regular readers of LGB will notice that we Violetta Zentai, Project Manager have made some changes. These changes effect Judit Benke, Program Assistant Piroska Hugyecz, LOGIN Project Assistant the format and style of the journal and are also Marietta Kleineisel, Program Coordinator reflected in the new title. Starting with this issue, Beata Magyar, Project Coordinator we will strive to present pieces that are shorter Angéla Radosits,Training and Logistics Coordinator and easier to read, yet maintain LGB’s high stan- Szilvia Szekeres, LOGIN Project Assistant Timea Tóth, Program Coordinator dards of providing useful and timely informa- Rachel Ambrose, Isabel Barcia, Meghan Simpson, tion to professionals interested in local gover- Research Interns nance and policy issues within our region. The new title, Local Governance Brief, reflects these LGI, Open Society Institute–Budapest changes. We have also changed our design, as Nádor utca 11, H-1051 Budapest, Hungary Tel: (+36-1) 327-3100 part of our effort to make Local Governance Brief Fax: (+36-1) 327-3105 a highly professional, focused publication. E-mail: [email protected]•http://lgi.osi.hu/ —Petra Kovács and Martin Tisné

2• SPRING 2004 INTERNATIONAL STRATEGIES: Seeking the right approach to corruption Donors seek the right approach to corruption World Bank’s changing their efforts to reduce corruption. • Taking corruption more explicitly into account in conceptions of graft country assistance strategies, country lending con- engender multipronged siderations, and the policy dialogue, analytical work, and choice and design of projects. and single-focus strategies • Adding voice and support to international efforts to reduce corruption. By Heather Marquette, Ph.D. Prevention of fraud has always been a concern of the Bank since its inception, despite some spectacu- In his 1996 speech to the Annual Meeting of the lar reports of misuse of Bank funds over the World Bank and the International Monetary Fund decades. Still, the commitment to assist countries in (IMF), current World Bank President James Wolfen- reducing corruption marks a complete departure sohn announced that donors needed “to deal with from past Bank activity, the cancer of corruption.” This public recognition which saw the Bank dealing of a movement that had been gathering speed since The great political upheaval of the with some of the world’s the early parts of the decade marked a turning point early 1990s ushered in an era of most notoriously corrupt for donor policy. Although the Bank has since good governance and political dictators and political claimed that it has been “in the business” of com- conditionality. regimes, often in the face of bating corruption “since its very inception” (Linn heavy criticism from many 2001: 2), this is not entirely true. Until the 1990s, of its shareholders. This approach also represents a donors rarely spoke out against the rampant corrup- complete about-face in Bank policy: Well into the tion within some borrowing countries or wide mis- 1990s, the Bank had claimed that it was unable to use of donor funds. Additionally, no projects or work on corruption because of its nonpolitical man- programs dealt specifically with corruption. Howev- date. Corruption was just too political for the Bank to er, for all donors, to one degree or another, this sit- tackle. The current focus on corruption at the World uation has changed. Bank must thus be seen both within the context of This article will focus on the World Bank for two an overall international movement and as the result main reasons. First, the Bank is recognized as a lead- of certain historical events. er among development agencies, and the propensity of donors to develop policies through a process of Donors’ changing approach osmosis means that any changes at the Bank gradu- The great political upheaval of the early 1990s ally trickle down into other donor programs. Second, changed the way donors approached foreign aid and there is simply much more information available, ushered in an era of good governance and political both from internal and external sources, on the conditionality. The end of the Cold War and the col- World Bank’s work in this field. While focusing on lapse of command economies was accompanied by the bank, I will also try to bring in examples of work what Huntington (1991) has referred to as a “Third being done by other donors. Wave” of democratization in the developing world. Bank commits to fighting corruption A combination of factors—such as those cited by Hewitt and Killick: the rise of neo-liberalism and In 1997, the World Bank announced a commitment economic liberalization, ever-shrinking aid budgets, to combating corruption within its own projects and and increased media attention on dictatorial Third within its client countries. The Bank said its efforts World regimes squandering foreign aid—caused were to include: donors to offer support for the removal of authori- • Preventing fraud and corruption within Bank- tarian governments and the spread of democracy in financed projects. the Third World. This support came in the form of • Helping countries that request Bank support in electoral assistance, judicial reform, media training, and support for civil society. Heather Marquette is a professor with the International Concurrent with assistance for democratization Development Department of the School of Public Policy at efforts, there has been growing concern with the the University of Birmingham in the United Kingdom. effects of corruption on development and increasing

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emphasis, within the donor community, on the need an advantage in dividing up the benefits of eco- to give assistance for anticorruption strategies. nomic activity.” (Rose-Ackerman 1999: 2) As Few people now argue that corruption, in any Krueger explained this idea, rent-seeking forms of form, is beneficial for economic growth or develop- corruption, which include bribery, “speed money,” ment. However, in the 1960s and 1970s, a group of smuggling, and the black market, do not cut down scholars saw a direct link between the modernization on bureaucracy or open the state to the excluded, process and corruption and argued that “corruption but rather add “additional welfare costs” to transac- seems to exist and thrive in countries at similar tions with the state. Instead of speeding up transac- stages of development tions, rent seeking actually encourages civil servants “Corruption can often more regardless of cultural dif- to slow transactions down, so that they can collect profitably be seen as one of many ferences.” (Ben-Dor 1974: more bribes. processes of political influence 69) These “functionalists,” typified by Heidenheimer Need for free market seen than as simply the misuse of office (1970), believed that cor- This approach to the impact of corruption on devel- in violation of community norms.” ruption helped aid social opment was given real voice by the work of two —Scott (1969) and political integration economists in particular, Rose-Ackerman (1978, during times of great social 1999) and Klitgaard (1988). Both have worked as change, and it filled needs not met by official means. consultants to the World Bank on corruption issues Leys (1965) and Leff (1964) both argued that and continue to have a great influence on the direc- bribes can in fact overcome the obstacles arising tion its work has taken. Both argue that a free mar- from inefficient bureaucracy, while Nye (1967) dis- ket is essential for combating high levels of corrup- cussed how corruption can help political develop- tion and that “corrupt incentives are the nearly ment by helping economic development, as long as inevitable consequence of all government attempts actors do not waste resources, vis-à-vis capital flight, to control market forces.” (Rose-Ackerman 1978: 9, improper investment, waste of skills or the loss of emphasis in original) Both see corruption primarily foreign aid. in terms of bribery. Both offer solutions taken up by the World Bank and other development agencies. ‘Rent-seeking’ becomes the new demon Rose-Ackerman’s direct recommendations to the Scott suggested that “corruption can often more Bank on corruption included (1) tackling corruption profitably be seen as one of many processes of in its own projects and being ready to cancel projects political influence than as simply the misuse of if corruption is detected; (2) supporting internation- office in violation of community norms.” He said al efforts to reduce bribery and establish universal that, in less-developed countries with low literacy financial management standards; and (3) creating rates and a concentration of wealth and power con- grant and loan projects that, according to Rose-Ack- trolled by a small elite, the majority are able to influ- erman, foster an environment for growth and pover- ence politicians more at the “enforcement stage,” ty reduction: that is, after laws have been passed, than in the pre- “The Bank could select a few countries with sup- legislation stage, when pressure groups, like business portive governments and work with them to design groups or trade unions, are more effective. programs that could serve as examples for others. Huntington argued that higher levels of corrup- Country officials, working with Bank staff, should tion coincided with rapid social and economic mod- design programs that reduce underlying corrupt ernization and helped to offset some of the destabi- incentives, facilitate civil service reform, open gov- lizing factors brought about by these rapid changes. ernment to outside scrutiny, and strengthen formal He said that, even though corruption tends to weak- institutions of oversight and control (such as the en political development, it can also strengthen the courts). This sounds like a large order, but piecemeal political system by strengthening opposition parties efforts are unlikely to do much good.” and other institutions that otherwise lack access to As we will see, this is exactly the direction in the state. which the Bank’s anticorruption program has This idea of corruption serving several function- evolved. al roles in development was criticized by a new gen- eration of scholars, mostly economists, in the late Early anticorruption: Public sector reform 1970s and beyond, and it is this school of thought Although, prior to 1997, the World Bank did not that has influenced the current donor agenda. Earli- fund work aimed specifically at combating corrup- er in the 1970s, economists such as Myrdal (1970) tion, it can be said that its work on public sector and Krueger (1974) developed the idea of “rent- management did, in many cases, do just that. By tak- seeking,” defined as “situations where people use ing away some of the incentives and opportunities resources both for productive purposes and to gain for corrupt behavior, the Bank has indeed long been

4• SPRING 2004 INTERNATIONAL STRATEGIES: Seeking the right approach to corruption active in various forms of anticorruption work. Wolfensohn explained how the Bank became inter- Prior to the 1980s, the World Bank focused pri- ested in tackling corruption: marily on helping develop the capacity of agencies directly involved in implementing Bank projects. “Let me say first off that, until three years ago, The advent of structural adjustment changed this, the word ‘corruption’ was never mentioned at the and instead the Bank’s focus switched to a more World Bank. As some of you may know, the true comprehensive program of public sector manage- story is that, when I got to the Bank, the General ment reform. This included, for example, civil ser- Counsel called me in to give vice reform, public expenditure management and me my briefing on what I “I recognized that there was no parastatal reform, reflecting the needs and priorities could do and what I could way to deal with the issue of equity of the time. not do as President of the and poverty and development In 1994, the Bank pointed out areas of work that Bank. And he said the one were not seen initially in terms of fighting corrup- thing you cannot do is to without tackling the question of tion but had that effect by “reduc[ing] opportunities talk about the ‘c’ word. And corruption.” for rent-taking by simplifying rules and by replacing I said what is the ‘c’ word? —James Wolfensohn, Bank president administrative with market mechanisms.” These He said the ‘c’ word is cor- areas include trade regime reform, tax reform, regu- ruption. And under the charter of the Bank you are lation reform, privatization, civil service reform, not allowed to talk about politics and corruption is public procurement reform, and the modernization politics. Therefore, don’t talk about the ‘c’ word. You of public sector accounting. can talk about anything else. You can talk about Corruption as a political issue social justice, you can talk about poverty, but for God’s sakes don’t talk about the ‘c’ word because Pulling all of these reforms together under a rubric you will get fired. Your shareholders won’t like it. of fighting corruption did not seem feasible at the “And that is not an allegorical story. That is, in time, given the position of Ibrahim Shihata, the fact, a true story. I took this for about two years until Bank’s general counsel and its head legal advisor I recognized that there was no way to deal with the responsible for interpreting its Articles of Agree- issue of equity and poverty and development without ment. In 1990, he laid out five aspects of governance tackling the question of corruption. So, I came out in prohibited by the Bank’s Articles: The Bank cannot my Annual Meeting speech, I said corruption is a be influenced by the political character of a member; cancer and it is not political but it is social and it is it cannot interfere in the domestic or foreign parti- economic and, therefore, I am allowed to talk about san politics of a member; it cannot act on behalf of it. And if you politicians think that it is political, that donor countries to influence a recipient member’s is your problem. I think it is social and economic. political orientation or behavior; it cannot allow Therefore, I can talk about it.” political factors to influence its decisions unless there is an “obvious” economic effect;1 and its staff Wolfensohn has been backed by the U.S. govern- must not build their assessment on the possible reac- ment, which blames the previous lack of focus on tions of a particular Bank member or members. corruption on “overly restrictive interpretations of These restrictions did leave some room open for their Articles of Agreement against consideration of anticorruption activities, but within a well-defined non-economic factors in their activities” and “reluc- framework. tance” on the part of the executive directors to tack- According to Shihata, areas with potential le the issue. (CSIS 1998: 40; USGAO 2000) Wolfen- impact on corruption that fell into the Bank’s man- sohn made very public his intention to work on cor- date include civil service reform, legal reform, ruption, and having replaced Shihata as general accountability for public funds, budget discipline, counsel, this work rapidly became the cornerstone of and popular participation “in the design and imple- Bank policy in the late 1990s. This allowed work to mentation of a specific development project or pro- be done explicitly on anticorruption and helped gram”—as opposed to popular participation in gen- move the Bank toward a more holistic approach, eral. rather than the single-focus, “piecemeal” approach Speaking before a group of NGOs in 2000, Rose-Ackerman warned against. Anticorruption agencies seen as a solution 1 However, “a question which is traditionally considered as ‘political’ cannot be turned into an economic issue just When donors first became interested in explicit anti- because of minor possible economic effects.” (Shihata 1991: corruption work, they looked for successful cam- 84) Despite this, “Much of what the Bank now considers ‘eco- paigns from which to draw examples of best prac- nomic,’ and therefore appropriate for its attention, would even a decade ago have been considered inappropriate.” (Blackden tice. Much attention has been paid to anticorruption 1996: 3; Marquette 2003) agencies following the success of such initiatives in

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Hong Kong and Singapore. The Hong Kong Inde- 'Multipronged' approach makes anticorruption a pendent Commission Against Corruption (ICAC), pillar of development strategy in particular, has attracted much attention since In the follow-up report to the 1997 strategy docu- 1974, when it was first initiated, following a number ment, the Bank’s approach to anticorruption is of high-profile scandals. Some of those who were described as follows: involved in the ICAC’s work from the beginning have found great success as consultants to donors “The Bank views corruption as a symptom of and governments interested in replicating the model underlying institutional dysfunction, and thus elsewhere. employs a proactive and holistic approach that 2 The ICAC model is comprised of a three- attempts to help clients strengthen governance and pronged “attack”: investigation, prevention, and public sector management, to improve economic education. This is based around the premise that it policies and legal/judicial systems, and to develop is not enough to prosecute cases of corruption and and implement specific anticorruption measures. put in place preventative measures—it is also impor- The Bank has made strengthening borrower capaci- tant to change the way people think and feel about ty a priority through increased lending, enhanced corruption. country-level advisory service, and the inclusion of The three-prong strategy is reflected in the orga- ‘good and clean governance’ as one of the central nizational structure: pillars of the Comprehensive Development Frame- work [CDF].” (a) Operations Department: conducts corruption investigations. The CDF, which is the cornerstone of Bank (b) Corruption Prevention Department: provides strategy under Wolfensohn, is described as a holistic policy advice to public and private organizations. approach to development. It seeks a better balance (c) Community Relations Department: educates the in policymaking by highlighting the interdependence public about corruption issues. of all elements of development—social, structural, human, governance, environmental, economic, and The ICAC has had a visible impact on corruption financial. The CDF is intended to emphasize part- in Hong Kong. For example, in 1974, 45 percent of nerships among governments, donors, civil society, corruption reports involved the police, while in the private sector, and other development actors. 1994, this figure was 18 percent. Significantly, in Perhaps most important, the country is in the lead, 1977, 38 percent of people surveyed thought cor- both “owning” and directing the development agen- ruption was widespread, da, with the Bank and other partners each defining while only 7.8 percent their support in their respective plans. The Bank’s anticorruption thought so in 1994. (de The Bank’s anticorruption assistance programs assistance programs reflect both Speville 1999: 52) reflect both the “holistic approach” to development the “holistic approach” prescribed Indeed, the ICAC has prescribed by the CDF and the Bank’s overall com- by the Comprehensive Development been so successful in mitment to long-term capacity building. As a matter Framework and the Bank’s tackling public sector of fact, Wolfensohn explains that the key to CDF is corruption that the good government and combating corruption and overall commitment to majority of reported long-term capacity building. that capacity building forms the basis of the CDF. incidents now involve Often used interchangeably with the terms “institu- the private sector tional reform” or “institution building,” “capacity instead. There is some building” has been defined by Bank documents in evidence that the handover of Hong Kong to China both narrow and broad terms. Narrowly, it is “the in 1997 and the rising influence of big business have provision of training and materials to build skills had some negative impact on the effectiveness of within organizations,” while broadly, it refers to the ICAC (Moran 2000), but in general, the Hong “reforms of incentives and institutions as well as Kong model is seen as being a good example of best strengthening skills and resources.” practice. Issues under the CDF matrix include good and This model has been replicated in countries as clean government, the justice system, financial sys- diverse as Singapore, Botswana, and Australia, tems and social safety nets, and social programs. among many others, with varying degrees of suc- 2 cess. Donors have supported many of these anticor- See http://www.icac.org.hk. ruption commissions, including, for example, in 3 The Utstein Group is comprised of the international devel- opment departments of Germany, the Netherlands, Norway, Malawi (World Bank), Papua New Guinea (World and the United Kingdom, working together to develop strate- Bank), Sierra Leone (DfID), and Zambia (Utstein gies to combat corruption. Group).3

6• SPRING 2004 INTERNATIONAL STRATEGIES: Seeking the right approach to corruption

Partners in this process include the government, building. A recent report from DfID suggests that multilateral and bilateral institutions, civil society, donors have often implemented anticorruption and the private sector. All sectors within the Bank agencies in the belief that this is “what needs to be are encouraged to adopt this CDF approach and done,” as opposed to employing more strategic “mainstream” governance activities into their own thinking about the processes of change actually work, be it health, education, water, transport, or involved in reducing corruption. other areas. Specific anticorruption initiatives are The Bank’s strategy for helping countries combat often represented by the implementation of a corruption is shown in Table 1. Because corruption National Integrity System,4 which is established in is seen as a symptom of institutional dysfunction, partnership with Transparency International (TI). this strategy aims to build strong institutions in order Other areas with an anticorruption component to combat and prevent corruption. Instead of focus- include improving regulations, privatization, partici- ing on a particular sector or a particular agency, the patory projects, decentralization, and institutional strategy aims to strengthen a country’s entire institu- and judicial reform. tional system. This comprehensive approach to anticorruption Measuring the costs of corruption is reflected in all four prongs of the Bank’s strategy, and especially in the second—“helping countries Anticorruption surveys have become key to under- that request Bank support in their efforts to reduce standing appropriate entry points for intervention. corruption.” According to I. McDonald, editor of According to a 2000 World Bank progress report on the IMF magazine Finance & Development, “Like the corruption, these surveys aim “to measure the eco- mythological hydra, corruption is a many-headed nomic and social costs of corruption, the quality of foe that insinuates into every part of the social fab- public service delivery and of the business environ- ric, weakens the body politic, and jeopardizes ment, and to identify public sector vulnerabilities.” prospects for economic growth.” This rather dra- The surveys, conducted by the World Bank Institute matic analogy is illustrative of how the Bank is (WBI) with local partners and often funded by bilat- approaching anticorruption work—tackling its eral donors, are targeted at citizens, private firms, impact in every sector of the Bank’s work, from and policymakers and consist of (a) public officials public sector management, to health, to forestry, surveys, (b) enterprise surveys, (c) household sur- and so on. In order to “kill the beast,” the Bank is veys and (d) specialized surveys (e.g., customs, trying to attack it at its institutional core rather than forestry, media). deal with one “head” at a time. Anticorruption agencies appear less useful This holistic approach makes simply funding anti- TABLE 1: The World Bank’s Multipronged corruption agencies less useful in terms of combat- Strategy for Combating Corruption ing corruption overall. According to the 1997 report, “Anticorruption bodies appear to be a promising Administrative and • Pay and meritocracy option if they can be made truly independent of the Civil Service Reform • Decentralization and executive and if there is a strong and independent community action judiciary. However, we need to better understand the Economic and • Deregulation experiences of these bodies—where they have been Policy Management • Tax simplification effective and where they have failed—before recom- • Macroeconomic stability mending them to governments.” • Demonopolization The Bank’s findings in subsequent reports con- tinue to support this point of view. The Bank does Financial Controls • Financial Management not believe that special anticorruption bodies are • Audit generally appropriate in developing countries, • Procurement despite success in Hong Kong and Singapore. Legal-Judicial Reforms • Legal framework Instead, its work focuses on institution and capacity • Judicial independence • Judicial strengthening 4 “The expression [National Integrity System] is of recent ori- • Alternative dispute gin, having emerged from discussions within the Transparen- resolution mechanisms cy International movement and widely popularized by devel- opment agencies.” (Transparency International 2000: 32) TI Public Oversight • Parliamentary oversight has produced a Source Book to assist countries in building a • Civil society and media National Integrity System, with an emphasis on “integrity pil- • Independent agencies/NGOs lars,” including the executive, parliament, the judiciary, civil service, “watchdog” agencies, civil society, mass media, and SOURCE: World Bank 2000b: 22 international agencies.

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The surveys are designed to focus on institutions Uganda). Now the Bank is doing work of some kind and their clients, rather than the behavior of indi- in all regions. As of the 2000 follow-up report, the viduals, and to provide quantitative rather than qual- countries in which the Bank was doing anticorrup- itative data. These diagnostic surveys “constitute a tion work can be seen in Table 2. key component” in providing new data that will help However, the Bank makes it clear that: countries prioritize areas of concern when designing anticorruption programs. “It is important to note that this is not a list of It should be noted that the Bank’s Operations countries that the Bank has singled out in which to Evaluation Department (OED) has expressed con- investigate corruption, and that the occurrence of a cern over the usefulness of these surveys, which country on the list is in no way indicative of the tend to only highlight “high visibility corruption” or presence or absence of corruption in that country. corruption “likely to be identified by surveys,” such Rather, this is a list of countries in which the Bank is as corporate bribes to government ministers. Yet working with governments and/or civil society, at this kind of corruption may not be very costly over- their invitation, to help understand and systematical- all in comparison to less exposed forms of corrup- ly address problems of public sector performance tion with a higher economic cost, such as persistent and corruption. This work is conducted sometimes tax evasion by corporations and the wealthy elite. under the more general umbrella of public sector A controversial approach institutional reform. Our work with client countries is continually expanding, and this list is thus not As the Bank itself has admitted, “While the Bank meant to be exhaustive.” has helped countries reform economic policies and strengthen public institutions for many years, its According to the 1997 report: “The main thrust involvement in explicit anticorruption strategies is of the Bank’s support for countries’ anticorruption novel.” This approach is controversial because it is efforts will be in helping to design and implement experimental in nature and still seen by some as a government programs.” Lending for public sector break from the Bank's nonpolitical mandate. This is governance and institutional reform, for both why the Bank insists it only works with those coun- adjustment and investment lending, rose from $4 bil- tries that have asked for assistance with anticorrup- lion to $7.5 billion from 1997 to 1999. Lending for tion efforts. The Bank describes its work as technical assistance during this time averaged $2-2.5 “demand driven,” and requires strong commitment billion per year. from top leaders, along with involvement of civil society and the private sector. New focus on capacity building Early anticorruption assistance was focused on Despite all this, there is increasing evidence that Europe and Central Asia (Albania, Georgia, Latvia) donors are beginning to move away from an empha- and Africa (Benin, Ethiopia, Malawi, Mali, Tanzania, sis on corruption and more toward a focus on capac- ity building and global issues (e.g., money launder- ing). Although the reasons for this shift are not entirely clear, a number of possibilities should be TABLE 2: Countries Working with considered: a changing political agenda, an over- the Bank on Anticorruption Issues stretched agenda, and a rethinking of the relation- Albania Ecuador Mozambique ship between corruption and development. Argentina Ethiopia Nicaragua It may sound like a well-worn excuse by now, but Armenia Georgia Nigeria the global war against corruption has been impacted Azerbaijan Ghana Paraguay by 9/11 and the war against terrorism. Initially, it Balkan Stability Pact Guatemala Philippines seemed that Western governments would rally even Bangladesh Guinea Poland further behind the anticorruption movement, Benin India (some states) Romania through increased pressure to tackle money launder- Bolivia Indonesia Russia Bosnia Kazakhstan Slovakia ing, for example. Yet in some ways the movement has Bulgaria Kenya Sri Lanka been set further back. It may not be another Cold Burkina Faso Korea Tanzania War, but the war against terrorism has once again Cambodia Latvia Thailand caused Western countries to turn a blind eye to cor- Cameroon Malawi Uganda rupt practices in “friendly” states. Chad Mali Vietnam In Central Asia, for example, the U.S. has ignored China Moldova Yemen Colombia Morocco Zambia high level corruption in countries like Kazakhstan in order to secure its support to fight terrorism in SOURCE: World Bank 2000b: 29 Afghanistan and beyond. In Equatorial Guinea, a country with a long history of corruption and human

8• SPRING 2004 INTERNATIONAL STRATEGIES: Seeking the right approach to corruption rights violations, the Bush Administration, in order to Taking on too much? facilitate an oil deal, is reopening the U.S. embassy that Johannes Linn, the former vice-president for the had been closed by former U.S. President Bill Clinton. Bank’s Europe and Central Asia Region, described Since then, the U.S. Justice Department has been four areas of concern regarding the risk of overload asked to investigate claims that Exxon and other oil for the Bank due to its work on governance: companies have deposited up to $500 million into • First, by trying to address the roots of poor gover- President Obiang’s personal account. In Iraq, even nance, the Bank may overload the reform agenda though a U.S. State Department document from 2003 and overstretch both its points out a clear link between corruption and terror- own limited capacities and ism, the U.S. and some other donors send a mixed those of its counterparts. If donors become this involved message by supporting new allies in countries that • Second, even the most with each country, will there ever rank low on TI’s Corruption Perception Index. committed reformers might be a time when they are not An over-stretched agenda shy away from undertaking worried about corruption a huge mass of comprehen- Donors’ anticorruption work has become increas- or capacity building? sive and simultaneous ingly ambitious and complex. It is both highly tech- reforms to regulatory insti- nical and highly theoretical. It attempts to engage tutions, fiscal relations, and the civil service, pension, high-level government support while potentially education, health, and banking sectors. undermining these same governments with work at • Third, overloading the reform agenda can under- the grassroots level. Donors work extensively with mine the credibility of genuinely reform-minded gov- international partners but are often incredibly insular ernments. How much blame should these govern- in their research base. Donors pursue various efforts, ments receive for the “slow” development of institu- involving management, specific countries, and spe- tions that took decades to evolve in other countries? cific sectors. Yet there is poor coordination and con- • Fourth, can the Bank really transfer the highest tinuity among anticorruption efforts of the donor standards of knowledge in so many areas, in many community—sometimes within individual donor countries simultaneously? organizations but especially within the community as Linn recommended greater selectivity, more flex- a whole. The complexity of donors’ work, combined ibility in defining conditionality, and dividing work with a lack of true direction, raises questions about among bilateral partners, based on comparative long-term sustainability, which the World Bank itself advantage. However, there is no reason to believe admits is needed to judge success or failure. that other donors are in the position to do this any Finch suggests, for example, that the Bank will better than the Bank—with all its financial and become over-stretched as it moves “out of areas in human resources. which supervision is easiest into social policy areas One is left looking for some kind of “exit strate- with oversight needs that have overstrained their per- gy.” If donors become this involved with each coun- sonnel.” In 2001, reported dissent within Bank ranks try, will there ever be a time when they are not wor- brought many of these issues to the front of the dis- ried about corruption or capacity building? Institution course on the ongoing role of the Bank. A leaked building has become fundamental to their work, but memo from the Middle East and North Africa there are countries so far behind others that there is a (MNA) Region described Wolfensohn as “isolated generation’s worth of work to be done. It is question- from reality” and intolerant of dissent, and it also able whether donors will be able to keep up sufficient blames low morale within the Bank on inadequate long-term momentum, either at the country or insti- resources. The memo is quoted as saying, “The Bank tutional level, for this sort of work to be effective. today has no focus and is driven by an ever growing list of mandates imposed on it through a variety of Rethinking links between corruption and poverty means … [such as the] President’s favorite subjects Donors could also be accused of mistaking the [including the CDF with its good governance compo- effects of poverty for the causes. Corruption does nents] … Board sentiments as discerned from time to not cause poverty: Poverty is caused by many things, time, public pressures, ideas generated by internal including a lack of access to resources, poor terms constituencies, and even fads. These are all cumulative of trade, and low levels of human capital. The World with nothing ever taken off.” The Observer reported Bank “has identified corruption as the single great- that, “The cause of dissent within the Bank seems to est obstacle to economic and social development.”5 be that it is over-stretching itself, delving deep into However, it can be argued that corruption merely areas of what is known as social development.” exacerbates what are already difficult circumstances blocking a country’s development efforts. For exam- 5 See: http://www1.worldbank.org/publicsector/anticorrupt ple, DfID has funded a study looking at research on /index.cfm. the impact of poor governance on HIV/AIDs,

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including diversion of donor funds intended for BIBLIOGRAPHY medicine and new “grab-what-you-can-while-you- Ben-Dor, G (1974) “Corruption, Institutionaliza- can” behavior on the part of HIV/AIDS affected tion, and Political Development” Comparative civil servants. HIV/AIDS is one of the most devas- Political Studies, 7(1), p. 63-83. tating challenges to development in many countries, Biersteker, T (1990) “Reducing the Role of the State and the problem acts as a significant obstacle to eco- in the Economy: a Conceptual Exploration of nomic and social development. Corruption has not IMF and World Bank Prescriptions” International caused this obstacle, though it certainly has not Studies Quarterly, 34: 477-92. helped. Instead, a lack of Blackden, CM (1996) “Human Rights, Develop- access to cheap medication, ment, and the World Bank: Economics vs. Poli- Diversion of donor funds has not poor health care provision, tics?” Trialogue, April. helped in the fight against AIDS, rapidly increasing urbaniza- Center for Strategic and International Studies but to focus on corruption neglects tion, a breakdown of social (CSIS) (1998) The United States and the Multilateral the much bigger picture. relationships, etc., have Development Banks, Washington DC: The CSIS caused the increase in Press. HIV/AIDS. Corruption De Speville, B (1999) “The Experience of Hong adds fuel to the flames, but to focus on governance Kong, China, in Combating Corruption” in R. and corruption neglects the much bigger picture. Stapenhurst & S. Kpundeh (eds.) Curbing Corrup- tion: Toward a Model for Building National Integrity, One can make the same argument regarding Washington DC: World Bank, pp. 51-8. many other areas: education, foreign investment, DfID (2003) “Better government for poverty environmental degradation, conflict, and so on. reduction: More effective partnerships for Each of these is a complex phenomenon that change” DfID Consultation Document, April. requires a holistic approach, much lauded through Doig, A & R Theobald (eds.) (2000) Corruption and the CDF process. In handling these problems, cor- Democratization, London: Frank Cass. ruption is merely one of the many aspects that Donovan, J (2002) “Central Asia: Verdict Still Out needs addressing and, perhaps, not the most impor- on US Engagement Policy” Radio Free tant. Europe/Radio Liberty 22 November, available New work certainly suggests that DfID is at: http://www.rferl.org/nca/features/2002/ rethinking the way it approaches governance issues, 11/22112002172125.asp. including corruption, and, indeed, development in Elliott, L (2001) “Leak reveals crisis at the World general. This suggests that “[donors] should start Bank” The Guardian (London), 31 January. with an analysis of each country’s particular context, Finch, CD (1996) “G7 Corruption Project” The not a specific list of policies.” Such an attitude flies International Economy, 10(6), pp. 22-6. in the face of current donor strategy, which can be Heidenheimer, A (ed.) (1970) Political Corruption: called the “Field of Dreams” approach—build the Readings in Comparative Analysis, New York: Holt, institutions and good governance will come. Rinehart and Winston, Inc. In other words, instead of taking a “multi- Hewitt, A & T. Killick (1996) “Bilateral Aid Condi- pronged approach to corruption,” applied in differ- tionality and Policy Leverage” in Stokke, O (ed.) ent stages to each country, depending upon that Foreign Aid Towards the Year 2000: Experiences and country’s capacity, donors start out with the particu- Challenges, London: Frank Cass & Co. Ltd., pp. lar social and political context and then look at what 130-67. strategies would be most appropriate, coming up Hoyos, C (2001) “James Wolfensohn’s self-created storm” Financial Times, 30 January. with completely new strategies if need be. It is too Huntington, S (1968) Political Order in Changing Soci- early to determine what the impact of this new eties, New Haven: Yale University Press. approach will be on DfID’s work, let alone the work --- (1991) The Third Wave: Democratization in the Late of other donors, but it is worth paying close atten- Twentieth Century, Norman: University of Okla- tion. We could indeed be looking at the beginning of homa Press. a new phase in donor work on corruption. Huther, J & A Shah (2000) “Anti-Corruption Poli- cies & Programs: a Framework for Evaluation” World Bank Policy Research Working Paper No. 2501, December. Klitgaard, R (1988) Controlling Corruption, Berkeley: University of California Press. Krueger, A (1974) “The Political Economy of the Rent-Seeking Society” The American Economic Review, 64(June): 291-303. Lashmar, P (2003) “Exxon probed over $500 mil-

10 • SPRING 2004 INTERNATIONAL STRATEGIES: Seeking the right approach to corruption

lion Africa scandal” Independent, 11 May. Theobald, R & R Williams (2000) “Combating Cor- Leak, TA (1999) “The Experience of Singapore in ruption in Botswana: Regional Role Model or Combating Corruption” in R Stapenhurst & S Deviant Case?” in A Doig & R Theobald (eds.) Kpundeh (eds.) Curbing Corruption: Toward a Corruption and Democratization, London: Frank Model for Building National Integrity, Washington Cass, pp. 117-34. DC: World Bank, pp. 59-66. Transparency International (2000) TI Source Book Leff, N (1964) “Economic Development through 2000, Berlin: Transparency International. Bureaucratic Corruption” American Behavioral Sci- USGAO (2000) “World Bank: Management Con- entist, 8(3): 8-14. trols Stronger, but Challenges in Fighting Cor- Leys, C (1965) “What is the Problem about Cor- ruption Remain” Report to Congressional Commit- ruption?” Journal of Modern African Studies, 3(2): tees, GAO/NSIAD-00-73, April. 215-224. US State Department (2003) Iraq: From Freedom to Linn, J (2001) “The World Bank’s New Approach to Fear, available on the internet at: Good Governance: Promises and Risks” Transi- http://usinfo.state.gov/products/pubs/iraq/ tion Newsletter, 12(2): 1-3. iraq.pdf. Marquette, H (2003) Corruption, Politics and Develop- Wilks, A (2001) “Over-stretched and underloved: ment: The Role of the World Bank, Basingstoke: Pal- World Bank faces strategy decisions” Bretton grave. Woods Project Briefing Paper, February, p. 3. McDonald, I. (2000) “From the editor” Finance & Williams, R (1999) “New Concepts for Old?” Third Development, 37(2). World Quarterly, 20(3), pp. 503-13. Moran, D (2003) “Literature Review on HIV/AIDS --- (2000) “Democracy, Development and Anti- and Governance,” DfID/Governance Resource Corruption Strategies: Learning from the Aus- Center (GRC) internal document, January. tralian Experience” in A Doig & R Theobald Moran, J (2000) “The Changing Context of Cor- (eds.) Corruption and Democratization, London: ruption Control: The Hong Kong Special Frank Cass, pp. 135-48. Administrative Region, 1997-99” in A Doig & R Wolfensohn, JD (1996) “1996 Annual Meetings Theobald (eds.) Corruption and Democratization, Speech” Address to the Board of Governors, London: Frank Cass, pp. 98-116. World Bank/IMF, Washington DC, 1 October. Myrdal, G (1970) “Corruption: Its Causes and --- (1999) “A Proposal for a Comprehensive Devel- Effects” in A Heidenheimer (ed.) Political Corrup- opment Framework: A Discussion Draft,” 21 tion: Readings in Comparative Analysis, New York: January. Available on the internet at: Holt, Rinehart & Winston, Inc., pp. 540-5. http://www.worldbank.org/cdf/cdf.pdf. Nye, JS (1967) “Corruption and Political Develop- --- (2000) “NGO Meeting with Mr. Wolfensohn,” ment: a Cost-Benefit Analysis” American Political Prague, 22 September, available at Science Review, 61(2): 417-27. http://www.wroldbank.org/html/extdr/am00/ Observer (2001) “Internal conflict leaves World ts092200a.htm. Bank policy in disarray” Observer (London), 4 February, Business Sec., p. 3. World Bank (1992) Governance and Development, Pope, J & F Vogl (2000) “Making Anticorruption Washington DC: World Bank. Agencies More Effective” Finance & Development, --- (1994) Governance: The World Bank’s Experience, 37(2), pp. 6-9. Washington DC: World Bank. Rose-Ackerman, S (1978) Corruption: A Study in Polit- --- (1997) Helping Countries Combat Corruption: the Role ical Economy, New York: Academic Press. of the World Bank, Washington DC: World Bank. --- (1997) “The Role of the World Bank in Control- --- (2000a) Anticorruption in Transition: a Contribution to ling Corruption” Law & Policy in International the Policy Debate, Washington DC: World Bank. Business, 29(1): 93-114. --- (2000b) Helping Countries Combat Corruption: --- (1999) Corruption and Government: Causes, Conse- Progress at the World Bank Since 1997, Washington quences, and Reform, Cambridge: Cambridge Uni- DC: World Bank. versity Press. --- (2000c) Reforming Public Institutions and Strengthen- Scott, JC (1969) “Corruption, Machine Politics, and ing Governance: a World Bank Strategy, Washington Social Change” American Political Science Review. DC: World Bank. 63(4): 1142-59. --- (2001) “Soul-searching uncovers hidden malaise --- (1972) Comparative Political Corruption, Englewood at World Bank” Development News, 31 January. Cliffs, NJ: Prentice-Hall, Inc. World Bank Institute (1999) New Empirical Tools for Shihata, Ibrahim (1991) The World Bank in a Chang- Anti-Corruption and Institutional Reform: A Step-by- ing World: Selected Essays, Dordrecht: Martinus Step Guide to Their Implementation, Washington Nijhoff Publishers. DC: World Bank.

SPRING 2004 • 11 LOCAL GOVERNANCE BRIEF EU funds and the new member states: Wide open to fraud? As the Union prepares to Reform efforts occur within the EU, but member states often hesitate to identify problems address corruption in CEE, While the serious problems experienced within EU skeptics note that it is already institutions inflicted great damage to the EU’s repu- tation, the financial implications of external cases of difficult for the community to irregularities and fraud, mainly money spent by the police its individual members EU member states, clearly outweigh those of the internal cases. By Claus Schultze Eighty percent of the EU budget is managed by member states. The funds flow into two policy areas: The European Union’s budget has grown constantly agricultural subsidies and structural aid. The Com- since the 1970s, when the Union introduced a system mon Agricultural Policy (CAP), a highly complex giving it an autonomous source of revenue. Granting support system for farmers, and the Economic and the EU its “own resources” has proved critical in Social Cohesion Policy, a policy to support underde- building the Union into an entity that is much more veloped regions through infrastructure investments than a traditional international organization. and also through skills development, have repeated- EU expenditure has now reached approximately ly been criticized for being exposed to irregularities 1.17 percent of the Union’s gross domestic product and fraud risks. (GDP). Although the EU The member states are required to report all Unfortunately, the diligence with budget covers only about irregularities to Brussels as soon as they are detect- which efforts are made to identify 2.5 percent of all public ed.1 In theory, some of these irregularities may lead and communicate irregularities expenditure within the to judicial procedures in the member states. Union, this still adds up to a varies substantially from member In practice, it is clear that this system depends very considerable spending pack- much on the quality of the control systems in the state to member state. age of approximately EUR member states, the quality of data, and the speed with 100 billion per year. which member states report irregular cases. Unfortu- With this much money at stake, there are obvious nately, the diligence with which efforts are made to reasons to be concerned about corruption. And, as identify and communicate irregularities varies sub- new countries prepare to join the Union, these con- stantially from member state to member state. cerns are increasing. The European Parliament, for instance, in its EU skeptics claim that up to 5 percent of the EU 2001 report on the protection of the Unions’ finan- budget is regularly lost to fraud, waste, and misman- cial interest, noted “with amazement that Luxem- agement. The figures reported in the official anti- bourg has never communicated any irregularity.” (It fraud reports of the EU and the activity reports of also did not report any irregularity for 2002.) OLAF, the EU’s antifraud inspectorate, are much The European Court of Auditors, responsible lower, amounting to a bit more than 1 percent of the for checking the EU’s accounts, regularly criticizes annual budget. many member states for showing substantial defi- But it wasn’t until the first big malpractice scandals ciencies in their management and control systems in the EU institutions were exposed in the 1990s that for agricultural payments and structural measures. fraud was recognized as an issue beyond the narrow Meanwhile, the Commission complained that circle of professionals who control the EU budget. member states often do not indicate whether the Facing growing criticism about what was widely cases they identify are suspected to be fraud or sim- perceived as a crisis of accountability and legitimacy ple irregularities and “that the Member States do not of the Union, the European Commission responded always have the same view of criminal risk.” It also by reforming and modernizing its administration said that member states often report irregularities too and management, including its accounting systems. late, years after they have happened, implying that all It also introduced tighter controls on sectoral poli- necessary actions were not taken by the member state cies, including more monitoring of money spent to limit or reduce their financial impact. directly in the member states. 1 The threshold for reporting irregularities is EUR 4,000 for Claus Schultze, [email protected], is a regular expenditure-related irregularities and EUR 10,000 for income- contributor to LGB, writing about EU policy and enlargement. related cases.

12 • SPRING 2004 INTERNATIONAL STRATEGIES: New EU member states and fraud

National borders hinder fight against EU fraud The need for anticorruption peer review In 1997, the Union introduced Article 280 into the On a more general level, the problem with irregular- EC Treaty. The article gave the EU and its member ities and corruption with EU funds really highlights states joint responsibility for combating corruption structural and constitutional problems. and fraud and obliged member states to take the same First, throwing money at problems, i.e., creating measures to protect the Union’s financial interests as a wide range of subsidy schemes, which in the agri- they do to protect their own financial interests. cultural sector are coupled with extremely complex Effective action is, however, often handicapped rules and regulations, creates continued opportuni- by the diversity of national criminal law systems and ties for fraud and irregularities. the different degrees of efficiency of national legal This problem can only be countered by even systems in prosecuting fraud and corruption. Mem- more checks and bureaucratic procedures, hardly a ber states have also been criticized for not being suf- recipe for getting the Union closer to its citizens or ficiently committed to prosecuting cases of fraud making it more efficient. against the Union’s budget. Second, the corruption theme also sheds light on A specific problem hampering the Union is that constitutional issues. The EU hovers between poli- police and judicial cooperation at the operational tics and diplomacy, between states and markets, and level is not part of the EU acquis (the body of EU between government and governance. legislation to which the EU’s legal and institutional It is not a federal state but it is not an interna- structure applies), but instead is part of the so-called tional institution either. It is “third pillar,” government by intergovernmental a hybrid and novel form of Effective action by member states agreements. governance between inter- is often handicapped by the As a consequence, Union law has remained all too national law and domestic diversity of national criminal-law often “virtual law,” because not all member states order, a supranational insti- systems and the different degrees have ratified critical anticorruption conventions or tution of its own kind. transposed key framework decisions into national law. One typical problem of efficiency in prosecution. This problem of insufficient implementation arising from the EU’s “in- also applies to cooperation mechanisms concerning betweenness” is that many international organiza- agencies such as Europol or Eurojust, the European tions treat corruption as purely a technical problem, units responsible for improving coordination or they choose to sweep it under the rug of diplo- between national police and judicial authorities on matic custom and treat it as an internal matter. serious transnational crime. The number of perpe- However, since internal problems that affect the trators prosecuted and penalized is rising but implementation of EU law and policy in one or sev- remains extremely limited. eral member states automatically affect the rest of The same is true of OLAF, established in 2001 to the EU, being too diplomatic on matters of corrup- counter serious cases of corruption against the EU tion and bribery can cause damage to the whole budget. Its investigation tools are largely administra- Union and all its citizens. tive and do not extend to the prosecution phase. Instead of tut-tutting about corruption and To remedy this situation, the Commission in bribery, as is often done at the political level, and then 2000 presented a proposal to appoint a European leaving the problem to the technicians at the working public prosecutor by amending Article 280 of the level, the EU should live up to its ambitions and treat EU Treaty. This prosecutor would have the right to fraud with “zero tolerance,” whether it occurs within bring cases before national courts. However, the EU institutions or in member states.2 member states did not take up this proposal at their A peer review system, open and transparent to Intergovernmental Conference (IGC) in Nice. the general public, could be a powerful instrument in But the European Convention did include a sim- applying pressure on governments to clean up their ilar provision in its draft constitution, which forms administrative practices. the basis for the current IGC. According to the The Commission has already proposed introduc- Commission, this proposal for a constitutional ing such a mechanism. In its 2003 “Communication amendment does not go far enough, because it on a comprehensive EU policy against corruption,” requires unanimity, giving veto power to any of the the institution suggests that existing EU instruments soon-to-be 25 member states, a stipulation that do not provide genuine monitoring or evaluating effectively blocks any swift or effective solution. mechanisms comparable to the Council of Europe’s Group of States against Corruption mechanism 2 The present Commission, headed by Romano Prodi, started off by promising “zero tolerance” on corruption to mark a (GRECO), which monitors the majority of Euro- clear stance against the allegations of fraud and malpractice pean states according to anticorruption principles that brought down the past Commission. that use peer review to evaluate member states.

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The Commission therefore proposes that the EU established and strengthened relevant supervision, either joins GRECO or sets up a separate peer- coordination, and enforcement structures. review mechanism within the EU system. A separate While it will certainly take time until these mea- mechanism within the EU system would clearly be sures are fully effective and translated into sustain- preferable, since the Council of Europe (CoE) able and enduring changes, it is important to note structure depends too much on diplomatic goodwill that the candidates have made significant progress in and is, to a great extent, shrouded by diplomatic cus- introducing standards of good governance and tom. The CoE structure also suffers too much from sound financial management. a lack of interest on the part of the press and the However, some observers, including the Open general public to be a fully effective incentive for Society Institute, have argued that the effectiveness good governance for the Union. of these formal changes depends on candidate The whole matter is, of course, still up to the countries properly implementing them. member states to consider. In the past, they have Another question is how deep and how far these dragged their heels on this issue. But recently, things changes really reach into the administration. Even if are moving rather quickly, not least because many major risks on the central level are under control, fear that eastern enlargement could lead to the there are still the regional and local levels, and other “import” of more corruption and organized crime. intermediate bodies, that will have to implement EU Concerns about new member states policies and manage funds for farmers and regional development. The nongovermental organization Transparency International (TI) has a widely publicized corruption Administrative weaknesses increase risk of fraud perception index, which clearly indicates that the Another matter raising doubts as to the full effective- problem of corruption persists in many current EU ness of anticorruption measures and standards of member states. The notable exceptions are Finland good governance in candidate countries is the con- and other Nordic countries, where public sector cor- tinuing weakness of accounting and financial man- ruption is virtually nonexistent or extremely low. agement systems in these countries. Many existing Corruption also poses a significant challenge in member states are also still struggling to meet the most of the accession and candidate countries and new, stricter EU rules of financial management, puts proper implemtation which were only introduced in 2002. The Commission has suggested of EU funds and legislation The Commission has encouraged candidate coun- that existing anticorruption at risk. During negotiations tries to develop a general financial control and audit instruments provide for membership, the Com- capacity, to guarantee sound financial management in insufficient protection. mission noted “serious the public sector, regardless of whether Union or problems” with corruption national funds are at stake. in at least half of the candi- To further underline the importance of these date states of Central and Eastern Europe. issues, the EU rules on financial management and The Commission based its assessment on gov- control, the protection of the Unions’ financial ernment reports, information from its delegations interests, and fraud prevention were grouped in one on the ground, and independent sources, such as specific chapter of the negotiations for membership information provided by TI. (Chapter 28 on financial control). Corruption also Assessing candidates’ performance figured prominently as a horizontal issue in the negotiations on the CAP and on Structural Funds. In response, the Commission has made candidates’ One important indicator for assessing the readi- efforts to fight against fraud one of the benchmarks ness of the candidates to administer EU funds was for entry into the EU. It has strongly supported mea- their handling of the pre-accession instruments, sures to strengthen candidates’ national legislation and ISPA, for infrastructure investments, and SAPARD, structures—including the reinforcement of corrup- for rural development. tion-fighting bodies and efforts to prevent corruption ISPA and SAPARD are managed on a decentral- in public administration, law enforcement, and the ized basis, much as the Cohesion and Structural police—as well as encouraging training and public Funds are in the current member states. Authorities awareness raising on corruption issues. Corruption managing the funds are responsible for grant appli- has been given close attention in all accession coun- cations, selection and approval of projects, and ten- tries, particularly Bulgaria, the Czech Republic, Hun- dering, contracting, and managing payments. Manag- gary, Latvia, Lithuania, Poland, and Slovakia. ing authorities are also responsible for an elaborate EU pressure in this field has been rather success- control system—including monitoring, reporting, ful: Most candidate countries now have anticorrup- evaluating, and certifying payments—as well as car- tion legislation and strategies in place and have rying out management and sample checks.

14 • SPRING 2004 INTERNATIONAL STRATEGIES: New EU member states and fraud

The implementation of these programs was few notable exceptions, the perception remains that marked by problems that led to a number of cor- the level of corruption in the acceding countries is ruption and bribery cases and showcased consider- still high, and very high in some cases, and can affect able administrative weaknesses. confidence in the public administration and the judi- In monitoring reports on the candidate’s mem- ciary, thereby affecting also the proper implementa- bership preparations, published on November 5, tion of the acquis.” 2003, the Commission warned the candidates that it New member states risk losing some EU funds is most urgent for them to bring financial manage- ment and control, as well as accounting systems, in Given the record of corruption in some candidate line with EU provisions. The work needed includes countries, and the continuing administrative weak- defining detailed responsibilities for all bodies nesses in all but two of them, it would not be sur- involved, providing training, and allocating more prising to see an increase in accounting problems and staff resources to these tasks. cases of outright fraud once Even more serious, with regard to agriculture, new member states start Anticorruption measures may be the Commission concludes that a number of coun- dispensing EU funds. especially problematic in the tries, such as Cyprus, Hungary, Malta, Poland, and The Commission, in anticipation of this prob- candidate countries, due to their Slovakia, will not have Integrated Administration weaknesses in the areas and Control Systems—which are central elements lem, has already announced for payments of CAP funds—in place by accession. that it will continue to mon- of financial management and Similar difficulties were reported with structures itor corruption in the new accounting systems. for handling rural development programs in Hun- member states for some gary, for executing control measures for the Com- time after accession, with mon Fisheries Policy in Poland, and for managing particular attention to protecting EU funds from export refunds in Malta and Cyprus. being diverted by corrupt practices. A recent report by a Brussels consultancy on the Commission names laggards impact of enlargement on important policy areas Structural and administrative weaknesses in the new quotes one Commission official as warning that member states, combined with corruption, clearly “there will be delays and irregularities because of the pose serious risks to the EU’s financial interests. weaknesses of administrations, not just corruption.” With only a few months to go before the EU The new member states clearly risk losing a con- embarks on the most ambitious enlargement in its siderable share of their funds, since payments from history, the Commission’s monitoring reports, for Brussels to member states’ accounts will only be the first time, offer an explict assessment of coun- made if the appropriate control structures and other tries that are clearly failing to deliver on implement- conditions tied to the payments (such as auditing and ing reforms, enforcing existing rules, and prosecut- certification of payments) are met. ing corruption cases. As a general rule, funds not used within two years While Estonia, Cyprus, Malta, and Slovenia only of their commitment are automatically returned to received specific recommendations to further the Union. The risk of misappropriations of funds is, improve the effectiveness of their measures, the thus, equaled by a risk of decommitment of funds. Commission regards corruption as a “high priority” Even those new member states that may risk losing for the Czech Republic, Latvia, Lithuania, Hungary, some of their reform zeal after entering the Union Poland, and Slovakia. will thus have a strong incentive to comply. In particular, Poland was strongly criticized by There is little doubt that a strong political will the Commission: “Corruption is perceived to be exists in most new member states to fight corruption increasing from an already high level in Poland. It is in all its forms. But corruption is ultimately a func- considered to affect all spheres of public life. There tion of the political culture of a country. Therefore, has been very little progress in combating corrup- even the best reforms will remain insufficient unless tion, and the existing perception has been borne out government institutions and NGOs, schools, and in various high-profile corruption cases recently.” the media recognize their joint responsibility in Overall, the Commission concluded that, “with a fighting for a zero tolerance approach.

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BIBLIOGRAPHY European Convention, Final report of Working Group Burston-Marsteller, Enlargement 2004 - Big Bang and X “Freedom, Security and Justice.” Aftershocks, 2003. European Court of Auditors, Special Report 7/2003 European Commission, Towards the Enlarged Union, on the implementation of assistance programming for the Strategy Paper and Report on the progress towards acces- period 2000-2006 with the framework of the Structural sion by each of the Candidate Countries, COM (2002) Funds. 700. European Parliament, Report on the Commission Green European Commission, Protection of the Financial Paper on criminal-law protection of the financial interests Interest of the Communities and Fight Against Fraud, of the Community and the establishment of a European Annual Report 2002, COM (2003) 0445. Prosecutor, A5-0048/2003. European Commission, SAPARD Annual Report - European Parliament, Report on the protection of the Year 2002, COM (2003) 582. Communities’ financial interests and the fight against European Commission, Protecting the Communities’ fraud - annual report 2001, A5-0055/2003. financial interests, Fight against fraud, Action Plan for European Commission, Comprehensive Monitoring 2001-2003, COM (2001) 254. Report on the state of preparedness for EU membership European Commission, Communication on a compre- of the Czech Republic, Estonia, Cyprus, Latvia, hensive EU policy against corruption, COMJ (2003) Lithuania, Hungary, Malta, Poland, Slovenia and Slo- 317. vakia, Brussels 2003. European Commission, Communication on the imple- Country Reports submitted by Candidate States to mentation of commitments undertaken by the Acceding the EU in February 2003: Countries in the context of accession negotiations on - Czech Republic: Corruption and Organized Crime in chapter 21 - regional policy and coordination of struc- the Czech Republic tural instruments, COM (2003) 433. - Estonia: Report on legal and institutional measures to European Commission, Communication on further fight corruption indicative guidelines for the Candidate Countries, COM - Hungary: Information provided by Hungary on fight (2003) 110. against corruption and organized crime European Commission, Decision on the review of the - Latvia: Progress in the field of combating corruption and guidelines for implementation of the PHARE program organized crime in Candidate Countries for the period 2000-2006 in - Lithuania: Report on Corruption and organized crime in application of article 8 of regulation 3906/89. Lithuania - Lithuania’s past, current and future actions European Commission, Green Paper on criminal-law to fight corruption and organized crime protection of the financial interests of the Community - Malta: Report on corruption and organized crime and the establishment of a European Prosecutor, COM - Poland: Anticorruption strategy (2001) 715. - Slovakia: Report on the fight against corruption and orga- European Commission, Communication on the Action nized crime Plans for administrative and judicial capacity, and the - Cyprus: Report on measures undertaken to combat orga- monitoring of commitments made by the negotiating nized crime and corruption in the Republic of Cyprus countries in the accession negotiations, COM (2002) Transparency International, Corruption Percep- 256. tions Index 2003, 2002, 2001 and 2000.

16 • SPRING 2004 INTERNATIONAL STRATEGIES: The rise of anticorruption The rapid rise of the anticorruption industry Toward second generation vants, NGOs, youth, and just about anyone who would listen. These programs have been conducted anticorruption reforms in by a broad range of different actors—including uni- Central and Eastern Europe versities, consulting companies, individual contrac- tors, and divisions within national governments and By Bryane Michael international organizations. Elsewhere, I have estimat- ed the global market size of anticorruption work to Since the start of transition in the early 1990s, cor- be at least $100 million, making anticorruption an ruption has been increasingly referred to as one of the industry in itself—an industry in which Central and main problems Central and Eastern Europe has faced Eastern Europe is a valuable market niche. on the path to democracy.1 As shown in Figure 1, cor- As this article will argue, the anticorruption ruption was mentioned about 800 times in the world industry in Central and Eastern Europe has so far press in relation to the region in 1991, while in 2002, largely focused on ineffective and at times deleteri- these references grew by roughly 50 percent to 1,200 ous awareness raising, rather than building the citations.2 Although this increase can be attributed to capacity of relevant state and civil society actors, an the establishment of new publications and other fac- approach that should be the logical next step of the tors, there is no doubt that public awareness about movement. If the anticorruption industry is serious corruption in the region has grown. Some of the fea- about reducing corruption, the focus must shift tures of corruption in Central and Eastern Europe from awareness to implementation. reflect causes that can be found around the world— excessive participation of the state in the economy and inefficient mechanisms of public sector control. FIGURE 1: However, some causes of corruption in the region are Frequency of 1500 unique, such as opportunities created by transition Citations in that are attendant with privatization, enterprise World Press of 1200 restructuring, and poor corporate governance. While Corruption and 900 similar situations have arisen in developing countries, Anticorruption the scale of resource transfers involved in “transition” 600 (which was, until recently, widely understood to be the Measures transfer of resources from public to private hands) 300 has meant that some of the features of corruption Reports about corruption 0 present in Central and Eastern Europe are unique to ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 economies that were formerly centrally planned. In response to these escalating perceptions of cor- 150 ruption, international donors increasingly undertook 120 “anticorruption programs” (in quotes since problems related to defining an anticorruption program will be 90 discussed later on in the text). Looking again at Figure 1, one can see that there has been a six-fold rise in ref- 60 erences to anticorruption in Central and Eastern 30 Europe, from roughly 20 to 120 times. Many of these Reports about anticorruption 0 references discuss anticorruption programs undertak- ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 en in the region. These programs have been targeted at almost all levels of the state and population— including the civil service, municipalities, politicians, customs officials, police, judges, investigative journal- 1 I will not discuss in detail the former Soviet Union countries as ists, legislators and their staffs, international civil ser- this region has economic and political factors which make it (increasingly) different from Central and Eastern Europe. Bryane Michael, of Linacre College, can be contacted at: 2 This simple nonrigorous illustration was conducted by per- [email protected]. The author would like to forming a Lexis-Nexis search on corruption and Eastern thank Larry Perez for his assistance with this article. Europe for the period 1991-2002.

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Awareness raising ruption programs raise public awareness (by getting in Starting around the mid-1990s, international assis- the media), and the awareness of the target trainees, tance on anticorruption reform was focused on about the harms of corruption and methods to fight “awareness raising,” in what I have termed the “first corruption. Such awareness raising—as demonstrated wave” of the anticorruption movement. Table 1 by the increase in references to corruption and by the shows some of the main areas of anticorruption fact that corruption is no longer a socially and politi- work and lists some of the countries in the region that cally verboten topic—has succeeded. have undertaken anticorruption activities. In the The increase in public awareness about anticor- region overall, a number of antibribery and anticor- ruption is also due to the growing institutionalization ruption laws have been passed. In several of the of local, regional, national, and international anticor- countries, supporting legislation affecting areas most ruption programs. As shown in Table 1, such institu- vulnerable to corruption, such as procurement or tionalization consists of the establishment of public public finance, have also been passed. Yet, despite the offices—such as corruption prevention councils and passage of laws, enforcement appears weak. In anticorruption agencies—as well as the diversion of Poland, the Open Society Institute (2002) finds that existing ministerial and quasi-public staff (and bud- “the increase in scandals and the public profile of cor- getary resources) toward anticorruption programs. ruption have been the result of media activity rather Such institutionalization is usually either justified or than an increase in the effectiveness of institutions of abetted by the establishment of a “holistic” or “inte- prosecution and enforcement.” (396) These anticor- grated” national anticorruption program, where rep- resentatives of different parts of the government and society meet together to “coordinate” a national anti- corruption strategy. TABLE 1: Raising Awareness To promote public awareness as well as the “inte- through Anticorruption Activities gration” of these programs, “civil society” organiza- tions are often involved. In many cases, civil society ANTICORRUPTION EFFORTS COUNTRIES representatives sit on the anticorruption council Laws such as Delna (Transparency International) in Latvia Criminal Provisions in Law All or Coalition 2000’s participation in the national Pol- Procurement Law Czech Rep., Kosovo, Latvia, Lithuania, Poland, Serbia icy Forum in Bulgaria. Funding for these organiza- Freedom of Information Law Latvia, Poland tions, in most cases, comes not from the citizens they are meant to represent, but rather from interna- Institutional Framework tional donor organizations. While individual cases Corruption Prevention Kosovo, Latvia, Lithuania, Poland, Russia, vary, regionally, the lion’s share of funding and tech- Council/Group Serbia, Ukraine nical assistance comes from multilateral lenders, Public Administration Institute Czech Rep., Latvia, Lithuania, Poland, Russia, Ukraine such as the World Bank, and bilateral donors, such as the United States—either directly through USAID or indirectly through a range of U.S.-based private Types of Activities sector contractors and U.S.-based nonprofit organi- National anticorruption All zations. Germany, the United Kingdom, and the program Scandinavian countries also provide finance. These Administrative (civil servant) Czech Rep., Kosovo, Latvia, Lithuania, Poland, Ukraine donors help raise visibility through international training public awareness programs and booklets. The Open Municipal Czech Rep., Kosovo, Latvia, Lithuania, Poland, Society Institute has also played an important role in Russia, Ukraine this area—small at first but fast increasing. Politicians Czech Rep., Lithuania These awareness raising anticorruption programs, Customs training Czech Rep., Latvia, Lithuania for the most part, were not developed in Central and Police training Czech Rep., Latvia, Ukraine Eastern Europe but rather diffused from abroad. As Judicial training Czech Rep., Kosovo, Latvia, Lithuania, Poland, Ukraine Marquette (2002) documents, the World Bank, in col- Investigative journalism training Latvia, Lithuania, Russia, Ukraine laboration with Transparency International, first Legislative training Czech Rep., Latvia, Lithuania started work labeled as “anticorruption” in Africa Civil society training All and expanded in the mid-1990s. Drawing inspiration from the models the World Bank had been using, International cooperation All centered on national anticorruption programs and SOURCE: Michael (2004b). the use of surveys analyzing corruption perceptions, NOTE: These data are compiled from case studies and may not accurately reflect the full the first Central and Eastern European anticorrup- extent of anticorruption activities in the reported countries. tion programs were started. Within the Central and Eastern European region itself, several “leading” or

18 • SPRING 2004 INTERNATIONAL STRATEGIES: The rise of anticorruption

“pilot” countries, including Latvia and Poland, lic sector management and legal reform approaches, devised national programs in cooperation with the may have been over-rated.” Haarhuis and Leeuw World Bank. As anticorruption activity rapidly took (2002) find that the anticorruption training of the off, national anticorruption programs were devised, first wave was seldom used by participants.3 Donor mainly aiming to integrate activities into “holistic support—for better or worse—achieved its mission frameworks.” Other countries continued on an ad of raising awareness. Yet overall, results to date have hoc basis, while a third tier of countries, mostly locat- been less than ideal: Why? ed in South Eastern Europe, were beneficiaries of Anticorruption assistance has reflected the same “best practices” from other European countries. problems in foreign aid assistance throughout the At present, a range of donors is involved in anti- world. Anticorruption programs’ tendency to use corruption programs, either directly or indirectly, technocratic, generic and broad language has often through participation in anticorruption fora and net- meant little to people in the field and to the general works—including several UN agencies, like the Unit- public. For example, within the last year or two, the ed Nations Development Program and the Centre for phrase “anticorruption programming” has entered International Crime Prevention; the Soros founda- the anticorruption lexicon.4 The real question tions network and the Open Society Institute; the U.S. behind such dangerously overarching bureaucratic Agency for International Development; the Organisa- terms is whether anticorruption is being layered tion for Economic Co-operation and Development; within existing programs or whether it is a pro- the World Bank; and the Organization for Security grammatic area in and of itself. For some, anticor- and Co-operation in Europe, among others. To help ruption is a sphere of “governance” while for oth- make sense of the wide range of anticorruption pro- ers it is about “promoting transparency and grams, Table 2 attempts to classify anticorruption accountability” and “providing easy and equal access projects into “four schools of practice,” grouped to service delivery.” according to their strategy. Universal programs have Such language is usually present in policy recom- tended toward “big bang” type approaches, which mendations, such as the recommendations made by view society as a machine in need of “holistic reform” the Collaborative for Development Action (2002) as and “anticorruption programming.” State-centric pro- part of the Donor Standards in Anti-Corruption grams view corruption as mainly a state-induced mal- ady—and address it with targeted “technical” inter- ventions, such as public sector pay and employment TABLE 2: Anticorruption Schools of Practice reform, public sector financial system reform, and executive agency regulatory reform, among others. Focus ‘Society’ State Civil society ‘Power Society-centric programs see “civil society” as the institutions’ guarantor of government transparency and account- ability, and they seek to develop projects that increase What Mechanistic Government Social Epistemic public awareness about the negative consequences of programs reform reproduction contestation corruption, as well as methods of monitoring the public sector. Finally, critical practitioners reject the Examples Integrity Civil service Media, Critiques of whole notion of “anticorruption” and refuse to par- systems reform, schools, international budget NGOs, organiza- ticipate in these programs. (In my work, I encounter reform, cultural tions and an increasing number of these people.) There are no administra- institutions governments clear distinctions between schools of practice and tive reform supporting organization or recipient country. Donors and recipients in the region encourage and implement Some World Bank World Bank's Private Academics strategies from all four schools. Practitioners Institute, PREM, sector Donors and anticorruption Transparency SIGMA, EU, contractors, International private sector NGOs, Despite some promising results, anticorruption contractors universities assistance has generally not delivered the achieve- ments that were expected. According to Daniel Kaufmann (2003), “The usefulness of anticorrup- tion ‘campaigns,’ creation of new institutions or pas- Country Albania, Czech Bulgaria Varies sage of laws, as well as much of the traditional pub- Examples Latvia, Republic, 3 In a more general context, Anechiarico and Jacobs (1996) find Poland Hungary that excessive attention to anticorruption could create excess regulation, which impedes the functioning of the civil service. SOURCE: Author 4 I have traced the term to Bailey's (2000) policy paper for CIDA and subsequent adoption by OECD and USAID.

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Project (DSACP).5 According to the Collaborative, seen as the main obstacles to effective anticorruption “when donor conditionalities coincide with genuine reform. In the case of the importance of politics, the political will and commitment to thwart corruption, DSACP cited the cases of Georgia and Moldova and conditionalities provide additional incentive and astutely observed that the rich and well-connected in motivation to address the issue seriously.” What does postcommunist society are able to manipulate the that mean? While similar problems affect “social legislative process to keep corrupt systems that favor capital,” “knowledge management,” and “capacity their financial interests. Headline stories about cor- building” in Central and Eastern Europe, the lan- ruption and financial concentration in Czech privati- guage used by anticorruption experts tends to be zation, delays in Russian stabilization, and increasing understood only by a small community of experts divergence between the first and second tier acces- and is often rejected by those other societal actors sion countries are testimonies to such state capture. whom the experts want to reach. Accordingly, Hellman and co-authors (2001) have Such ambiguity and technical veneer has allowed argued that “the evidence suggests that improved the anticorruption agenda to become so broad that it property rights protection and civil liberties can sig- encompasses all parts of social, political, and eco- nificantly reduce the capture economy.” nomic life. The Annual International Anti-Corruption Yet, property rights regulation and the guarantee Conference represents one of the largest world pow- of civil liberties rely on the political process. Many wows of anticorruption practitioners. At the 10th donors fail to accept that government is political— annual event, held in Prague—focused on Central and acting as a fora for aggregating preferences, setting Eastern Europe—public sector topics included ethics, directions, and making policy. In the transition con- financial transparency, ombudsman’s offices, anticor- text, interest group politics are called “state capture.” ruption strategies, parliamentary oversight, contract- But in OECD countries, such relations might be ing and public procurement, law enforcement, police labeled as public-private partnerships or “synergy.” forces, judicial corruption, international investiga- The World Bank’s Anticorruption in Transition offers a tions, and local govern- dichotomy between state capture and administrative Ambiguity about the definition of ment. Private sector top- corruption. Yet, even the most junior civil servants in anticorruption means the term can ics included corporate Central and Eastern Europe will recognize the politi- encompass nearly every sphere of governance, risk man- cal element present in their daily work. agement, and regulatory The extent of donor-funded projects in anticor- social, political, and economic life. issues (accounting stan- ruption has led to repeated attempts to promote dards, export credits, donor coordination, collaboration, and use of “com- project finance, etc.). A broad set of issues were cov- parative advantage” between donors in the region. ered, ranging from media ownership and financial ser- Transparency International runs the Anti-Corrup- vices to sports and whistle-blower protection. tion Resource Centre, which focuses on Azerbaijan, These technocratic, generic and broad-based Bulgaria, Kazakhstan, Lithuania, Moldova, Russia, anticorruption strategies may be less benign than and Slovakia.6 The OECD runs the Anti-Corruption they look on paper. According to Polzer (2001), by Network for Transition Economies and the Stability hiding donors behind the guise of a technocratic and Pact Anti-Corruption Initiative (SPAI).7 The previ- apolitical approach, such language tends to minimize ously mentioned Collaborative for Development the implicitly political role donors play in recipient Action notes that “there are clear opportunities for countries. The donors offer holistic and integrated synergy between programs, and benefits to be “strategies” that on the whole tend to ignore the his- gained from coordination within donor agencies.” tory and development of institutions in different Yet, the value of such “comparative advantage” has countries. For example, in a critique of the World been questioned by Marquette (2001), who notes Bank’s ahistorical approach, Khan (2002) disagrees that, on the whole, donors continue programming that corruption has acted as a drag for development with a “business as usual” attitude. While the oppor- but instead argues that corruption and capitalism tunity to collaborate exists, the individual incentives have developed simultaneously. Aspects of the self- for donor organizations to do so are low. interested nature of aid have been widely covered by 5 According to their report, “The DSACP was launched in April Wedel (2001) who, as an anthropologist, has docu- 2002 in a collaborative arrangement between the OECD-based mented the self-serving nature of aid for both polit- Secretariat of the Anti-Corruption Network for Transition ical elites in the West and the East. No doubt that Economies, and the Collaborative for Development Action, the institutionalization of anticorruption work has (CDA) Inc. of Cambridge Massachusetts. During this time the DSACP conducted seven case studies in Georgia, Armenia, expanded the mandate and budgets of donors and Kosovo, Ukraine, Moldova, Tajikistan, and Bulgaria.” the project managers who work for them. 6 See http://www.transparency.org/acrc/index.html for more. Despite the donor’s apolitical approach to anti- 7 http://www1.oecd.org/daf/SPAIcom/index.htm and corruption, politics and state capture are increasingly http://www.anticorruptionnet.org/.

20 • SPRING 2004 INTERNATIONAL STRATEGIES: The rise of anticorruption

Fences make for good neighbors be aware of its harms, or that the region’s citizens are Donor organizations have repeatedly advocated for unsure of how to fight corruption, and should be civil society-led, “participatory” anticorruption given recommendations for action. Opponents of efforts in Central and Eastern Europe throughout awareness raising argue that increased “awareness” the second half of the 1990s. The success of the has simply created an atmosphere of cynicism Berlin-based international NGO Transparency Inter- which, amongst other effects, has made it more dif- national has certainly contributed to worldwide inter- ficult to fight corruption. est in corruption and the belief in the power of civil Proponents of awareness raising have spent a society to reduce its prevalence.8 On a budget of only large amount of time and resources on trying to EUR 6 million, the group manages an international quantify, measure, and correlate corruption. The network in the region (and around the world). Policy World Bank Institute, one of the leaders in the inter- changes within the international and bilateral donors national field, developed governance indicators that encouraging grant-giving to local NGOs have also allow for international comparisons, as shown in led to the establishment of a number of anticorrup- Figure 3. What’s more, with these indicators, the tion NGOs in the region, especially in Bulgaria, Bank has correlated corruption with civil liberties, Latvia, Poland, Romania, and Slovakia. In principle, civil service professionalism, rule of law, regulatory the involvement of civil society in both anticorrup- discretion, unofficial economy, press freedom, and tion strategy formulation and in monitoring govern- indicators of transition. These indicators are quickly ment can only help the anticorruption effort. catching up with the Transparency International Yet, looking at broad data, it is difficult to see a Index in citations. At the national level, data is col- correlation between civil society involvement and lected about perceived corruption in various min- transparency worldwide. Figure 2 compares the rank- istries and non-government entities. As shown in ings of countries based on their level of corruption Figure 4, health care is widely seen to be the most and their level of civil society activity. The black bars corrupt area in the Slovak Republic, while the army show how countries are distributed in the Trans- is widely perceived by officials, enterprises, and parency International Index, which gives a rating of households as the least corrupt. Does this mean that “9” to countries with little or no corruption and a rat- the health services really are the most corrupt? Or ing of “1” to countries with high levels of corrup- rather that they are simply perceived as the most cor- tion. The gray bars show how countries are distribut- rupt—perhaps for reasons other than the actual fre- ed based on a measure of civil society activity, with quency of corrupt practices in that sector? countries rated “9” having a high amount of civil Proponents of awareness raising have also used society activity and those rated “0” having a low art and popular culture. At the 10th Annual Anti-Cor- amount. The civil society measures were obtained by rescaling an index developed by Anheier and Stares FIGURE 2: Transparency in (2002). The chart indicates some connection between civil society and transparency, but the relationship an International Perspective appears weak. It is hard to say how important civil society participation is in reducing corruption. Most 30 descriptions of civil society anticorruption programs TI Index talk about activities undertaken rather than concrete 25 outcomes. Moreover, much of the “evidence” relat- Civil Society index ed to the effectiveness of civil society comes from 20 civil society representatives. And, because NGOs live 15 off of donor and government funds, not only are there incentives to exaggerate the effectiveness of 10 NGO anticorruption activity, but incentives also exist 5 to design programs sanctioned by donors rather than the citizens who make up “civil society.” 0 % of countries in each range 9 8 7 6 5 4 3 2 1 0 Unintended consequences of awareness raising (high) (low) The goal of the international donors and interna- TI Transparency/Civil Society index ranges tional civil society organizations like Transparency International during the first wave of anticorruption was to raise awareness. Should this have been the goal? In support of awareness raising, proponents 8 Transparency International has prepared a civil society argue either that Central and Eastern Europeans do report; see http://www.transparency.org/toolkits/2002/ for not know corruption is bad, and therefore need to some measures “civil society” has taken.

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ruption Conference, an art exhibit featured visual arts, photography, literature competitions, documentaries, FIGURE 3: Control of Corruption in CEE and theater performances. Cartoons depicting cor- ruption scenes have been a long-time favorite of anti- corruption activists. Although these may be put to 100 good use, there is an ever-present risk of oversimpli- fying a complex issue. For example, a series of car- 80 toons depicting classic instances of bribery and the reasons for not participating in corrupt deals were 60 used in an anticorruption campaign promoted by the OSCE in the run-up to recent elections in Bosnia and Herzegovina. The cartoons provoked widespread 40

CENTILE RANK protests by locals, who said the international commu- nity misread their level of knowledge on the topic. PER 20 Ivan Krastev (2003), director of the Centre for Liberal Strategies in Sofia, is one opponent of aware- ness raising. For him, such quantification campaigns 0 are “the new anticorruption science,” where attempts are made to quantify the unquantifiable—the risk

OECD being that wide-ranging policy decisions will be made

East Asia based on public perceptions, which he sees as policy South Asia irrelevant information. Krastev rejects the pejorative

Eastern Europe normative evaluations used by international donors

Subsaharan Africa and argues that citizens in the former East Bloc tend Former Soviet Union to use corruption as a means for voicing dissatisfac- tion with transition and their leaders, rather than as a Middle East & North Africa Latin America & Caribbean reflection of actual experience. On the whole, one might argue that donor-led SOURCE: Kaufman et al (2003) awareness raising has heightened public perceptions of corruption and therefore made fighting corrup- tion so much the harder, since it has contributed to FIGURE 4: Perceptions of Corruption in Slovakia people losing trust in their leaders.9 The Collaborative for Development Action, working with the OECD, also finds evidence of excess awareness raising with- in donor programs themselves, noting that “perceived Officials Enterprises Households corruption within donor agencies seems to be partly 80 a function of the level of resources a donor provides: S 70 larger agencies are a more frequent subject of gossip 60 and are more often cited for a lack of transparency in how they make their decisions about resource alloca- 50 tion” (italics in original). 40 How effective has anticorruption been in the region? Those attempting assessments include the

GE OF RESPONDENT 30

A OECD (2003) and the World Bank (2000). These 20 evaluations are academically useful but operationally CENT 10 in vain. The aid world’s mentality of act and evaluate

PER must change—and transition countries must be 0 responsible for their own anticorruption programs.

Army Anticorruption’s second wave Justice Customs

Education If Central and Eastern Europeans want to take the Parliament Health Care

Public Media driver’s seat in their anticorruption programs, they will need to move from awareness raising toward skills and capacity building. At the risk of using a medical

Local Self-Government analogy, they must move from just recognizing symp- SOURCE: World Bank and USAID (2000) 9 While Krastev does not argue it, at the extreme, excess aware- ness raising could cause the same legitimation crises which Holmes (1993) claimed helped undermine Communist rule.

22 • SPRING 2004 INTERNATIONAL STRATEGIES: The rise of anticorruption toms to providing treatment. And just like in medical tional level, the U.S.-based Center for International training, one-day or one-week training workshops are Private Enterprise has made some valuable contri- not sufficient—such training often takes years. butions—including looking at the role of corporate Already the contours of a “second wave” of anticor- governance in reducing corruption and working in ruption are in the making. In Table 3, I tried to high- delicate areas, like Serbia and the Caucasus. At the light the apparent differences. national level, the Integra Venture has provided a In the first wave, anticorruption plans tried to locally-grown business model for working on private “integrate” various programs—often lacking a long- sector development and reducing corruption.11 term vision or strategy for fighting corruption. Coor- Although policymakers are ambivalent about the dination, the adoption of legislation, and the acquis role of global investment funds, portfolio allocation communautaire, along with donor assistance, are all decisions have often been more powerful than all the absolutely necessary.10 But much anticorruption “pro- conferences in the world in promoting government gramming” in the region still depends on donor fund- transparency and accountability. In our world, ing (Michael, 2004b). Anticorruption agencies should money still talks. move from simply coordinating activities to thinking Investigative journalism will also be a priority in about strategy, which means that they should develop the next wave of anticor- the capacities needed for them to have a policy and ruption. In anticorruption’s research element. As for the international donors, first wave, most of the Portfolio allocation decisions have they are going to have to prove that integrated strate- attention was focused on often been more powerful than all gies work, or abandon supporting them and focus on teaching investigative jour- the conferences in the world in that crucial capacity building phase. nalists, but they could not promoting government The work of the National Institutes and Schools always practice their profes- transparency and accountability. of Public Administration in Central and Eastern sion, due to excessive media Europe (NISPAcee) represents one example of concentration and inappro- training using Central and Eastern Europeans. The priate regulation. In the second wave, attention must NISPAcee covers areas such as politico-administra- be placed on addressing media concentration. tive relations, public sector quality, preventing cor- Reporting figures on media is perilous, as ownership ruption in public administration, democratic gover- and commercial patterns change rapidly. Yet, foreign nance of multiethnic communities, public sector ownership has increased owner concentration of the finance and accounting, e-government, and public Central and Eastern European press, according to health management and policy. While the NISPAcee the European Federation of Journalists (2003). certainly has its drawbacks (including reliance on Looking only at European print media, Passauer external finance), this network has created a stable Neue Presse (PNP) is an important player in Prague institutional structure dedicated to bringing aca- and Moravia, sometimes having 100 percent owner- demics and practitioners from the region together. ship stakes. Westdeutsche Allgemeine Zeitung Institutions such as the NISPAcee should lead the (WAZ) has a dominant position in Bulgaria, Croatia, second wave of anticorruption. and Hungary (and has a stake in two Romanian news- Surprisingly, business-focused anticorruption papers). Axel Springer Verlag is a major player in was conspicuously absent during most of the first- Hungary, Poland, and Romania, while the Swiss pub- wave awareness raising activities. The OECD Con- vention on the Bribery of Foreign Officials in Inter- national Business Transactions is an important step TABLE 3: Comparison between First and Second toward addressing business-led corruption. But the convention does not address inter-country corrup- Wave Anticorruption tion, nor does it build capacity in these countries. 1ST WAVE 2ND WAVE Government-business relations throughout Central and Eastern Europe have distinctive regional pecu- TIME PERIOD 1990s 2000s liarities: For example, the state used to be an impor- FOCUS Awareness raising Capacity building tant participant—and still is in the case of Poland. RECEPTION Copy Customize Work on corporate governance tends to focus on activities within the firm, rather than at the nexus IMPLEMENTATION Homogeneity Heterogeneity between public and private sectors. At the interna- MAIN ACTORS International Multiple national organizations and local 10 Lindsey and Dick (2002) are especially hard on the World organizations Bank, claiming that their “post-Washington Consensus” attempts to engage in anticorruption amount to new attempts SOURCE: Author at “social engineering.” 11 http://www.integra.sk/index.htm

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lisher Ringier has important stakes in Romania, Slo- They should desist from engaging in “program- vakia, the Czech Republic, and Hungary. Although ming” exercises redolent of the “big push” and foreign owners may, in principle, be less subject to “unbalanced growth” campaigns of the 1960s. They local political and economic pressures, their particu- should also desist from encouraging Central and lar interest in reporting on corruption could well be Eastern European countries to pass unenforceable jeopardized due to market concerns—resulting in an laws. Finally, while it would be a mistake to deny the “awareness raising” type of approach rather than dif- importance of “peer pressure effects” or the power ficult high-quality investigative journalism. of information, donors should desist from assessing Catch the wave and reassessing these countries and let Central and Eastern Europeans evaluate their own programs. If the first wave of anticorruption helped to consol- International and national NGOs will also face idate knowledge about anticorruption and resulted challenges in anticorruption’s second wave. To date, in a wide range of universally applicable models, the Transparency International has pioneered a number second wave will need to rely on Central and East- of initiatives in a number of areas, such as its Bribe ern Europeans developing their own knowledge. Payers Index, the Corruption Perceptions Index, The fact that anticorruption programs in the region Global Corruption Report, the IACC, Art for Trans- can be easily classified, as in Table 1, suggests that parency, and, very importantly, its Transparency there is too much “isomorphism” (what social scien- Integrity Awards. They offer an effective and cheap tists call copying). Publica- “business model.” Yet, if Transparency International tions like the World Bank’s Anticorruption will need to become is to move away from awareness raising toward gen- Anticorruption in Transition uine capacity building in the transition economies, it a field rather than a hodgepodge and the best practices gen- will face many challenges. Organizationally, senior of activities, a field run by and for erated by donors bring Transparency International management will need to Central and Eastern Europeans. together many insights into decide on a role for Berlin (and London) and its var- Countries in the region should be fighting corruption in the ious chapters. This includes allocating finances and wary of Western nostrums. region. However, much of risk between the headquarters and chapters. As local this information recom- chapters of the organization start to threaten real mends Central and Eastern financial interests, Berlin may be compelled to bear European countries follow advice that has not been some of the political and economic risk. Berlin will shown to work so far and, worse yet, is not “falsifi- also have to eschew awareness-raising workshops and able” in the sense that “holistic” models are often provide real training to develop the financial, human too complex to definitively be proven wrong. resource, and managerial skills of its Central and If Central and Eastern European countries Eastern European chapters. become responsible for their own anticorruption strategies and programs, the international organiza- Conclusion tions will have to find new anticorruption “markets.” To be clear, despite my attempt to present a balanced In Central and Eastern Europe, they will probably assessment of anticorruption in transition, I unam- have to refocus their activities around their “core biguously support the efforts of the donors and competencies” and “comparative advantages.” For international civil society organizations, such as many of the donors, running civil society workshops Transparency International, in working on anticor- is not one of their core competencies. Given the ruption in Central and Eastern Europe. When I resource costs in these organizations, local experts started working in the region, corruption could only might be cheaper and more qualified. If the donors be indirectly referred to as the “c” word. Donor-led have a role to play, it can be providing deep “mar- awareness raising encouraged an almost unfettered kets” for local organizations to work on corruption discussion of corruption. Yet, there is no denying through grant competitions. The World Bank has that the anticorruption industry in the region (and played a pivotal role in encouraging innovation and globally) has profited enormously during the leadership in anticorruption, and their mandate and 1990s—and learned many important lessons along resources should be increased (provided this is not the way. Anticorruption will need to become a field spent for the most part on report writing and data rather than a hodgepodge of activities, a field run by collecting). The SPAI has usefully engaged in a Small and for Central and Eastern Europeans. Central and Grant Program for civil society organizations. Eastern European countries should be critical of Donors should desist from recommending “inte- Western nostrums and pre-designed anticorruption grated strategies” that Central and Eastern Euro- programs as expertise and tacit knowledge drive the pean countries are unable and unwilling to follow. second wave of anticorruption efforts.

24 • SPRING 2004 INTERNATIONAL STRATEGIES: The rise of anticorruption

BIBLIOGRAPHY Sentiments in Transition. Downloaded from the Anechiarico, F. and J. Jacobs (1996). The Pursuit of World Wide Web on October 15th, 2003. Avail- Absolute Integrity: How Corruption Control Makes able at: http://www.wiiw.ac.at/balkan/files/ Governments Ineffective. Chicago: University of Krastev.pdf. Chicago Press. Ledeneva, A. (1998). Russia’s Economy of Favors: Blat, Anheier, H. and S. Stares. (2002). Introducing the Networking and Informal Exchange. Cambridge Uni- Global Civil Society Index. In H. Anheier, M. versity Press. Glasius, M. Kaldor. (Eds.) Global Civil Society. Lindsey, T. and H. Dick. (2002). Corruption in Asia: Oxford: Oxford University Press. Rethinking the Governance Paradigm. Federation Bailey, B. (2000). Anti-Corruption Programming Ques- Press. tions and Strategies. CIDA. Marquette, H. (2002). Politics & the World Bank’s Anti- Cassagne, J-C. (2002). Anti-Corruption Measures in Corruption Program. Paper prepared for the Work- South Eastern Europe: Civil Society’s Involvement. shop on Anti-Corruption and the Transfer of OECD. Standards in Central and Eastern Europe. Collaborative for Development Action. (2002). Prague. 21-23 March 2002. Donor Standards in Anti-Corruption Project Marquette, H (2001). Bilateral Donors and Anti-Corrup- (DSACP): Final Report (Narrative). September. tion Work: The Myth of Comparative Advantage. Available at: http://www.anticorruptionnet.org Paper presented at the Leeds University Center /acncgi/user_side/projects.cgi?lang=en&site_ty for African Studies (LUCAS) Seminar Series. pe=graphics&come_from=projects&search=1 November. &project_search=by_theme&theme_id=425# Michael, B. (2004a). The Globalization of Anti-Cor- European Federation of Journalists. (2003). Eastern ruption Policies: The Diffusion of Best Practices Empires: Foreign Ownership in Central and Eastern and the Role of Knowledge Management. In European Media. Available at: http:// David Levi-Faur and Eran Vigoda (Editors). Pub- www.ifj-europe.org/pdfs/MedconJune2003.pdf. lic Policy and Public Management in a Globalized Haarhuis, C. and F. Leeuw. (2002). Fighting Corruption: World. (forthcoming). Evaluating Impact and the World Bank Institute’s Pro- Michael, B. (2004b). Preventing Corruption in Public gram Theory. Paper presented at the IPMN Con- Administration. Council of Europe. (forthcom- ference on ‘The Impact of Managerial Reform ing). on Informal Relationship in the Public Sector’, OECD. (2003). DAC Network on Governance. Syn- Siena, Italy, 26-29 June 2002. June. thesis of Lessons Learned of Donor Practices in Hellman, J., G. Jones, and D. Kaufmann. (2000). Fighting Corruption. Meeting on 1-2 July 2003. Seize the State, Seize the Day: State Capture, Cor- Available at: http://www.u4.no/document ruption, and Influence in Transition Economies. /showdoc.cfm?id=61. World Bank Policy Research Working Paper 2444. Open Society Institute. (2002). Corruption and Anti- Holmes, L. (1993). The End of Communist Power: anti- corruption Policy in Poland. In Monitoring The corruption campaigns and legitimation crisis. Oxford: EU Accession Process: Corruption And Anti-Corrup- Oxford University Press. tion Policy. Available at: http://ftp.osi.hu/ Huther, J. and A. Shah. (2000). Anti-Corruption euaccession/2002_c_poland.pdf. Policies and Programs: A Framework for Evalu- Open Society Justice Initiative. (2003). Evaluation of ation. World Bank Working Papers 2501. Anti-Corruption Initiatives. Available at: Kaufmann, D. (2003). Rethinking Governance: Empirical http://www.justiceinitiative.org/projects/ac/ac_ Lessons Challenge Orthodoxy. Available at: eval http://www.worldbank.org/wbi/governance/ Polzer, T (2001). Corruption: Deconstructing the pubs/rethink_gov.html World Bank Discourse. Development Studies Institute Kaufmann, D. A. Kraay, and M. Mastruzzi. (2003). (DESTIN) Working Paper. London School of Governance Matters III: Governance Indicators Economics No. 01-18, December. for 1996-2002. Available at: http://www. Wedel, J. (2001). Collision and Collusion: The Strange worldbank.org/wbi/governance/pdf/govmat- Case of Western Aid to Eastern Europe. St. Martin’s ters3.pdf Press. Khan, M (2002). Corruption and Governance in World Bank. (2000). Anticorruption in Transition: A Early Capitalism: World Bank Strategies and Contribution to the Policy Debate. Their Limitations. In: Reinventing the World Bank. World Bank and USAID. (2000). Corruption in Slo- Pincus, J. & Winters, J. (eds). London: Cornell vakia: Results of Diagnostic Surveys. Available University. at: http://www.worldbank.org/wbi/governance Krastev, I. (2003). A Moral Economy of Anti-Corruption /pdf/guide_pdfs/slovrep44.pdf.

SPRING 2004 • 25 LOCAL GOVERNANCE BRIEF DAC report details lessons of donor anticorruption efforts advocacy are now shifting into direct action. An OECD study of donor (2) Donor agencies, including the International experiences points out Financial Institutions (IFIs), have made a number of efforts to protect grant and loan funds from some success stories corruption. At the same time, there is a growing realization that protecting donor funds is of lim- and best practices ited use unless sustainable changes are made to the systems and institutions of partner countries. Compiled by David Hayhurst (3) Harmonization of procedures, sector-wide In June 2003, the OECD Development Assistance approaches, greater focus on poverty reduction Committee’s Network of Good Governance (GOV- and untying are presenting new challenges to NET) and Capacity Development released an exten- accountability. sive report, Synthesis of Lessons Learned of Donor Prac- (4) There has been a shift away from traditional con- tices in Fighting Corruption. This study was commis- ditionality to more collaborative approaches. sioned to review recent donor experiences and (5) A significant amount of evaluative work on cor- lessons about what works or does not work when ruption will become available in the near future. attempting to fight corruption in developing coun- It will be important to pause and reflect on the tries. The lessons are intended to assist GOVNET in lessons that emerge. (Page 6) improving donor effectiveness in fighting corrup- Few unambiguous success stories tion and in improving collaboration between all part- The report stresses that “it is important to be aware ners. (See Page 5 of the report.) that there are few success stories or examples of The report describes a number of intermediate actually reducing corruption in a sustained way. The success stories and emerging lessons in the global only clear-cut successes have been in Hong Kong anticorruption campaign. Lessons covered include and Singapore, both city-states that had fairly specific areas, such as main- authoritarian governments when they initiated their streaming; more technical The report notes that “most donors anticorruption efforts. They are also special cases, areas, like procurement, are financing programs ... to and it is debatable how much these examples apply oversight agencies, financial to other countries.” (Page 6) address the issue of corruption” administration, customs On a more encouraging note, the study also and says the fight against reform, etc.; efforts to deter- emphasizes that “there may be better lessons to be corruption “is at a crossroads.” mine proper approaches, learned from countries like Botswana, Chile and like defining the role of civil Costa Rica that for some time have had relatively society organizations; partic- decent track records.” There do also appear to be sev- ipatory approaches; stakeholder involvement and the eral interesting localized experiences, primarily in development of policies; pacts, tools, and toolkits. Latin American cities, some of which are quite large. At a crossroads However, “of concern is the extent to which many of In the report’s estimation, the fight against corrup- these localized efforts can be sustained.” (Page 18) The tion “is at a crossroads.” The current struggle con- report also cites Transparency International (TI) find- sists of at least five dimensions: ings on success, albeit modest, in some anticorruption (1) The advocacy movement has been both important initiatives, in particular Central and Eastern European and successful in drawing attention to the issues, government bodies, including EU accession coun- opening up the debate, mobilizing resources, tries’ banking systems, the Hungarian Customs Ser- developing analytic tools, and deepening knowl- vice, and the Estonian Audit Office. (Pages 18-9) edge and understanding of corruption. Many of Intermediate accomplishments the civil society organizations (CSOs) involved in The assessment is decidedly more upbeat about posi- David Hayhurst, [email protected], a Paris-based tive intermediate developments, especially in terms of freelance journalist, compiled this article on the basis of the greater international understanding of what consti- report entitled: Synthesis of Lessons Learned of tutes corruption and the development and use of Donor Practices in Fighting Corruption. diagnostic tools. “Along with greater openness, and

26 • SPRING 2004 INTERNATIONAL STRATEGIES: DAC report on anticorruption partly as a consequence, our understanding of the vide information and insights that more quantita- nature and causes of corruption, along with strategies tive surveys do not. and specific ways to fight it, has mushroomed. Recog- • The information from surveys, when combined nition of corruption, as a symptom of poor gover- with participatory approaches to discussing the nance or as a serious developmental problem in itself, results, have been very useful in identifying and is far more widespread today than even 10 years clarifying issues; identifying allies and opponents; ago—in large measure because of the leadership of building stakeholder commitment and alliances; the World Bank. [See Marquette article on Page 3 of this developing action plans; and building local capaci- publication.] These factors have created a willingness to ty to carry out such surveys. commit more resources to the topic, and this in turn • There are also concerns about short-term prob- has permitted a more rigorous examination and lems and the longer-term usefulness of surveys. demystification of some of the issues and biases. This These include failure to be clear about who the increased rigor has, in turn, helped to disaggregate survey is intended to serve; misuse of survey some of the issues and possible solutions.” (Page 19) results for political and other purposes; the cost Emerging lessons in understanding corruption and effort of surveys, which may be over-elabo- rate; failure to build sustainable local ownership; The report offers some telling observations about lack of follow-up; replicability; and the difficulty certain limitations inherent in the way in which the of maintaining survey results locally. (Page 21) vast majority of anticorruption approaches empha- size the role of civil society. The drawbacks revolve The interplay between broad economic, political around the status quo approach of “largely seeing the and social issues and corruption state as the body that implements anticorruption poli- Turning attention towards the broader aspects of the cies. Clearly an understanding of how the state func- environments in which corruption can thrive, the tions in reality (not how it should), including the report examines aspects of privatization and market inheritance of post-colonial regulatory and control liberalization; economic growth; international trade; mechanisms, the roles of powerful quasi-public and foreign investment; the role often violent (e.g., mafia, military) organizations, of the private sector; “With greater openness, and partly powerful ‘crony’ capitalists (often part of political and regional initiatives, etc. as a consequence, our military networks), neo-patrimonial élites and other It finds that “there is networks, as well as class interests, are important. now fairly strong empirical understanding of the nature and “Several authors argue that state and civil society evidence that the process of causes of corruption, along with in many African and Asian countries are not separate successful economic devel- strategies and specific ways to domains struggling for dominance. For them, the opment reduces corruption fight it, has mushroomed.” basis for entrenched corruption is mainly the lack of considerably in the long —DAC Report distinction between public and private. … [S]ome run, but little in the short French political scientists working in Africa see neo- run. How this works is still patrimonial élites as the main profiteers of not clear. Therefore, policies that boost growth are widespread corruption who have little political will likely to reduce corruption in the long run.” As the for reform. The authors are pessimistic about the report’s authors note, “the policy implications of sustainable effects of institutional and administrative these studies are somewhat discouraging. Policy reforms.” (Page 19) decisions in themselves have little significant impact Do surveys provide truly valuable information? on corruption, or else work painfully slowly. Democ- ratization does not have statistically noticeable The DAC report also provides an extensive analysis effects until it has lasted for decades.” (Page 22) on lessons and questions that have recently emerged regarding surveys and the nature of information Decentralization’s effects on corruption they can provide. Some examples include the fol- The majority of related studies suggest that links lowing: between corruption and decentralization, and the • TI’s Corruption Perceptions Indices (CPI), includ- potential for decentralization to reduce corruption, ing its Bribe Payers Index, have played an extreme- are not straightforward. Many examples can be cited ly important advocacy role in raising the level of (e.g., in Indonesia) where government decentraliza- debate about corruption. Many, however, do tion has, at least in the short run, only decentralized object to perception-based surveys, and particular- corruption. On the other hand, there are examples in ly their usage when making international compar- the Philippines and other countries where corruption isons. TI itself acknowledges that the CPI index in local and city government is being reduced on what has serious limitations for tracking changes over seems to be a sustainable basis, despite relatively time. Others find perception-based surveys pro- endemic corruption at the national level.

SPRING 2004 • 27 LOCAL GOVERNANCE BRIEF

Civil society involvement OECD Anti-Corruption Network for Transition Civil society organizations typically work at fighting Economies case studies corruption at local, national, and international levels In parallel with the DAC study, the OECD’s Anti- in a variety of ways. Programs are occasionally under- Corruption Network for Transition Economies also taken by CSOs working alone, but efforts are increas- commissioned a series of case studies on transition ingly collaborative. In terms of lessons emerging with country experiences. The studies, which are called regard to both CSOs and members of the donor Towards Donor Guidelines on Anti-Corruption Assistance community, the DAC report found the following: and were not published as of press time, are aimed • Unexpected and unusual alliances have been created at producing recommendations for donor standards between NGOs and other CSOs, including the pri- in fighting corruption. The studies focused on vate sector and, sometimes, the police and army. developments and attitudes in Armenia, Bulgaria, • The anticorruption activities of many CSOs are Georgia, Kosovo, Moldova, Ukraine, and Tajikistan. shifting from advocacy and awareness-raising to The case studies revealed that: specific, focused activities (e.g., researched advocacy • The role of donors, in general, was perceived quite on legislative and regulatory negatively by many participants. There were fre- The DAC report found that the change, action plans, pro- quent references to donor corruption in the sense World Bank, in particular, is curement and other moni- of donor agencies or countries directly or indi- working much more closely with toring, and development of rectly contributing to corrupt practices or benefit- ing from their unique situations. civil society as part of its approach toolkits). This is due to a combination of factors, • There was very little differentiation between to fighting corruption. including establishment of donors and their roles. The very different roles of TI chapters in many coun- the major lending institutions, bilateral donors and tries, greater CSO concern about governance and various non-governmental organizations were not corruption, and funding criteria of donor agencies. well understood. • Approaches are changing. More “frontal” approach- • Considerable doubt was expressed about the utili- es are evolving, with increasing emphasis on effi- ty and effects of awareness-raising efforts, includ- ciency and transparency as the entry point, accom- ing training of journalists. This is consistent with panied by more collaborative approaches. observations from other countries: Awareness • There are numerous examples of the positive role raising has an important role to play, but depends played by the media, particularly when it works as on the specific situation and the stage of reform. part of a coalition. There are also numerous exam- • Several participants noted the failure of donors, ples of various ways in which the media can be including donor countries and international CSOs, intimidated and controlled. to make adequate use of local knowledge. • A number of CSOs have demonstrated that they • Concern was also expressed that donor assistance can play an effective role at the local level, even had created a new industry of CSOs that focus on when endemic corruption still exists at the nation- anticorruption and governance. Those cited in the al level. study said they were concerned that these new • Donor attitudes in relation to working with CSOs organizations have variable motivations and dubi- are evolving. The World Bank, in particular, is ous sustainability. working much more closely with CSOs as part of • Survey participants reconfirmed observations their approach to building coalitions. from many studies that corruption is “context- But the report also noted an ongoing systemic specific”; preconditions are highly variable and weakness: “There is very little formal evaluative there is no single correct approach—either at the work by either CSOs or donors.” (Pages 35-6) macro level or at a more project-specific level.

28 • SPRING 2004 CASE STUDIES Freedom of information laws promote honest government whether the introduction of the law will reveal the Citizens exercising their type and scale of corruption that will result in expo- right to know can force sure of significant fraud: Does transparency actually authorities to behave in a result in saving taxpayer’s money? more transparent manner Success in Mexico The Mexican freedom of information (FOI) law, By Helen Darbishire which came into force in June 2003, requires that certain information, including detailed budgets, be Anticorruption advocates often talk about the impor- published automatically by all bodies covered by the tance of transparency in rooting out and preventing law. Such automatic publication requirements are corruption. Freedom of information advocates com- typical of the new genera- monly maintain that laws granting access to informa- tion of FOI laws. One of For those who want proof that FOI tion are essential tools in the fight against corruption. the bodies covered by the laws work, there is the Mexican Some skeptics would argue that these are mere new Mexican law is a pub- mantras of civil society activists. They would say it is case, where a new law helped save licly funded university taxpayers $40 million in 2003. unrealistic to expect the passage of an access to called the National Poly- information law to result in the disclosure of infor- technic Institute (Instituto mation that will expose corrupt practices or wrong- Politecnico Nacional—IPN), whose recently doing. It seems reflective government secrecy and appointed director seized the opportunity of the deliberate attempts to hide compromising informa- new law to back up his efforts to combat the status tion will prevent petitioners from obtaining govern- quo of corruption and nepotism typical of the Mex- ment-held documents of any consequence. But real- ican education system. In September 2003, the IPN life case histories give evidence to the contrary. opened its payroll to the public, knowing full well the At the time of writing, 52 countries around the scandals that would ensue: One professor whose world had freedom of information laws. In all, 40 of official salary was 60,832 Mexican pesos (around these laws have been adopted since 1992, and 20 were $6,000) had received from the public purse, com- adopted since the turn of the new millennium (2000- pletely illegally, an annual compensation of 782,502 2003). These new laws are only just getting up and Mexican pesos ($78,000). Another mid-ranking running, but already thousands upon thousands of employee had received 567,855 pesos ($57,000), or information requests are being filed by the public in 10 times her official salary. The IPN’s archives countries where government secrecy had previously revealed letters from its directors to the head of been the norm, and corruption had flourished behind human resources requesting bonuses that had no closed doors. Much important information about the legal basis and often exceeded the basic salary of the inner workings of government is being released. Pub- employee. The director of public relations, for lic knowledge of administrative processes and citizen example, had been awarded a bonus of 254,358 participation in decision-making is increasing as a pesos ($25,000) on top of his basic salary. result. The question is whether there exists any evi- In addition to over-inflated salaries, the IPN’s dence that these laws are also directly contributing to budget revealed suspiciously high spending on goods the fight against corruption. and services—for example, one budget line for An important test of freedom of information “bags” came to a total of 4 million pesos ($400,000). laws as a tool against corruption is to establish The clean-up operation by the IPN’s new director not only resulted in the dismissals of the worst Helen Darbishire, [email protected], is senior pro- offenders but, perhaps more importantly, in the sav- gram manager for freedom of information and expression ings of public funds: an estimated 400 million pesos, with the Open Society Justice Initiative. or $40 million in 2003. Mexican activists also report

SPRING 2004 • 29 LOCAL GOVERNMENT BRIEF

that the pressure is now on other public education Program for legal assistance, and an administrative institutions to open up their accounts to similar appeal was filed. scrutiny. In response to this appeal, the ministry claimed Even where political will is lacking, the potential of that no information could be disclosed to the freedom of information laws to save public funds has requester because the relevant documents had been demonstrated. In Japan, private lawyers used already been transferred to the State Archives and local-government-level access to information laws to were no longer in the possession of the ministry. The force the release of reports on the expense accounts Access to Information Program then turned to the of local government officials. These reports revealed director of the State Archives, requesting informa- huge line items for entertaining visiting bureaucrats at tion about documents received from the Ministry of top restaurants, with multiple beer and sake rounds. Science and Education. The State Archives respond- As a result of the revelations, between 1995 and 1997, ed that the last documents sent from the ministry to Japan’s 47 prefectures cut their food and beverage the archives were dated 1991! When this information budgets by the equivalent of more than $100 million. was presented in court, exposing the lie, the minister’s Civil society use of FOI laws lawyer conceded that in fact no contract had been signed for renting the public lobby to the private A striking feature of the global wave of new free- company. Although no criminal prosecutions or res- dom of information laws is the major role played by ignations have yet resulted from this exposure of civil society organizations (CSOs) in the enactment wrongdoing, it is a good example of how civil soci- of the new laws. This is particularly true in emerging ety can hold government accountable by reducing the democracies, whether in space in which it is possible for corruption to occur. In Canada, in June 2003, the head Eastern Europe, Latin In developed democracies, where public opinion of the new gun registry office America, Africa, or Asia. carries greater weight, the disclosure of such scandals CSOs have lobbied parlia- routinely leads to public officials being forced to resigned after citizens’ groups ments, presented draft leg- used FOI laws to obtain expense resign from their posts. In a recent example from islation, carried out public Canada, in June 2003, the head of the new gun reg- records showing he had spent awareness campaigns, gar- istry office resigned under pressure after citizens’ $205,000 on 56 airplane tickets. nered international atten- groups obtained his expense records using the access tion, and kept the pressure to information law. The records showed that he had on governments until the spent $205,000 on 56 airplane tickets, commuting new law enters into force. Not only are these laws from his home in one part of Canada (Edmonton) to democratic tools, but they have come about as the his office in another (Ottawa). Such developments result of democratic processes. have a precedent in Canada: In a case from the 1980s, Civil society organizations that were behind the a government minister was forced to resign after the movement to introduce freedom of information laws media used the Access to Information Act to reveal are now active in promoting their implementation, by that she had spent five days in Paris at public expense filing requests for information and, where necessary, to attend a one-hour meeting. The potential conse- going to court to challenge refusals to provide infor- quences for politicians when such scandals are mation. A typical example is the Access to Informa- exposed by citizen watchdogs is a powerful mecha- tion Program, a Bulgarian NGO which provides legal nism for discouraging abuse of office. advice and support to a wide range of organizations, including anticorruption groups. Ousting a corrupt president The Access to Information Program runs a hot- In some instances, the use of access to information line and provides legal assistance to members of the to public records has brought down corrupt regimes. general public, some of whom have also used the A recent example is the work of the Philippines Cen- Bulgarian Access to Information Law to expose cor- ter for Investigative Journalism (PCIJ), which in 2000 ruption. One such citizen is Ivaylo Ganchev, who, in began a major investigation into the personal wealth early 2003, was passing through the Ministry of Sci- of then-President Joseph Estrada. The PCIJ reports ence and Education when he noticed that a private that “the coffee shops were already buzzing with talk company was displaying its advertising banners in the of fancy mansions being built for presidential mis- lobby. Suspicious of the circumstances in which this tresses and of Estrada taking cuts from various busi- public space was being used for private commercial ness deals,” but no serious investigative journalism reasons—he suspected links between the minister had been done to substantiate the rumors. and the owners of the company—he filed a request The PCIJ’s work included painstaking research in for documents relating to the rental of the lobby. areas where the allegations were most likely to be When the ministry failed to provide him with this linked to documentary evidence: the acquisition of information, he turned to the Access to Information real estate and the formation of companies by mem-

30 • SPRING 2004 CASE STUDIES: Access to information bers of Estrada’s family. Although the Philippines does not have an access to information law, the PCIJ was able to use the combination of existing laws and What is an FOI law, precedents to access this information. The PCIJ’s story is nevertheless indicative of the and how does it work? problems facing investigative journalists in the Typically, a freedom of information law will: absence of full access to information laws: To get cor- • establish a presumption that all information held by the public should be accessible; porate registration records at the Philippines Securi- • establish that all persons, regardless of whether they are cit- ties and Exchange Commission (SEC), researchers izens, can request information; had to start lining up at the SEC office as early as 7 • set out a narrowly defined set of exemptions on disclosure, a.m. Moreover, each researcher was allowed to access such as harm to national security or protection of personal pri- only three corporate records a day. This became par- vacy; ticularly time-consuming as searches using SEC com- • establish a balancing test for weighing exceptions against puters yielded 66 corporations in which the president, democratic, public interest in releasing the information—for his wives, and various children were listed as incorpo- example, in order to expose corruption and wrongdoing or vio- lations of human rights; rators, board members or substantial shareholders. It • set out the mechanisms for accessing information—for took the PCIJ more than two months to obtain the example, by filing written, oral or electronic requests with the records of all these corporations. relevant authority; After putting together the evidence, the PCIJ • specify that no reasons have to be given as to why the infor- gradually identified 17 pieces of real estate, many of mation is being requested; them exceptionally opulent mansions, often regis- • establish time frames for providing the information—the tered in the name of shell corporations formed by Justice Initiative has calculated that the average time under close associates of the president. The journalists then 34 laws around the world is just over 15 days; • require authorities to reply to all requests and to provide interviewed residents, building suppliers, and interior reasons if information is to be refused; designers, to get an estimate of the vast sums of • require authorities to appoint information officers and/or money expended on these buildings, and also to con- establish public offices where people can go to ask for infor- firm the presence of the president and his mistresses. mation; As the articles about the mansions gradually • establish appeals mechanisms for challenging refusals to appeared in the media, the journalists received infor- provide information; mation from an ever-more engaged and outraged • require authorities carrying out public functions to publish public, including anonymous tips through phone proactively certain standard information, such as annual reports and accounts, details of policies, and decisions taken; calls, e-mails, documents, and photographs. The con- • require authorities to keep track of FOI requests and make nection between these properties and the president this information public—for example, through an annual report seemed to be just the tip of the corruption iceberg. to parliament or another supervisory body; As the momentum of the anticorruption cam- • possibly establish a special body that hears challenges to paign built up, the mainstream media increasingly refusals and promotes government compliance with the FOI covered these and other revelations. When the law, such as an ombudsperson or information commission. Philippines House of Representatives eventually While not all FOI laws contain all of these elements, many voted to impeach the president, three of the reports of the new generation of laws are of a high standard and do genuinely provide for access to information. by the PCIJ were cited in the debate. Private interest and public interest Further Information: For those interested in finding out more about the right of A principle of the right of access to information, access to information, a few key websites are: which is enshrined in many of the new laws, is that Open Society Justice Initiative: www.justiceinitiative.org those who request information do not have to state Freedominfo.org: www.freedominfo.org their reasons for doing so. (See box at right.) In some FOI Advocates Network: www.foiadvocates.net cases, as in the work of the PCIJ, the requests will be Global Map of FOI laws: www.privacyinternational.org motivated by public interest goals. In other Article 19: www.article19.org instances, private individuals may use access to infor- For some examples of national FOI campaigns and anti- mation laws for personal reasons; but this too can corruption work, check: lead to the exposure of wrongdoing, which can in Access to Information Program, Bulgaria: www.aip-bg.org turn have a wider public benefit. Libertad de Información, Mexico: www.limac.org When the Chilean gas company Gasandes Commonwealth Human Rights Initiative: www.chri.org received a concession from Chile’s energy regulator Parivartan, India: www.parivartan.org (the Superintenencia de electricidad y combustibles) Philipines Center for Investigative Journalism: www.pcij.org to build a gas pipeline from Chile to Argentina, it took the liberty of also building a telecommunications line

SPRING 2004 • 31 LOCAL GOVERNANCE BRIEF

alongside it, something it could later sell for millions active use of the right to expose the misuse and of dollars. According to a law, Gasandes should have squandering of public funds. In 2003, activist obtained a concession for this from the telecommuni- Qaneez Sukhrani requested the audited accounts of cations regulator, and, given the for-profit nature of the Pune Municipal Corporation for the past five the telecommunications line, should have increased years. Although she only received the accounts from the level of compensation paid to the landowners 1998-1999, these exposed numerous irregularities, over whose property the pipelines were running. including failures to collect a range of fees and taxes Hence, by not complying with the law, Gasandes was from construction companies and banks. The saving money due both to the public purse and private accounts revealed, for example, that the Maharashtra landowners. All this was done in secret. State Electricity Board, which had been receiving A landowner with only a few kilometers of land compensation in order to charge educational institu- traversed by the pipelines became suspicious as to tions concessional rates for power consumption, had what was actually going on, and she used the rela- in fact been billing municipal schools at the com- tively limited access to information provisions of mercial rate. Publication of the accounts and ensu- Chilean law, which are part of the probity law, to ing newspaper articles have increased the pressure seek documents that would verify the existence of a for the authorities to act, as well as to release the telecommunications line. After six months of wait- audited accounts from subsequent years. ing for information, the landowner hired a public The role of FOI advocates and litigators interest lawyer to sue both for the documents and for a judicial declaration that the electricity regulator It is clear from the above case studies that, in many was failing to ensure com- instances, information relating to corruption does not pliance with other aspects enter into the public domain automatically as a result Access to information laws do not of the probity law. As a of access to information laws, but rather that the laws guarantee that the truth about result, the regulator investi- are a valuable tool that can be used to dig up the infor- corruption will become public, but gated the problem, fined mation necessary to expose wrongdoing in govern- they are a useful tool for those who Gasandes $20,000, and ment and misappropriation of public funds. The oft- want to expose these truths. ordered it to put in order cited inverse correlation between levels of trans- the legal status of the parency and levels of corruption only comes about pipelines. The regulator was when activists make use of the tools available to them. also ordered by the court to publish on its website all That means both requesting information and building the relevant documents, thereby ensuring that not advocacy campaigns around this information to chal- only the litigating landowner but also all others lenge corrupt practices. The examples in this article affected could be aware of the situation. show that this can be done and is being done. At the same time, it is clear that far greater use Defending social and economic rights of the poor could be made of the excellent opportunities that The right of access to information is not, and should FOI laws offer to anticorruption activists and citizens’ not be, a right exclusively for educated and wealthy groups. It is true that, in the early years of the imple- elites, investigative journalists, and those who can mentation of freedom of information laws, litigation afford to pay lawyers’ fees. Many civil society groups is often necessary to secure access to documents are working to make use of the new laws to empow- requested. The experience from a number of coun- er ordinary people, so that they can assert their rights tries where the Justice Initiative is working—countries and defend themselves against corruption and abuse such as Bulgaria, Georgia, Slovakia, Mexico, and of power, particularly at the local government level. Peru—shows that the more the laws are used, the One of the most famous cases of the use of more often that public interest litigators win cases, access to information to defend the rights of the poor and the more the media publicizes the existence of comes from the Indian state of Rajasthan, where local the right to ask for information, the easier it becomes government officers were diverting funds destined for to secure requested documents. Now that the initial development projects. (See story, facing page.) The per- obstacles have been overcome in many countries, the sistent demands for information by Rajasthan civil task of the right to information movement is to pro- society groups and villagers came in the absence of an mote use of the newly established mechanisms in access to information act and resulted in the passage order to secure information necessary for the defense of a state-level law, as well as contributing to the cam- of other human rights. paign for the adoption of the federal legislation. The author would like to thank the following for infor- Since the passage of India’s Right to Information mation used in this article: Issa Luna Pla, Ernesto Vil- Act in 2002, and the adoption of other state-level lanueva, Tom Blanton, Charmaine Rodrigues, Gergana laws, Indian human rights groups have been making Jouleva, Nikolay Marekov, and Juan Pablo Olmeda.

32 • SPRING 2004 CASE STUDIES: Access to information Citizens benefit from mass demand for freer information In their quest for fair wages, marked present and their pay recorded as given, and thumb impressions that prove receipt of payments a workers’ group in India were found to be forged. Most tellingly, public works unveils government exploitation like roads, though never actually constructed, were marked completed in government books. Mazdoor Kisan Shakti Sanghatan (MKSS), a work- Though many villagers were illiterate, through ers’ and farmers’ solidarity group, is based in face-to-face public hearings they could scrutinize Rajasthan, one of India’s least developed states. In complex and detailed the course of their efforts to get fair employment accounts, question their conditions for daily wage earners and farmers in the representatives, and make After the local movement exposed region, MKSS workers realized that the government them answerable on the corruption, Rajasthan legislators was exploiting villagers. Not only were they being basis of hard evidence. denied minimum wages, they were also not receiving were convinced that they needed a Local officials reacted right to information law. benefits from government-funded developmental badly. Determined to activities earmarked for the area. undermine the people’s Under the slogan “Our Money-Our Accounts,” campaign for accountability, they appealed to class, MKSS workers and villagers organized themselves caste, and clan loyalties—and even resorted to to demand their local administrators provide them threats and violence. But the campaign persisted and with an account of all expenditure made in relation eventually was successful in getting local officials to to development work sanctioned for the area. In the admit to corruption. Some officials returned misap- absence of a legal right to access the records, local propriated public funds and, in one case, an arrest officials, long used to holding villagers in thrall and was made for fraud. Following this success, more never being questioned, dug in their heels and and more people mobilized to hold similar hearings, refused to provide the documents. MKSS resorted and this reached the state capital as a demand for an to peaceful mobilization to increase the pressure to access to information law. Public pressure grew as release copies of official records, organizing sit-ins, the local and national media covered the campaign public demonstrations, and hunger strikes. While extensively. The government eventually issued there was resistance at all levels, little by little, as the administrative orders implementing the right to get pressure continued and the media began to take copies of local records. The main opposition party notice, the administration relented and eventually promised in its manifesto to create a state-level law provided the information requested. that would guarantee the right to access information. MKSS used the information disclosed to organize Once in power, the party took three years to bring “social audits” of the administration’s books. They the law onto the books—and only after further organized public hearings to see if the information in advocacy and input from MKSS and the National the government’s records tallied with the reality of the Campaign for People’s Right to Information—but villagers’ own knowledge of what was happening on Rajasthan now has a right to information law. the ground. Not surprisingly, it did not. At each pub- An additional outcome of the work by MKSS in lic hearing, a description of the development project, Rajasthan has been the institution of the concept of its timelines, implementation methods, budget and public audits carried out by reading documents out outputs would be read out along with the record of loud. In a recent exercise, this approach was used to who had been employed, how long they had worked correct the electoral register in Rajasthan. A major and how much they had been paid. Villagers would task, it nevertheless proved to be one of the most effi- then stand up and point out discrepancies—dead cient ways of updating the register, and it resulted in people were listed, amounts paid were recorded as 7 million changes, in a state with a population of 57 being higher than in reality, absent workers were million. This oral approach to access to information is This case study, supplied by the Commonwealth Human effective in areas with low literacy and rural popula- Rights Initiative, was compiled by Helen Darbishire, senior tions that are not used to operating with written program manager for freedom of information and expression records. The approach provides a model that activists with the Open Society Justice Initiative. ([email protected]) in other developing countries are now considering.

SPRING 2004 • 33 LOCAL GOVERNANCE BRIEF Global Witness sees corruption’s impact on rights and resources

resources in funding conflict. The campaign showed The organization has done that the trade in “conflict” diamonds had generated pioneering work to expose US $3.7 billion for the UNITA rebel movement, one economic abuses that fuel side in Angola’s long-running civil war, which had seen over 500,000 people die in just five years. poverty and conflict A consumer awareness campaign followed in By Corene Crossin November 1999, and then a detailed report called Conflict Diamonds was released in May 2000. This In a world increasingly shaped by global market report, advocating an international import and export trends and economic interdependence, there is a control regime, became the template for the diamond remarkable deficit in international cooperation and certification system established by the Kimberley Pro- commitment to tackle the root causes of desperate cess in January 2003. As a result of helping bring poverty and violent conflict. The non-governmental about this reform, Global Witness Limited was joint- organization Global Witness has pioneered research ly nominated for the 2003 Nobel Peace Prize. and thinking on the links between the exploitation of Today, the diamond team is closely involved in natural resources and the funding of conflict, human monitoring the implementation of the Kimberley rights abuses, and corrup- Process in order to ensure that the link between the tion. Global Witness has legitimate diamond trade and rough diamonds is final- Global Witness investigated grown from the three con- ly broken. The campaign also continues its pioneering Al-Qaeda’s involvement in corrupt cerned individuals who investigative work into abuses of the trade, recently international diamond trading. founded Global Witness exposing how terrorist organizations fund their oper- Limited in 1993 to a full- ations from diamonds in the report, For A Few Dollars time staff of 36, based in More: How Al-Qaeda Moved Into The Diamond Trade. three offices. The organization has its headquarters in Global Witness has continued to break new London, with offices in Cameroon and Cambodia. ground on the issues of natural resources, corrup- Global Witness began by investigating links tion, and conflict. Natural resources are often seen between timber and conflict in Cambodia. Using as crucial to the economic growth of countries in secret cameras and posing as timber buyers, Global the process of development. But, contrary to expec- Witness exposed how the genocidal Khmer Rouge tations, natural resource wealth usually does not ben- guerrillas in Cambodia, and Thai logging companies, efit the general population. Instead it is misused by had established a US $10-20 million trade in tropical officials. This can happen because institutions and timber, with the complicity of the Thai government companies involved in resource extraction in devel- and the military. Global Witness’s international lob- oping countries often operate non-transparently. bying and media campaign resulted in the closure of Global Witness’s oil campaign aims to improve the Thai-Cambodia border and the cutoff of the the transparency and governance of revenues from funding the Khmer Rouge needed for their war the oil sector. Governments of resource-rich devel- effort. This work was integral to the final break-up oping countries often do not provide information of the Khmer Rouge 18 months later. about revenues from resources, and multinational Diamonds fund violence extraction companies rarely publish information about payments to governments. As a result, billions In 1996, Global Witness turned its attention to of dollars are lost to impropriety and embezzlement. researching the role that diamonds played in funding Global Witness’s work on oil transparency is not violent conflict in Angola. The ground-breaking being framed as an antibribery campaign. Rather, it report A Rough Trade was released in December attempts to bring regulation to key markets where 1998, launching the second Global Witness cam- capital for oil extraction is raised. Global Witness paign. The report focused the world’s media spot- helped found the Publish What You Pay (PWYP) light on the issue of conflict diamonds—and set a campaign, a coalition of over 180 NGOs calling for new agenda for governments, industry, and the gen- governments, especially among the G8, to take lead- eral public to address the exploitation of natural ership and promote transparency in resource revenues Corene Crossin, [email protected], is a mem- worldwide. The coalition is calling for regulators to ber of Global Witness. require resource extraction companies to report their

34 • SPRING 2004 CASE STUDIES: Access to resources net payments to all governments as a condition for up the military junta and regional warlords. The being listed on stock markets. The PWYP campaign report, A Conflict of Interests: The Uncertain Future of has already influenced the establishment of a major Burma’s Forests, details how massive environmental international policy initiative by the UK government, destruction and resource liquidation threatens called the Extractive Industry Transparency Initiative Burma’s economic and ecological future. It also dis- (EITI), which is currently exploring ways to promote cusses the concept of resource colonialism, initially transparency and wise use of oil, mining, and gas rev- touched upon in Global Witness’s research in the enues worldwide. Revenue transparency was also a DRC. Here it concerns the keystone of the G8’s action plan on tackling corrup- use of Burma’s resources The Global Witness Burma tion and promoting government transparency. by China, where China is campaign analyzes the role Successful work on forestry issues purposefully conserving its of timber in propping up own resources to avoid fur- Global Witness has a track record of success in ther environmental degra- the military junta and warlords. forestry issues. Since 1995, the organization has pio- dation. Global Witness’s neered campaigns that focus on illegal logging, research and monitoring work seeks to reduce forest instead of regarding forest exploitation as a purely destruction in Burma by monitoring and investigat- environmental issue. Global Witness forestry cam- ing the extraction, processing, and trade of Burmese paigns include investigations into illegal logging and timber—to assess the scale of these operations in “conflict timber” in Burma, Cambodia, Liberia, and financial terms and gauge their social, ecological, and the Democratic Republic of Congo (DRC). These economic impacts. campaigns, and cooperation with other NGOs to Global Witness continues to grow and develop push forest issues up the international agenda, have new areas of research: It recently began the new “i2” been highly successful. The European Commission is and Conflict Trade Accountability campaigns, and considering a ban on importing illegally sourced tim- an extensive project in the DRC. ber, and the United States has just launched a presi- The i2 campaign, fully funded by the manufactur- dential initiative against illegal logging. er of intelligence software i2 and USAID, will input In addition, the government of Cameroon and the vast and varied information from all the existing the British Department for International Develop- campaigns into one central database. It is hoped that ment asked Global Witness to establish a forestry this database will enable thorough analysis of avail- monitoring project in 2001. As an independent able information, exposing any hidden trends. Global observer in support of Forest Law Enforcement, Witness currently suspects that as few as 150 individ- Global Witness works to report on government uals and organizations are responsible for the majori- achievements in monitoring and to bring increased ty of corruption and conflict in Africa and Asia. transparency to the forestry sector. The Conflict Trade Accountability campaign Global Witness has led an international campaign uses the outputs from the individual campaigns to on “conflict timber”—timber that is traded in a way tackle generic issues of trade, the mechanisms of that drives conflict. A key example is Liberia. Since money laundering, state looting, and trade in conflict 2001, the Liberia Campaign has worked to investi- commodities. The intention of the Conflict Trade gate, expose, and end the historical role of the Liberi- Accountability campaign is to identify the key actors an logging industry in fuelling corruption, human in some of the conflicts and corruption found in rights abuses, and conflict in Liberia, Sierra Leone, Africa and Asia. It seeks to have individuals and and Cote d’Ivoire. Investigations exposed the role of companies indicted and their assets frozen. some elements of the logging industry in arms deal- Global Witness began looking into resource ing, weapons imports, and direct support of foreign exploitation in the DRC in late 2001, when investiga- rebel groups. Moreover, research into logging indus- tions into Zimbabwe’s role in the conflict led to the try revenues has revealed that the tens of millions of report Branching Out: Zimbabwe’s Resource Colonialism in dollars that go unaccounted for every year are used Democratic Republic of Congo. In 2003, Global Witness to perpetuate conflict and enrich a corrupt elite. Such commenced work on an in-depth project of natural work led to the July 2003 timber sanctions placed on resource governance and conflict in the DRC for the Liberia by the UN Security Council. While the polit- UK’s Department of International Development. ical landscape in Liberia is changing, Global Witness Natural resources are often seen as crucial to the is still working to ensure that Liberia’s nascent peace economic growth of countries in the process of is not undermined by the resumption of a logging development. The work of Global Witness demon- industry that continues to support weapons imports strates that, unless natural resources are effectively and facilitate regional destabilization. governed and used for the benefit of all citizens The Global Witness Burma campaign, launched rather than an elite minority, it is the citizens of Third in 2003, also analyzes the role of timber in propping World countries who will continue to feel the burden.

SPRING 2004 • 35 LOCAL GOVERNANCE BRIEF Civic watchdogs try to put the bite on crooked politics Activists in Slovakia and sion lost the public’s trust and, in the end, was forced to tighten the existing party regulations by introduc- elsewhere find that efforts to ing moderate sanctions and a requirement to publish keep an eye on pre-election a basic audited statement on finances, as well as a yearly list of donors. expenditures can prove to be This was very little to start with. Whether or not effective in fighting corruption the statements were published is difficult to deter- mine, since no one checked or analyzed them, nor By Zuzana Wienk did state authorities enforce the law. The media con- tinued publishing random allegations of corruption Civic monitoring makes good use of pre-election or the misuse of public posts. The following years periods, when candidates are supposedly the most confirmed that the interests of the media range too conscious of their media image. While the collection widely, and their capacity and economic power is too and management of hard data can sometimes prove weak to serve as a watchdog that would not only difficult, civic monitoring can be a powerful tool. It monitor the performance of state control authorities can influence the public perception of an issue and and political parties in greater detail but also persis- force politicians to respond. However, if the moni- tently offer new solutions. Thus, non-governmental toring campaign is not grounded in solid research organizations, which are respected for their capacity and long-term goals, its influence will not last. to focus on a particular issue, offered the only viable Slovakia provides a unique, but useful, case study. alternative. The first post-revolutionary political elite in Slo- Slovakia’s civic monitoring campaign was based vakia were messengers of freedom and ideals. No on two assumptions: one expected that these ideals could be betrayed. The • Without a permanent watchdog and active public earliest legal norms concerning political parties were debate, there are no incentives for politicians to liberal in spirit. In line with the pre-war tradition, change their behavior to be more transparent and political parties received complete privacy, with only responsible, nor are there incentives for them to a formal control mechanism tighten rules concerning themselves. in parliament. But the Non-governmental organizations, • Every representative democracy needs a strong civic power of a centralized gov- respected for their capacity to focus society, decentralization of power, and a functioning ernment over all public on a particular issue, offer the best system of checks and balances to be able to grow. affairs, especially the privati- When the Slovak branch of Transparency Inter- alternative for election monitoring. zation of state property, national, which cooperated with the author’s organi- fueled temptation, and the zation, came up with the idea to monitor the pre- media reported numerous accusations of political election expenditures of political parties, there had parties misusing public funds. Nevertheless, the legal been only a few similar efforts carried out by non- framework concerning political parties withstood the governmental organizations. Efforts in Argentina pressure and remained intact until the year 2000. were based on the theory that the large illegal From one ‘enemy’ to many resources that bedevil national economies must By then the situation had become untenable. The affect politics as well—and therefore must be one-time political “enemy”—the infamous Vladimír reflected in the expenditure of political candidates. Meciar—had been replaced. The opposition that The monitoring group in Argentina decided to mea- took over from him in 1998 was no more able to sure seconds of broadcasting time and centimeters resist the blandishments of state resources than its of advertisements bought by candidates and com- predecessor had been. The whole political profes- pare the results to data received from political parties on the basis of the so-called “transparency pact.” Zuzana Wienk, [email protected], works for the This approach, successfully tested in South Fair-play Alliance in Slovakia. The Fair-play Alliance is a America, wasn’t applicable in Slovakia. With a ban civic association, established in the year 2002, that seeks to on political television and radio advertising and strict serve as a permanent civic watchdog over the performance and limitations on print media and outdoor advertising finances of political parties. in the pre-election season, most of the political

36 • SPRING 2004 CASE STUDIES: Fair elections expenditure moved to the unregulated and uncon- coming years is addressing the question: How many trollable spheres of events/rallies, PR activities, and people do we represent and how can we increase that merchandising. number? The way we deal with this question can even Taking a qualitative approach determine if the country starts stagnating—and is unable to conclude reforms or prevent splits which The Fair-play Alliance in Slovakia decided to focus create yet more populist political parties—or finds an on the qualitative rather than quantitative analysis of inner power to let democracy form fully. pre-election campaigns. Although we counted the Activities such as civic monitoring have the centimeters of print media advertisements and the potential to attract public attention and create a number of billboards, events, and types of mer- foundation for long-lasting change, but they have to chandising products used, we discovered only minor have a solid methodology, effective implementation, discrepancies. Our main strength wasn’t in an imme- and long-term goals. They also shouldn’t create a diate response but in the long-term effect. We used small group of insiders with access to the financial data to show all the weaknesses of the existing legal data of political parties as a framework and state control mechanism. We collect- substitute for an indepen- The experiences of developed ed proof of more than two dozen companies that dent public control mecha- didn’t fulfill legal duties and haven’t been sanctioned. nism. Signing a pact with countries show that political We pointed out the lack of disclosure. We discov- political parties is useful parties strengthen rules ered cases of direct conflicts of interest and hidden when there are no disclo- concerning themselves only if donations and criticized the nonfunctioning mecha- sure rules. But it has to be abuses are exposed. nism. We analyzed the financial situation of political only a temporary solution. parties and suggested necessary changes. We based Every citizen ought to have our efforts on the assumption that only with this access to the same information about political par- approach can one act as a long-term watchdog ties, and it should be our goal to advocate for such whose know-how is not lost after the elections but is access as soon as possible. used for systematic reform. Civic monitoring also needs to stem from the Elections are viewed as an important decisive peri- specific requirements of every country. If some- od, when the political landscape is being influenced thing works in one country, it doesn’t necessarily for four years or even longer. Elections can expose mean that it will work in another. Everyone who weaknesses and undercurrents in a society, which is decides to monitor a pre-election campaign finds why they attract so much attention. But it shouldn’t be themselves under pressure to publish at least partial forgotten that it is during the electoral term that all the results when it matters the most—before the elec- weaknesses and undercurrents are formed. tions. This can be a double-edged sword. In Slovakia, with a constant number of political By monitoring political spending and serving as scandals, public frustration and apathy grow. The an active player before the elections, an organization independent control mechanisms, so vital to every will be dragged into a political fistfight. The results democracy, are either poor or nonexistent. The can be misquoted, misused, or manipulated, and the experiences of developed countries show that polit- implementing organization has to be prepared to ical parties strengthen rules concerning themselves deal with that. Our experience shows that it is best only if exposed. The media and active NGOs can not to surrender to pressure to publish results before point out mistakes and breaches of rules, and offer they are final. legal solutions, but they can only advocate and reach Monitoring political events, for example, is logis- the necessary changes with the help of the public. tically and methodologically difficult, and it can And the public has been our weakest link. never produce quick, quantitative results. We should Slovakia has only a small tradition of civic engage- not succumb to the attraction of publishing an exact ment in political issues. In a climate of public apathy number that could be used to convict political par- and the belief that there is no political alternative, ties of vast corruption or cheating when the facts NGOs have so far been unable to activate larger and arguments are not “waterproof.” We should groups of people to support and participate in their practice more patience and not jeopardize long-term activities. The biggest challenge for NGOs in the reforms for 15 minutes of fame.

SPRING 2004 • 37 LOCAL GOVERNANCE BRIEF Monitoring state neutrality during Peru’s local elections

An NGO launches a ence of party supporters at ceremonies that were held to inaugurate public projects. Additionally, the low campaign to prevent unfair support rates for the government party made the electioneering practices prospect of defeat very real. This could, it was sup- posed, lead to the government’s use of improper By Jorge Valladares methods to avoid defeat. TRANSPARENCIA also worried that almost 2,000 elections would be under- During Peru’s municipal and regional elections of way simultaneously,3 which multiplied the number of 2002, the TRANSPARENCIA Association set up a people with a direct interest in the electoral results. campaign to alter citizens’ traditionally tolerant and Strategy of the campaign permissive attitudes regarding the use of public resources during electoral campaigns. The aim was to TRANSPARENCIA’S campaign, called “No promote an active monitoring role to ensure state Democracy Without Vigilance: Be Vigilant!,” neutrality. Citizen committees provided public educa- involved the following six phases: tion and reported on the misuse of public resources. 1. Encourage the government to participate: The The campaign had an impact on the behavior of first move in the campaign was to encourage all gov- public servants, including electoral authorities, all the ernmental agencies responsible in the field of social way up to the president of the Republic. assistance to commit to adopting a neutral stance dur- ing the election campaign. Along with other organiza- The context tions, TRANSPARENCIA managed to enlist the sup- Although the use of public resources for the financ- port of 12 public authorities, among them ministers ing of electoral campaigns is not a new practice, never and heads of social programs, who on June 18, 2002 before the 2000 elections subscribed to the Compromiso por la Neutralidad y la had this method become the Transparencia (Commitment to Neutrality and Trans- Alejandro Toledo’s new main strategy for a govern- parency), whereby they guaranteed “the respect” of government was accused of ment’s reelection. That year, the public’s needs by maintaining “neutrality during practicing favoritism when the government of Alberto the electoral process.” This public act was the starting allocating public posts to party Fujimori dipped into public point in awakening and engaging the media, public affiliates—and tinting state acts funds to influence the elec- servants, candidates, and citizens on these issues. with the party’s colors tion.1 The main casualty was Two months later, the government enacted the the electoral process. Like- Instruction on Executive Neutrality and Transparen- wise, the government’s legit- cy (Directiva sobre Neutralidad y Transparencia del Poder imacy was compromised by this injustice.2 Ejecutivo).4 That’s why the most salient mission—and 2. Call for volunteers to form the monitoring achievement—of the transition government headed committees: TRANSPARENCIA set up a Unit for by Valentín Paniagua was to ensure that the 2001 1 Fujimori used social assistance programs, to gain votes general elections were conducted as transparently as among Peru’s poor, and public funds, to control the media possible. and finance the personal campaigns of his party’s candidates. If the 2001 elections were carried out in a manner Moreover, the armed forces were recruited to support his presidency. Additional information regarding electoral irregu- respecting state neutrality, why did the following year’s larities during the 2000 campaign can be found under: voting constitute a renewed concern? Alejandro Tole- TRANSPARENCIA, Una historia que no debe repetirse. Informe de do’s new government was accused of clientelist prac- Observación Electoral, (A Story that Should not Repeat Itself. tices. Indeed, he allegedly practiced favoritism when Electoral Monitoring Report), Lima, 2000. allocating public posts to party affiliates and literally 2 This original defect of Fujimori’s government generated an unprecedented institutional crisis that ended with Alberto tinted state acts with the Perú Posible party’s colors— Fujimori’s resignation of the presidency. Two days before this showing the party flag and including a massive pres- resignation, a video had been published showing the head of intelligence, Vladimiro Montesinos, handing U.S. $15,000 to a Jorge Valladares, [email protected], is coordi- member of parliament, to induce him to change loyalties. nator of electoral monitoring and political reform for TRANS- 3 The elections were to select more than 1,850 mayors and 25 PARENCIA, Peru, an election monitoring organization. regional presidents. This article was translated from Spanish by Isabel Barcia. 4 Decree 076-2002-PCM of August 9, 2003.

38 • SPRING 2004 CASE STUDIES: Fair elections

Report Reception (UAD, Unidad de Atención de essential to retain the public’s attention on the need Denuncias), which in turn called for volunteers to to ensure governmental neutrality. It also encouraged make up the monitoring committees. The UAD tar- members of the monitoring committees, who could geted citizens an members of other social networks see the fruits of their community labor. (educational, professional, parochial, etc.). It also dis- 6. Notify the electoral authorities of any irregu- tributed leaflets among citizens, social organizations, larities: The campaign was also designed to help and public entities and hung posters in streets, authorities ensure a clean election campaign. Sixty- squares, churches, markets, transport facilities, and five percent of the cases were accompanied by suffi- other public places all over the country. cient proof to merit official investigation and were As a result, 87 monitoring committees were estab- forwarded to the electoral authorities. lished in the same number of cities, with membership As the following examples show, this process did varying from five to 100 members. Each committee not invariably elicit the same reactions from these featured a coordinating team, to focus on team tasks. authorities. In all, 9,165 volunteers were recruited. Example 1. Massive voting population change in 3. Monitoring committee training: The commit- tees served as opinion shapers in their communities. Aguas Calientes (Macchu Picchu) They were responsible for receiving reports of irreg- Aguas Calientes had a total of 1,174 eligible voters ularities and proving or disproving the accusations. registered in June of 2001. One year later, the num- The committees used a manual on the monitoring of ber reached 2,131. In other words, the electorate neutrality in the use of public resources and an accu- grew by 82 percent. According to the National sation form. Statistics and Investigation Two months before the elections, five training Institute (INEI; Instituto Investigations indicated that most workshops took place in five large cities. Each work- Nacional de Estadísticas e new registered voters in Aguas shop brought together coordinators from 10 to 20 Investigación), however, Calientes came from nearby the normal annual increase monitoring committees. The trainings emphasized the villages and received a financial importance of citizen monitoring and demonstrated is about 2 to 3 percent. how a monitoring committee should discharge its The monitoring com- contribution from the mayor. responsibilities. With the participation of committees mittee informed the UAD from different cities, the workshops were a good place of these circumstances and worked together with the to exchange knowledge and experiences. judicial authorities on the case. The investigations Once the training was over, the committees went found that new voters had been entered in the regis- on to train the members of political organizations, ters under false addresses. A single building, for exam- public servants, and citizens. ple, (Pachacútec av., nº 109) was supposed to house 4. Consultancy to the committees and informa- 124 registered voters. The investigations showed that tion centralization: The UAD was in permanent most new registered voters came from nearby villages contact with the monitoring committees in order to and had received a financial contribution from the help them with whatever difficulties they encoun- mayor, José Isidro Soto Vera, who was also standing tered and to compile information on accusations. for reelection in Aguas Calientes. TRANSPAREN- Because these groups functioned on a voluntary CIA’s findings were reported to the Special Electoral basis, they had to rely on a telephone number that Court and to the office of the public prosecutor of enabled reversal of charges. The telephone number Urubamba. These authorities accused the candidate was published in the media and in TRANSPAREN- mayor, and a number of officials working at the CIA’s publications (for example, at the start of the National and Municipal Registry Office for Identity news bulletins on RPP, the main radio station). and Civil Status, of acting against the public interest. The UAD registered a total of 454 telephone The Special Electoral Court of Urubamba consultations and 115 documented reports of annulled the five voting tables that would have alleged irregularities. Of these reports, 82 percent received the votes of the “new electors” (Resolution came from inside the country and could be verified 359, October 17). The banned electorate saw their by the UAD. Once verified, the reports were passed identity documents taken from them, and the Nation- on to the local electoral authorities. al Electoral Court cancelled elections in that locality. 5. Long-term dissemination of the results of the Example 2. The leader of the governmental campaign: TRANSPARENCIA disseminated the party was an electoral official in Mellendo results of the campaign through its bulletin Datos Electorales (Electoral Information). This bulletin The monitoring committee of Islay (Mollendo-Are- became a working resource for journalists who, in quipa), coordinated by Omahar Torres Mendoza, turn, disseminated the bulletin’s information through found that Rosalía Huillca Hurtado, coordinator for media channels. This dissemination strategy was the Decentralized Office of Electoral Procedure

SPRING 2004 • 39 LOCAL GOVERNANCE BRIEF

(ODPE) of that province, had been a member of the Example 4. State propaganda favored Lima’s Perú Posible party until the previous March 3, when mayor and candidate for reelection she had stepped down. Huillca had also been deputy Alberto Andrade, as mayor of Lima and a candidate governor of Mollendo District until March 14. for reelection, twice compromised his duty to respect The ethics code of the ODPE officials, however, neutrality. On September 28, Lima and Callao’s forbids active membership in any political party four Autonomous Authority of the Special Project for the years before acquiring membership in the ODPE. Electric Mass Transport System published an Huillca had contravened this prohibition. announcement that the electric train would not charge TRANSPARENCIA informed the National users during the month of October. This act repre- Office of Electoral Procedure of these facts. With no sented a breach of the legal restrictions imposed upon answer from that body forthcoming, a special team state publicity during the electoral period. was sent out to seek a direct solution for the case. This prohibition was likewise disregarded on Rosalía Huillca resigned her place in the ODPE October 18 (one month before the elections were at the same time as the team was initiating its task, in due to take place), when the Metropolitan Municipal- effect putting an end to the case. ity of Lima issued a radio announcement informing Example 3. The president and his party were listeners of the opportunity to worship the Image of accused of proselytism in the inauguration of a the Señor de los Milagros, which is annually brought public project in Iquitos (Maynas-Loreto) out for its religious procession in the month of Octo- ber. The announcement was made by the Mayor On September 23 and 25, 2002, the president carried (who sang Criollo waltzes, a campaign strategy he out official duties in the city of Iquitos while in the often used ) and retransmitted by many stations, even company of Perú Posible’s candidate for the position after the religious worship had concluded. of regional president of Loreto, Patricia Donayre. Both events were reported to the electoral The president visited areas affected by a fire and authorities, but no corrective measures were coordinated the govern- imposed against the candidate. mental assistance that The Monitoring Committee of Islay was to be allocated to Conclusion found that an election official had the victims of the fire. Although it is indeed difficult to measure the results belonged to the ruling party, and Despite the fact that the of the No Democracy Without Vigilance: Be Vigi- the threat of further investigation candidate was not carry- lant! campaign as far as the voting preferences of the made her give up her job. ing out any official citizens are concerned, one can see some change with duties at the time, she regards to the development of a culture of vigilance accompanied the presi- within civil society. Never before had 9,165 citizens dent at all times. She carried campaign literature and taken part in monitoring the use of public funds. Nei- wore clothing that bore propaganda messages of ther had they ever received 67 documented cases of support for her party and her candidacy. Supporters alleged infraction of state neutrality. of the candidate also carried similar messages. The campaign allowed us to inform Peruvian cit- It had, in fact, become normal for the president izens and candidates, and, at least in some cases, we to be seen in the company of candidates of his own supplanted the services of local electoral authorities. party in inauguration ceremonies or during inspec- This shows the degree of confidence and legitimacy tions of sites of governmental construction pro- that society has given the monitoring work carried jects. Although the president himself made no elec- out by its citizens. toral campaign references, his actions were an obvi- This campaign, together with the observation ous sign of political support. exercises carried out in previous electoral contests, The monitoring committee charged that the pres- represents the most extensive and varied example of ident had breached his duty of neutrality and that the citizen monitoring to date in this country. Numer- Perú Posible candidate had made unacceptable use of ous state activities are currently being monitored by public resources. With these supporting arguments, citizens’ groups, which are also organized in the the irregularities were reported to the Special Elec- form of committees. toral Court of Maynas. The court decided to issue a In fact, the very committees that partially carried warning to Perú Posible regarding the actions of out the campaign are at this time keeping a watchful President Toledo and candidate Donayre. eye over the activities of their district congressmen The party appealed the decision before the and monitoring the implementation of social pro- National Electoral Court. But that court responded grams by their local governments. Furthermore, with resolution 752-2002-JNE, issuing a public warn- other organizations similar to TRANSPARENCIA ing and recommending the president avoid trips that have included monitoring by civil society as one of could appear to undermine governmental neutrality. the guiding principles of their work.

40 • SPRING 2004 CASE STUDIES: Reform and corruption Corruption in Kyrgyzstan: The cultural dimension While Westerners may view were fully aware of this problem, but their ways of enforcing law and order and fighting corruption ‘gifts’ to officials as bribes, were completely different. Russian administrators the concept translates demanded implementation of the laws and regula- tions but turned a blind eye to the shadowy area of differently in the Central “gift-giving,” nepotism, and conflicts of interest Asian experience among public sector employees. The situation changed during the Soviet era, By Rafis Abazov especially under Joseph Stalin’s leadership. The Sovi- et regime brutally enforced The Encyclopedia Britannica defines corruption as the law and promoted new “improper and usually unlawful conduct intended to cadres into state adminis- Russian authorities used to turn secure a benefit for oneself or another. Its forms tration positions in order to a blind eye to nepotism and include bribery, extortion and the misuse of inside fight corruption and nepo- conflicts of interest among public information.” In modern Western culture, corrup- tism. In an environment sector employees, but the tion and its key functional element, bribery, have where money had little situation changed under Stalin. clearly negative cultural and political connotations. market power, there was In the Central Asian context, however, the issue limited scope for direct is not so simple and straightforward. The Central bribery. However, lavish functions given by party Asian perception of corruption has been affected by and state officials became the norm, and they were historical experience and the present political and often promoted as a part of the national culture. economic environment. Another change took place in the 1970s and 1980s, with the relaxation of the most repressive fea- Can history provide a lesson? tures of the totalitarian system and with rising stan- One of the peculiarities of Kyrgyzstan’s experience dards of living. Among various developments, two with corruption in the modern era is that there was were fundamental. First, state and ruling party previously no legal or moral definition of the phe- bureaucrats, whose salaries were slightly above those nomenon. Until the 19th-century Russian coloniza- of ordinary people, realized that their political power tion of the country, Kyrgyz political and judicial and control of the state’s institutions and public institutions were very weak and often not separated goods put them in a position to regulate practically from other branches of power. Thus, legal issues any economic activity. Second, since there were no and government regulations were open to a wide mechanisms within the rigid Soviet legal system to range of interpretations, which in turn opened the create legitimate and acceptable market opportunities door to widespread abuses and misinterpretations of for entrepreneurial Central Asians, they became the law. widely engaged in the nonstate sector in order to feed In fact, many local governors (beks) were their large families (45 percent of Kyrgyz families appointed to head their districts and provinces (bek- had five or more children in 1979).1 liks) on purely nominal salaries. They were expected In an environment with no clear legal regulation to complement their incomes by soliciting “gifts” in of the nonstate sector, and where an enterprising the course of collecting taxes and enforcing the law. individual’s every step depended on the permission In this environment, the gifts and lavish parties for of state bureaucrats, lavish partying and gift-giving government officials became almost customary for became the only way to conduct activities outside anyone engaged in business activities, trade or inter- the state-controlled sector. Party and state bureau- pretation of taxation issues. Practically all laws and crats began patronizing enterprises, collective farms, regulations were only enforced after appropriate and retail outlets, creating vast patronage networks, “gifts” were offered. which interfered with tribal, community, and clan Both the colonial Russian and Soviet authorities networks. According to professor Sergei Poliyakov Rafis Abazov, [email protected], is a visiting scholar at the Harriman Institute at Columbia University 1 Abazov, R., Historical Dictionary of Kyrgyzstan. Lanham, Scare- in New York City. crow Press, 2003, pp. 213-214.

SPRING 2004 • 41 LOCAL GOVERNANCE BRIEF

of Moscow University, between 20 and 30 percent restrictions or avoiding the official tax code. of the Central Asian population was engaged in var- In recent times, however, this corrupt system has ious ways in the shadow economy. grown out of control and has begun to impose a The collapse of the Soviet economic system in heavy toll on the economic development of the 1991 and the introduction of market-oriented republic. In the first place, rampant corruption at reforms saw the legalization of private entrepreneur- the current rate undermines the country’s business ship. The consequent massive and rapid privatization environment by striking directly at the cornerstone of small retail businesses and services—a process of the market economy—open and fair competi- completed by 1996 in Kyrgyzstan—created a vast tion. This occurs when crony companies are grant- class of private entrepreneurs, who contributed up to ed privileged access to information, government 60 percent of the GDP. However, institutional contracts, tax breaks, and other advantages at the reforms lagged far behind. expense of others. An increasingly corrupt environ- According to the IMF and World Bank, Kyr- ment has long-lasting negative consequences, as oth- gyzstan was one of the leaders among the reform- ers compete by seeking their own underhand con- ing countries. Yet, for a decade, there were no clear- nections with corrupt politicians, moving to the cut tax regulations, and business activity regulations shadow economy, or investing in other countries or were so confusing that any step could break one law in offshore accounts. In the meantime, the country’s or another. In many instances, taxes were so high credit rating is dangerously low, as a significant pro- they could eat up 100 percent of the profits. As portion of the $1.4 billion in international assistance opposition newspaper Res Publica claimed: “lawless- and loans in the 1990s was wasted or appropriated ness became the norm.”2 In such an unclear regula- by corrupt politicians. tory environment, the only way to conduct business Secondly, governments began receiving signifi- was to bribe the state bureaucracy. The bureaucrats cantly less in tax revenues, as one of the primary were deeply demoralized by objectives of corrupt businesses was to maximize the IMF-endorsed steep their profits by minimizing their taxes. The oppor- Although it may be a controversial cut in public sector expen- tunity to avoid or underpay taxes is one of the most view, evidence from the field ditures, especially salaries, popular services corrupt politicians provide to their suggests that corruption actually due to the collapse of state cronies. With less revenue coming in, Kyrgyzstan’s played a positive role during the revenue. Throughout the government had less money to spend on various first years of transition. 1990s the official monthly social, educational, or infrastructure projects, or salary of the akim (head) of even on enforcing law and order. a district or province could This vicious circle undermined the business barely cover the cost of living for three-to-four days. environment throughout the country. It is little wonder that state bureaucrats again began Thirdly, corruption and an unattractive business to supplement their extremely low incomes through environment undermined economic growth. Kyr- a system of solicited gifts, given their power to inter- gyzstan, despite being the most advanced reformer pret the laws and regulations. Within a decade, cor- in Central Asia according to the EBRD classifica- ruption had become so rampant that in 2003, inter- tion,4 was the only country in the region to experi- national donors named Kyrgyzstan the most cor- ence economic decline in 2002.5 It is true that a rupt state in Central Asia and the Caucasus.3 combination of factors played roles in this negative Costs of transition development, but the unbridled corruption docu- mented in such opposition newspapers as Res Publi- Although possibly a controversial view, evidence ca and Moya Stolitsa increasingly contributed to the from the field, including personal interviews, sug- process. gests that the system of corruption in fact played a Fourthly, patronage and nepotism, which fuel positive role during the first years of transition. At corruption, bring further concentrations of wealth the initial stage, and at certain rates, culturally into the hands of a few, deepening the widespread acceptable “gifts” and payments allowed private poverty among large segments of society. (Between businesses to establish themselves in Kyrgyzstan 45 and 55 percent of citizens were classified as “very without the extremes of criminality seen in Russia. poor” in 2003.) This polarization dangerously desta- In an environment with no clear laws and regula- tions, the bureaucrats had applied common sense 2 “Bezzakonie slalo normoi.” Res Publica. 25 January, 2000. rather than imperfect laws or taxation codes. Many 3 “International Donors Say Kyrgyzstan most corrupt of the members of the business community would come poorest CIS states.” Local Government Brief. (LGI) Summer to admit that there existed an informal taxation code 2003, p. 69. for “help” in navigating through unclear regulations, 4 IMF World Economic Outlook, September 2000, pp. 180-183. speeding up registrations, circumventing various 5 IMF World Economic Outlook, April 2003, p. 41.

42 • SPRING 2004 CASE STUDIES: Reform and corruption bilizes the political environment and greatly reduces the example of the education and health care sys- the attractiveness of the country’s markets for inter- tems illustrates that the introduction of fees and national investors. payments has driven out most of the corrupt prac- tices that had involved people paying bribes in Policy recommendations exchange for free access to public goods. In addi- It has been widely said that hasty and murky privati- tion, the salaries of government officials should be zation, an ill-thought-out “shock therapy” approach transparent and increased significantly, so that tal- to market reforms, and the absence of clear and ented individuals will be attracted to work in the business-friendly regulatory mechanisms fueled cor- public sector for salaries, but not for opportunities ruption and harmed the transition process in the to extort bribes or gifts. transitional countries in general and in Kyrgyzstan in And finally, the existence of patronage networks particular. However, the paradox is that most of the should be addressed. This is the most difficult issue remedies against rampant corruption can still be to deal with, but practically found within existing market mechanisms, which all newly industrialized can be employed in combination with proactive countries of East and Introduction of fees for education measures by public institutions, independent media Southeast Asia have faced and health care are controversial, and NGOs and by public education campaigns. this problem before. The but now fewer people pay bribes in There are many controversial measures that gov- key problem is how to exchange for free access to ernments might adopt in order to curb corruption. make the business commu- public goods and services. One of the most controversial would be to declare nity powerful enough to be some form of amnesty on past privatization deals, independent of govern- or establish a system of largely symbolic penalties ment officials. The creation, development, and for some of the business activities of the early enforcement of regulations over the Korean chae- 1990s. The penalties would force business people to buls (corporations) might be an example to study. It acknowledge wrongdoing and pay fines, but they is true that large chaebuls abused their positions. would not be stripped of their businesses. Without However, in the course of tough competition this step, business people become hostages to selec- among themselves, they finally accepted that law and tive punishment for their political views or for not order were the foundations of a positive business giving away enough gifts, simply because they broke environment. the many imperfect laws of the past era. This is an important lesson: The business com- Another controversial step would be to intro- munity and ordinary people should realize that they duce clearly defined fees and tariffs for all govern- must act together to fight corrupt practices and cor- ment services. This is a politically difficult and rupt politicians in order to break the vicious cycle of unfortunate step in many poor countries. However, corruption in their country.

SPRING 2004 • 43 LOCAL GOVERNANCE BRIEF New approach makes it easier to gauge graft

on accountability and ethics-related issues. Beholden Global Access has set up to neither government nor corporate interests, it a database that allows provides people with information they can use to hold their government accountable. Over the past 13 for the creation of a years, the Center has published more than 225 inves- Public Integrity Index tigative reports on topics such as animal trafficking, contracting in Iraq, water privatization, telecommu- By Marianne Camerer nications, and money and politics in all 50 U.S. states. In 1997, the Center established a project called What if, at the click of a button, you could find out the International Consortium of Investigative Jour- what leading investigative journalists and social sci- nalists (www.icij.org). It’s a network of more than 90 entists in a particular country had to say about the of the top investigative journalists in 47 countries. state of corruption and anticorruption in 2003? The emergence of Global Access as a project to What if this information were available in a range track corruption issues internationally must be seen of formats—from a searchable database of hun- in the context of the Center’s other work using the dreds of indicators that compares data across coun- skills of independent social scientists and investiga- tries; to a detailed, reader-friendly analysis of the tive journalists to produce reporting and research. strength of civil society, the media, public informa- tion issues, electoral and political processes; to what Piloting a new approach is happening in various The year 2002 was important for the Global Access branches of government; to project. In April of that year, the Center produced a Research showed that it was regulatory mechanisms that 150-page pilot report that sought to demonstrate possible to sketch a control abuse of power? that a new and relatively inexpensive way of tracking journalistic impression What if, in addition to corruption and governance issues was possible. this information, you could Research was conducted in Indonesia, Italy, and of corruption in a country. see a comprehensive cor- South Africa over a 10-week period, using in-country ruption time line that places teams of investigative journalists, social scientists, and events referred to in a “Reporter’s Notebook,” a de “readers,” who reviewed country reports. The pilot facto account of the culture of corruption by a lead- report found that, alongside an academic assessment ing journalist, in some sort of context? of the de jure legislative and institutional safeguards in And, what if all this information could be used place to prevent corruption, one could effectively to produce a new Public Integrity Index that could sketch a journalistic impression of the de facto reality of credibly assess the existence and strength of the leg- corruption experienced by citizens in a given country. islative and institutional mechanisms for preventing The picture that emerged was comprehensive corruption in countries around the world? and striking and presented the framework for a new Add up-to-date country facts to this mix, and you methodology that went beyond gathering percep- have the key ingredients of the Global Access project. tions on corruption, also collecting new hard data that could potentially be used to generate an index. Global Access and the Center for Public Integrity After receiving major funding from the Open Global Access (www.global-access.org) is a new pro- Society Institute, a team gathered in Washington, ject of the Center for Public Integrity (www. D.C., to consider how best to translate the lessons of publicintegrity.org), a nonpartisan, nonprofit Wash- the pilot into a refined set of Access Indicators to be ington-based organization established in 1990 by applied to a larger sample of countries. The Access former 60 Minutes producer Charles Lewis. Indicators would “measure” three things: The Center is known for its in-depth reporting 1. The existence of institutions, mechanisms, and laws in place to prevent abuses of power and pro- Marianne Camerer is director of Global Access, an mote good governance and sound administration. international project of the Center for Public Integrity, 2. The effectiveness of these various anticorruption www.publicintegrity.org, www.global-access.org, e-mail: mechanisms to fulfill their mandate in practice, look- [email protected]. ing at considerations such as independence from

44 • SPRING 2004 CASE STUDIES: Gauging corruption political interference, professional personnel, and a Selecting the country teams regular budget. Another important consideration in selecting the 3. The accessibility of information—in terms of countries was that Global Access had identified jour- process, time, and cost—to ordinary citizens seeking nalists and social scientists in some places. Most jour- to hold their government accountable. nalists came from the ICIJ network and were con- Measuring anticorruption tracted to write a 2,000-word Reporter’s Notebook. From a database of contacts, from a variety of Corruption by its very nature is difficult, but not sources, Global Access targeted individual social sci- impossible, to measure. Turning the problem on its entists and non-governmental organizations with head and attempting to measure the opposite of expertise in conducting research around corruption corruption, namely the effectiveness of the systems and governance issues in the 30 countries. Publica- and mechanisms that governments have established tions record, availability, Internet access and English to prevent abuses of power, may yield some inter- proficiency were key considerations in the final selec- esting results. tion of researchers. Selected social scientists were After hours of deliberation, and countless contracted to produce scores, comments, and refer- spreadsheets, the Global Access survey instrument, ences for the Access Indicators and a 3,000-word nar- the Access Indicators, was finalized, with critical rative analysis describing the key findings. input from a Methodology Advisory Committee of A major part of the Global Access methodology leading economists and political scientists experi- consists of a peer review panel of five-to-10 readers enced in corruption and governance research. with expertise in a particular country providing crit- The 100 indicators and subindicators are ical feedback and commentary on the draft country grouped into six main categories and 26 subcate- reports, as well as scoring the indicators themselves gories, which are shown in Table 1. These categories in terms of whether they agree or disagree with the help capture detailed information on factors that— lead social scientist’s findings. Appropriate individu- based on an extensive survey of the corruption, gov- als and NGOs were targeted and alerted to the ernance, and democracy literature—have proven to Global Access reader registration site. As of early be important when fighting corruption. November 2003, over 160 readers had registered. In the main, the indicators consist of “in law” In summing up the project, it can be said that the and “in practice” questions, for which the social sci- proposed Public Integrity Index may tell us some- entist is required to assign a score and produce com- thing new, in numbers, about the nature of the anti- ments and references, based on primary and sec- corruption infrastructure in each of these countries. ondary research. A detailed scoring methodology However, it is the entire unique package of research has been devised for the project. and reporting Global Access offers that will be use- Getting into the field (from Washington) ful to citizens, activists, media, investors, and policy- The selection of 30 countries for Global Access makers around the world. If funding can be secured 2003 rested on a number of criteria, the first being to continue the project and establish a time series for geographic distribution. If this was to be a truly the data, this will be a timely and valuable contribu- international index, it would need to include coun- tion to the anticorruption debate. tries from all continents. Overall, democracies as defined by Freedom House were selected, but, in a TABLE 1: Composition of the Access Indicators couple of countries, Global Access decided to test The Access Indicators incorporate Civil Service and Administration its methodology in less democratic contexts. Coun- 100 indicators and sub-indicators, • Conditions of employment tries were also chosen based on their economic and grouped into these categories: • Whistle-blowing measures development positioning according to the UN Civil Society, Media, Public Information • Procurement and tendering • Privatization processes Human Development Index. • Civil society organizations 1 • Access to information Oversight and Regulatory Mechanisms The final list of countries included : Argentina, • Freedom of the media • National ombudsman Australia, Brazil, Germany, Ghana, Guatemala, • Media restriction • Supreme audit institution India, Indonesia, Italy, Japan, Kenya, Mexico, • Media regulation • Tax collection agency Mozambique, Namibia, Nicaragua, Nigeria, Norway, Electoral and Political Processes • Customs and excise agency • Central bank Panama, Philippines, Poland, Portugal, Russia, South • National elections • Election monitoring agency • Financial sector regulation Africa, South Korea, Thailand, Turkey, Ukraine, • Political party finances • Business licenses and credit United States, Venezuela and Zimbabwe. Branches of Government Anticorruption Mechanisms, Rule of Law • Executive • Anticorruption legislation • Legislature • Anticorruption agency 1 Field research was eventually undertaken in 28 of these • Judiciary • Rule of law & access to justice countries, and we plan to produce full country reports for at • Law enforcement least 25 countries by early 2004.

SPRING 2004 • 45 LOCAL GOVERNANCE BRIEF Proper instruction could help fight corruption ences of other jurisdictions are irrelevant. Any such Educator proposes training course would have to be firmly anchored in local for those who must find conditions—the legal and political variables of any given country, region, or municipality of a govern- ways to keep graft in check mental agency. Corruption is a cancer that attacks in different ways, and methods of fighting this “dis- By Anetta Debicka ease” have to vary depending on the legal system, Corruption, or rather increasing knowledge about the economic realities, and political culture. corrupt behavior of public officials, has become one This preliminary course proposal is meant to start of the most “burning” public issues. In practically a dialogue that will encourage further research leading every country there have been attempts at reducing to a more concrete and comprehensive design, based this “cancer.” Until recently, there were no university on the specific experiences of different countries and courses or in-service programs dealing with this spe- different clients, who would adopt such a curriculum. cific issue. Courses in ethics in public life or human The proposal assumes that we need to create cul- resources management may have incorporated issues tural change in which corrupt behavior will not be related to corruption into their curricula, but it is time tolerated by coworkers, and individuals themselves to consider special courses dealing with corruption will avoid even the appearance of corruption or con- systematically. If we want to have comprehensive flict of interest. This requires not only a value system anticorruption policies and but also procedural and structural methods of pre- reduce corruption’s pres- venting and discovering corruption. It should be self- Corruption is influenced by the ence in public life, one of evident that prevention is the best possible “medica- local legal system, economic the necessary tools is knowl- tion.” If we are left to deal with the consequences of realities, and political culture, so edge among those who will corruption, the damage has already been done. Pun- activists must be careful in using have the duty to design and ishment as a means of institutional response to cor- experiences from countries other implement such policies. ruption—though necessary—has limited benefits than their own. This is a proposal for the and is also expensive. Even the most rigorous development of such a enforcement is never totally successful. If we rely too course, designed primarily heavily on control of employees, in addition to high for students of law and public administration but costs and the likelihood of failing to discover cor- with the flexibility to be used as a training component ruption, we will create an environment of distrust. in the public sector as well. Extensive empirical research shows that workers We frequently—and without adequate empirical who feel alienated and continuously viewed as evidence—oscillate between the pessimistic view untrustworthy perform poorly in terms of both the that “all public servants are corrupt” and the opti- quality and quantity of their work. We should aim at mistic one, under which corruption is an anomaly in developing an institutional culture where group val- an otherwise honest workforce. Such assessments ues will stigmatize corrupt behavior and send clear contribute to misinformation and make it difficult to signals that coworkers will not tolerate corruption. design substantive policies, procedures, and struc- Institutional culture and peer pressure are important tures to reduce this problem. factors in setting the parameters of individual behav- Corruption can be analyzed and anticorruption ior. Corruption is like an avalanche—it starts with courses developed primarily, if not exclusively, in the small incidents of minor conflicts of interest or context of a concrete legal system, political culture, insignificant behavior and soon becomes more and institutional settings, social norms, and local envi- more extensive. At some point it gets out of control. ronment (in the broadest sense of that word). This The first tack is to determine the place and role doesn’t mean that we cannot search for common of such a course in the overall training of public ser- methodologies and approaches to designing courses vants and to identify the primary recipients of such in terms of content and process, or that the experi- a program. This proposal is for a one-term course. If it is to be used as a part of a training component for Anetta Debicka is associated with the Bialystok School institutions in the public sector, it would have to be of Public Administration, Poland. modified to fit particular in-service training systems.

46 • SPRING 2004 CASE STUDIES: Capacity building in practice

There are several arguments in favor of including Module One: Environmental assessment anticorruption training in universities (or schools of The objective of this module is to introduce partici- public administration). In the first place, it might be pants to the analysis of the data sets relevant to cor- easier to instill the principles of transparent, open, ruption: demographic data, economic data, data on honest, and friendly administration while providing social trust, and crime data. Given the lack of students with basic knowledge about administrative “good” data on corruption, students should be systems, structures, and processes. It provides an made aware of the types of data required to ascer- opportunity to introduce students to empirical stud- tain the extent of corruption. Students should also ies showing the damaging effects of corruption on be taught methods of data utilization, which can the working of administrative structures and atti- indirectly give us some tentative conclusions. tudes toward administration in society. Participants should also be aware that data from With proper training at the very start of their other countries can be compared to that of their own careers, public servants will be provided with a foun- countries. It is true, of course, that we should never dation of knowledge about corruption, which assume that we can transfer such data. But, if we should act to prevent and reduce corrupt behavior. understand the systemic differences, it is possible to If and when new civil servants are exposed to cor- learn about ourselves from the experiences of others. rupt practices, it is expected that they will both rec- This module should be conducted with the great- ognize them as such and reject such behavior as est possible participation of the students in the pro- inappropriate. Later training to increase professional cess of finding relevant data. Students should devel- skills will have a reference point and serve as a means op integrated sets of hypotheses linking data to cor- of providing operational methods for combating ruption—for example, the relationship between the corrupt practices in an actual workplace. levels of education and basic literacy of the “clients” Given the scarcity of academic work in this field, and corruption. Another obvious area is the rela- such courses should avoid being too theoretical. Pro- tionship between the levels of income of public ser- grams should also be developed in such a way that vants and their job stability and corruption—or the the same basic modules could easily be adapted to relationship between the contributions of the gray participants with different levels of knowledge and economy to the GDP and corruption. practical experience. Such a course could be a part of the curriculum Module Two: Potential for corruption in public in law schools and schools of public administration administration as a general introduction. Students should have The objective of this module is to introduce partici- already taken a basic course in public law and at least pants to agencies/departments with a high risk of an introductory course in public administration. corrupt behavior. For in-service programs, the course should have This module is based on the hypothesis (sup- a more practical focus, based on the structural func- ported by the literature and based on empirical find- tional parameters of a concrete agency or a particu- ings) that some agencies and/or types of decisions lar group of public servants. Persons participating in have a high potential for corruption. this program should be graduates of a post-sec- ondary institution. In-service courses should be designed in such a way that participants would work Curriculum overview on designing concrete proposals for anticorruption The proposed course to help students and decision makers learn to measures in their institutions. address the challenge of corruption could be broken down into the following five modules: Basic objectives of the course • Environmental assessment: Focuses on analysis of data sets relevant 1. Introduction of participants to the problem of to corruption: demographic, economic, and crime data—and data on corruption in public institutions. social trust. 2. Individual and group work with these goals: • Potential for corruption in public administration: This module would highlight agencies or departments with a high risk of corrupt behavior. • development of methods of determining the • Strategies of human resources management designed to reduce the extent of corruption; risk of actual corruption: This module focuses on the role of manage- • identification of laws, policies, and situations ment in creating an “anticorruption climate,” methods of general preven- with a high risk of corruption; tion, and the monitoring of workers and clients. • development of prevention systems; • Law and corruption: This module is intended to evaluate law and law- • development of tools for anticorruption man- making techniques as elements of combating corruption—or creating agement; conditions in which corruption is likely to occur. • Anticorruption institutional audit: The program could end with a module • development of a system of sanctions for cor- in which participants perform an institutional audit of selected agencies. rupt behavior. The following course modules are proposed.

SPRING 2004 • 47 LOCAL GOVERNANCE BRIEF

Without suggesting that this is a complete list, Module Four: Law and corruption one should concentrate on the following: public pro- The objective of this module is to evaluate law and curement; significant administrative discretion; all lawmaking techniques as elements that can combat decisions where, as a result of an administrative deci- corruption—or create conditions in which corruption sion or policy, a legal entity or person might derive is likely to occur. In particular, these issues should be significant economic benefits (e.g., licensing, condi- examined in the context of labor law, administrative tions of conducting a business, etc.); situations in law, laws dealing with public procurement, conflict of which information is not made available to the gen- interest, laws dealing with transparency and freedom eral public because of the potential for economic of information, and, finally, criminal law. gain (e.g., development plans, forthcoming changes There are some generally recognized problem in tax laws, etc.); decisions resulting in a loss of areas with legal norms that have an impact on cor- license or imposition of a penalty fee (e.g., for pol- ruption. The discussion should focus on: unclear or luting the environment). conflicting laws; incongruence between statutes and Participants should conduct independent inferior legislation; over-extensive administrative dis- research on selected agencies, laws, and policies rele- cretion; secrecy; decisions made without parties being vant to these points. Discus- present; lack of clarity as to the decision-making pro- From the experience of several sion should deal with the cess; an ineffective and slow decision-making pro- countries, we know that individual legal and policy dimensions cess; a poorly constructed system of appeals; a poor- public servants who would like to of the problem, as well as ly constructed system of penalties for corrupt behav- the human resources man- ior; lack of integration, or ineffective integration, of report or fight corruption require agement dimension of the institutional support. administrative and criminal penalties; and lack of problem. This part of the clarity in criminal law dealing with corruption. course could lead to a pre- liminary assessment of the potential for corruption. Module Five: Anticorruption institutional audit Students should start developing an open-ended The program should end with a module bringing catalogue of those types of situations, laws, and, in together all the elements discussed and learned in particular, license granting that have the greatest earlier parts of the course. This can be accomplished potential for corruption. by participants performing an institutional audit of This module should be designed very differently some selected agencies. for public servants than for university students who The objectives of such an audit are: integration have no practical experience. Students would benefit of all learned material; assessment of the potential from a good selection of case studies. Public ser- for corruption in a concrete agency; assessment of vants should be able to provide examples from their the anticorruption system (managerial, legal, policy, own departments or other governmental agencies. ethical) in a concrete setting; and recommendations The module should end with some attempt at for new tools for combating corruption. estimating potential for corruption based on the This module would have to be constructed differ- analysis of data, laws, and administrative practices. ently for university students and public servants par- Module Three: Strategies of human resources ticipating in in-service training. Due to lack of practi- cal experience, students will have to do more of their management designed to reduce the risk of work based on documents, such as laws and policies. actual corruption Public servants can rely on their experience. If possi- This module has three components: the role of ble, they should audit their workplace, but this may be management in creating an “anticorruption climate” impossible due to cultural prohibitors. in the workplace, methods of general prevention, Participants should try to develop solutions to and monitoring of workers and clients. The module problems identified in the audit. Solutions should should end with an attempt at creating an “anticor- especially aim at introducing changes in procedures ruption climate” both among the public servants as and management that don’t require changing the law. well as within the population served by both the In our administrative culture, too often we think local and national administrations. that the only possible change can occur through From the experience of several countries, we enactment of new laws. It is very likely that, even if know that individual public servants who would like we create new laws, the corrupt practices will remain, to report or fight corruption require institutional unless we also introduce more systemic changes. support. It is the responsibility of management to These modules dealing with anticorruption train- create such a support system. The particular solu- ing should be part of an integrated system of educa- tions or management tools will have to vary depend- tion of future public servants. This course should ing on the legal system, powers of managers, and the help develop a value system and the mission of pub- particular institutional setting. lic service based on honesty and high moral standards.

48 • SPRING 2004 GLOSSARY Glossary: Terms used in discussing corruption

An understanding of the following terms is helpful in appre- property that you have access to, or property legally entrusted ciating discussions of anticorruption efforts. to you in your formal position or job as an employee, agent, trustee, or guardian. In legal terms, embezzlement is an eco- Accountability: Accountability describes the constraints placed nomic crime. It is theft or larceny but not corruption, because on the behavior of politicians and public officials by state there is no briber involved. institutions, organizations and constituencies having the power to apply sanctions. Accountability has three basic com- Extortion: Extortion is unlawfully demanding or receiving by ponents: transparency, answerability and controllability. an officer, in his official capacity, of any property or money Accountability is the responsibility of a public institution, offi- not legally due to him, by using force, fear or excessive author- cial or politician to carry out a given mandate and to justify his ity. Extortion includes requesting fees in excess of those decisions and actions according to applicable rules and regu- allowed under pretense of duty. A typical example of extor- lations. Democratic accountability is the idea that people tion is roadblocks manned by armed police or military men entrusted with political power owe accountability to “the peo- who exact money for your passage. Other words for the same ple”—both directly, through elections, and indirectly, through would be blackmail, bloodsucking and extraction. delegated authority to institutional checks and controls. Fraud: Fraud is economic crime involving deceit, trickery or Bribery: Bribery is the act of offering someone money or false pretenses, by which someone gains unduly. An actual other valuables in order to persuade him to do something for fraud is motivated by the desire to deceive another to his you. Bribery is corruption by definition. A bribe can also be harm, while a constructive fraud is a profit made from a rela- called a kickback, payola, hush money, a sweetener, protection tion of trust. Synonyms include: swindle, imposition, deceit, money, boodle, a gratuity, etc. Bribery is practiced at all levels, double-dealing, cheat, and bluff. from private familiar situations to international politics. Brib- Graft: ing of foreign officials is banned through the OECD Con- Graft (verb) is to obtain money dishonestly by using vention on Combating Bribery of Foreign Public Officials. your position of power, especially political power [American (http://www.oecd.org/oecd/pages/home/displaygeneral English]. Graft is understood as political corruption with an /0,3380,EN-document-88-3-no-no-7198-88,00.html) element of greediness. Graft (noun) is the rewards of corrup- tion: the loot, booty, payoffs, or spoils. Bureaucratic corruption: Bureaucratic, administrative or Grand corruption: “petty” corruption takes place in the public administration, at High level or “grand” corruption takes place the implementation end of politics, where the public meets at the policy formulation end of politics. It refers not so much with public officials. Bureaucratic corruption is usually distin- to the amount of money involved as to the level in which it guished from high level, “grand” political corruption (to the takes place: Grand corruption is at the top levels of the pub- extent it is possible to distinguish administration from poli- lic sphere, where policies and rules are formulated in the first tics). place. It is usually (but not always) synonymous with political corruption. Checks and Balances: This is the idea of separation of powers Integrity system: to hinder power abuse. Checks and balances are the constitu- Integrity is the quality of being honest and tional controls whereby, basically, the three branches of gov- firm in your moral principles and in what you do. An integri- ernment (the executive, legislative, and judicial, but also other ty system is a political and administrative set-up that encour- state institutions) have limiting powers over each other, so that ages integrity. A country’s National Integrity System compris- no branch will become supreme. It is a democratic system of es all those government and non-governmental institutions “mixed” government that includes multilayer institutional that have the ability to work together to achieve high stan- controls, active examination and verification of laws, finances, dards of national integrity and low levels of corruption and and other policies. maladministration, both individually and as a system of accountability, whereby each acts as a watchdog over the Clientelism: Clientelism is an informal relationship between actions of at least one other. The establishment of an effec- people of different social and economic status: a “patron” tive, transparent and accountable National Integrity System (boss, big man) has his/her “clients” (dependents, followers, fragments power and paves the way for a well-governed state. protégés). The relationship includes closeness and a mutual Kickbacks: but unequal exchange of favors, which can be corrupt. It is an A kickback is a bribe, the “return” of an undue informal but sophisticated hierarchic network in most devel- favor or service rendered, an illegal secret payment made as a oping countries that penetrates formal roles and position. return for a favor. The word describes a bribe as seen from the Long-lasting patrimonial and clientelist practices can institu- angle of the bribed. For example, one person gives a second tionalize hegemonic elites and embedded political corruption, person a favor, so the second person gives the first a kickback, in a system sometimes reaching all the way up to the president a little something, in return. It is used to describe the returns of the republic. of a corrupt or illegal transaction or the gains from rendering a special service. A kickback can also called a percentage, Cronyism: Cronyism is favorable treatment of your old friends share, cut, commission, payoff, recompense, etc., as long as and “buddies.” It is favoritism, confidentiality and preferential the context is illegal. treatment based on long-standing friendship. Kleptocracy: (From klepto, to steal, and kratos, rule: “rule by Embezzlement: Embezzlement is misappropriation, to take or looters”). Kleptocracy is a political system dominated by those steal from your employer for your own use. It is misuse of who steal from the state coffers, those who treat the ministry

SPRING 2004 • 49 LOCAL GOVERNANCE BRIEF of finance as their private purse and practice extortion as the to make and enforce the laws in the name of the people, use mode of rule. When the organs of authority are determined this authority to sustain their power, status and wealth. Politi- by the mechanisms of supply and demand rather than the laws cal corruption not only leads to the misallocation of and regulations that is a kleptocracy. Among the better known resources, but it also perverts the manner in which decisions former kleptocrats, are Duvalier (“Papa Doc”) of Haiti, are made. Political corruption is when the laws and regulations Mobutu of Zaïre, Bokassa of the Central African Republic are abused by the rulers, side-stepped, ignored, or even tai- and Suharto of Indonesia. lored to fit their interests. It occurs when the legal bases, against which corrupt practices are usually evaluated and Money laundering: Money laundering is the process whereby judged, are weak and furthermore subject to downright the identity of dishonest and/or illegally obtained money encroachment by the rulers. (corruption proceeds) is transformed, so that it appears to have originated from a legitimate source (legitimate business- State capture: State capture refers to the capacity of firms to es). The forms of money laundering are inexhaustible, but shape and affect the formation of the basic rules of the game drug traffickers, parties involved in organized crime, klepto- (i.e., laws, regulations, and decrees), through undue influence crats and white-collar criminals can be considered the main like private payments to public officials and politicians. The users of money laundering. Bank secrecy and tax havens facil- traditional image of corruption is the bureaucrat extorting itate money laundering. bribes from powerless individuals and firms, or a state extract- ing rents from the economy for the benefit of politicians and Nepotism: Nepotism is favoritism, but usually used to indicate bureaucrats (for instance, kleptocracy). Alternatively, if inter- a form of favoritism that involves your family members. ests outside of the state—private business interests, in partic- Nepotism is when someone who has power or authority uses ular, and mafias—are the stronger party and able to shape the it to get jobs or other favors for members of his own family laws, policies, and regulations to their advantage, we are talk- or close relatives. Nepotism can take place at all levels of the ing about state capture. This has been recognized as a most state, from a post office manned largely by one extended fam- destructive and intractable corruption problem, above all in ily to the state élite. Many unrestricted presidents have tried to transition economies with incomplete or distorted processes secure their (precarious) power position by nominating family of democratic consolidation and insecure property rights. members to key political, economic and military/security positions in the state apparatus. When “successful,” deeply Systemic corruption: As opposed to exploiting occasional nepotistic systems are similar to a “mafia,” because they are opportunities, endemic or systemic corruption is when cor- based on shared family “values” and loyalties. ruption is an integrated and essential aspect of the economic, social and political system, when it is embedded in a wider sit- Patronage: Patronage is the support or sponsorship of a uation that helps sustain it. Systemic corruption is not a spe- patron (wealthy or influential guardian). In a clientelist rela- cial category of corrupt practice, but rather a situation in tionship it is “kindness” done with an air of superiority and which the major institutions and processes of the state are authority. Patronage results in appointments to government routinely dominated and used by corrupt individuals and jobs, promotions, contracts for work, etc. But, “there is no groups—and most people have no alternatives to dealing with such thing as a free lunch”: patrons use patronage to keep a corrupt officials. Examples might include contemporary clientele, and to gain power, wealth and status. Patronage Bangladesh, Nigeria, Kenya, Cameroon and many others. Ref- transgresses the boundaries of legitimate political influence erence: Michael Johnston: Fighting Systemic Corruption: Social and violates the principles of merit and competition. Foundations for Institutional Reform. (http://people.col- Petty corruption: Small scale, bureaucratic or petty corruption gate.edu/mjohnston/MJ papers 01/EJDR article.doc) is the everyday corruption that takes place at the implementa- Transparency: Transparency means clearness, honesty and tion end of politics, where the public officials meet the pub- openness. Transparency is the principle that those affected by lic. Petty corruption is bribery in connection with the imple- administrative decisions should be informed, and it is the duty mentation of existing laws, rules and regulations, and thus dif- of civil servants, managers, and trustees to act visibly, pre- ferent from “grand” or political corruption. Petty corruption dictably, and understandably. Transparency thus encompasses refers to the modest sums of money usually involved, and has access, relevance, quality, and reliability. It describes the also been called “low-level” and “street level” corruption, increased flow of timely and reliable economic, social, and because it is the kind of corruption that people can experience political information (for example, about private investors’ use more or less daily, in their encounters with public administra- of loans and the creditworthiness of borrowers, about gov- tion and services, like hospitals, schools, local licensing ernment service provision, monetary and fiscal policy, and authorities, police, taxing authorities and so on. about the activities of international institutions). Transparen- Political corruption: Political corruption is any transaction cy enables institutions—and the public—to make informed between private and public sector actors through which col- political decisions, it improves the accountability of govern- lective goods are illegitimately converted into private payoffs. ments and reduces the scope for corruption. Transparency is Political corruption is often used synonymously with “grand” also essential to the economy: It improves resource allocation, or “high-level” corruption, distinguished from bureaucratic or enhances efficiency and increases growth prospects. petty corruption because it involves political decision-makers. Source: "Frequently Asked Questions: A Conceptual Dictionary," Political or grand corruption takes place at the high levels of Utstein Anti-Corruption Resource Centre: http://www.u4.no/docu- the political system, when politicians and state agents entitled ment/faqs5.cfm

50 • SPRING 2004 LGI NEWS

OSI Related Policy Centers between itself and the OSI Brussels Office. Network holds workshop in Kiev Specific discussions about cooperation between members of the network included an agreement to Representatives from nearly 30 policy centers in the create a “budget watch” joint project, to allow cen- OSI Related Policy Centers Network gathered ters to monitor national budgets in order to increase November 7-8 in Kiev to discuss ways in which they transparency. Participants also agreed to create a can work together to affect policy. European affairs Internet portal. This meeting, the second in the year for the net- Practically all centers expressed interest in creat- work, was hosted by the International Center for ing an Association of Public Policy Centers (APPC). Policy Studies (ICPS), the network member in Kiev. A steering group was established and charged with As always, there were newly formed policy cen- preparing articles of association and determining ters joining the group for the event, and this time the which country would host the secretariat. The APPC new member was from Tajikistan. Representatives will serve as a nonprofit, representative organization from the various centers gave presentations about of public policy centers, undertaking policy analysis their work. and research, policy development and advocacy, and The host center, ICPS, gave an informative pre- training in the field of public policy. The APPC’s sentation about its “marketing strategy,” describing mission will be to “promote open society values by how the organization prepares to raise funds through influencing public policy decisions through research, competitive tendering. The presentation also includ- policy development, and advocacy.” ed a helpful discussion of how ICPS deals with the A presentation on the financial position of the challenge of developing its indirect cost rate. network included an analysis of the revenues of The theme of cooperation dominated the work- each of the centers as well as the network. Centers shop, and representatives participated in activities were encouraged to seek additional outside funding. intended to identify the strengths and weaknesses of For more information, please contact Caroline the network and its various members. These activi- Newman ([email protected]) or Gabor Peteri ties helped identify the capacities of the members of ([email protected]). the network, to indicate future areas for cooperation. For example, a center that feels it is weak in a partic- WBI-LGI assesses SEE needs at ular area can pair up with another center that con- workshop in Budapest siders itself strong in that field. In keeping with the network’s tradition of foster- At an October 11-13 Needs Assessment Workshop ing joint work with specific OSI programs, the OSI in Budapest, the World Bank Institute (WBI) and International Harm Reduction Development Pro- Local Government Initiative (LGI) discussed training gram gave a presentation detailing opportunities for needs of South Eastern Europe as well as the repli- future collaboration with the network. cation of joint LGI-WBI courses on urban manage- And network members also discussed ways in ment and fiscal decentralization in the region. which they can work together with the OSI Brussels The organizers and the participating countries Office, in light of a recent letter received from its new had the opportunity to report on past activities and director, Andre Wilkens. Wilkens expressed an inter- achievements in local government reforms and est in cooperating with the network on joint projects specifically in urban and fiscal reforms. WBI and LGI related to EU accession, specifically the Wider shared their plans for the region with the participants Europe Initiative. The network has decided to form a and received useful feedback. The meeting was pri- contact group for the Wider Europe Initiative, which marily dedicated to discussion of how to best tailor was to meet with Wilkens in Brussels in December. the existing courses in urban and city management, as The contact group was to share comments on behalf well as fiscal decentralization courses, around the pre- of the network on a recent open letter—sent by sent-day needs of South Eastern Europe. NGOs and foundations working in Central and East- The meeting generated strong interest among the ern Europe and the NIS to Enlargement Commis- participants and paved the way for the agreement on sioner Günter Verheugen—about the European future plans in course delivery for the South Eastern Commission’s proposed Wider Europe Policy. European region. The network has other plans to continue devel- For more information, please contact Judit oping avenues for cooperation and partnership Benke at [email protected].

SPRING 2004 • 51 LOCAL GOVERNMENT BRIEF

WBI, LGI begin designing joint Berat, Durres, Korce, Lezha, and Shkodra. Econom- course at meeting in Budapest ic development strategies for those municipalities should be completed by late 2004 or early 2005. The World Bank Institute (WBI) and LGI met in For more information about the DELTA pro- Budapest November 15 to begin working together gram, or to learn about ways in which the municipal on developing a new course on urban and local strategies can be supported, please contact Project financial issues for Central and Eastern Europe and Manager Scott Abrams at [email protected]. the former Soviet Union region. During their meeting, at the offices of the Open LGI holds ‘Jamboree’ for the Society Institute-Budapest, WBI and LGI agreed Soros Foundations Network that the main course components should be the fol- lowing: the role of local governance (global, theoret- Members of the Soros foundations network met for ical, and region-wide issues and local tasks in urban workshops, experience sharing, and brainstorming development and intergovernmental finance); a when the LGI held its fifth annual conference, or framework for strategic urban management (setting “Jamboree,” for the Soros foundations network in goals and an introduction to the intergovernmental Antalya, Turkey, on September 17-21, 2003. system); urban finance “tools”; and integration of Nearly 100 participants from throughout the urban and finance issues. OSI network, representing most of the national The meeting brought together LGI and WBI foundation offices, attended the event. A number of staff, as well as local experts involved in urban and guest speakers from within and outside the network local finance course development from Hungary, spoke on matters such as sharing/transferring Romania, the United Kingdom, and the United States. regional experiences and organizing regional initia- For more information, please contact Judit tives; the importance of the Soros national founda- Benke at [email protected]. tions working more closely in the future; and how the Soros national foundations can join forces, LGI, World Bank make progress rather than compete, in their tendering and fundrais- with DELTA program in Kosovo ing activities. LGI trainers also led sessions on effec- tive policy and proposal writing. Representatives of A joint LGI and World Bank program, designed to various key international donors spoke on the help local governments in Kosovo establish medi- donor’s perspective of OSI-entity fundraising strate- um- to long-term economic development plans, was gies and consortium building in the fields of decen- scheduled to start work in five new cities in Kosovo tralization and public administration. in early 2004. LGI holds its annual jamborees to increase the The first phase of the program, Developing capacities of the network through the working ses- Enterprises Locally through Action and Alliance sions and to provide participants with the opportu- program (DELTA), has already taken place in the nity to hold discussions with their colleagues Kosovo municipalities of Istog, Kacanik, Klina, throughout the network. Prizren, Podujeva, Viti, and Vushtrri. Economic For more information about LGI’s 5th annual strategies have been developed for those towns. network conference, please contact Scott Abrams at Work has begun, with assistance from LGI and the [email protected]. World Bank, to implement the projects called for in the strategies of these towns. During 2003, LGI held LGI holds fellowship workshop donor meetings, in Kosovo and Budapest, where for region’s professionals donors gave local officials pledges of funding and technical assistance for the municipal plans, which Outgoing fellows presented policy proposals for have the Soros/World Bank stamps of approval. their home countries in Eurasia, and incoming fel- The Riinvest Institute for Development and lows were welcomed, when the LGI held its fourth Research served as the local implementing partner in annual fellowship workshop in Budapest on Octo- this phase. ber 16-20. A second phase in Kosovo, DELTA II, will focus This year, 36 fellows and mentors from over 20 on another five towns, which were chosen through a countries participated in the event. LGI’s incoming competitive application process. class is divided into two focus groups: “NGO Sus- Meanwhile, the opening workshop for DELTA tainability,” mentored by Katalin E. Koncz, director Albania took place in Tirana and Durres on January of OSI-Budapest, and “Mapping the Policy Pro- 13-16, 2004. In partnership with the Albanian Foun- cess,” mentored by Julius Court, research officer at dation for Local Autonomy and Governance the London-based Overseas Development Institute. (FLAG), DELTA Albania will be implemented in Outgoing fellows presented their findings and

52 • SPRING 2004 LGI News policy recommendations stemming from their Public Administration” project was short-listed and research on the following four topics: “Digital invited to submit a tender. Members of the LGID- Divide and E-Democracy in Eastern Europe and led consortium are: the Dutch Institute for Public Central Asia,” “Housing the Poor,” “Decentraliza- Administration, Central European University Con- tion and the Transformation of the Governance of sulting, the Hungarian IPA, and the Kosovo Riinvest Education,” and “Administrative Remedies for Local Institute. Government Abuses.” Outgoing fellows also pre- LGID has successfully completed its tasks for year sented their plans for putting paper into practice— one of the USAID-funded Northeast Bosnia Local the ultimate goal of the fellowship program. Government Support Activity, where LGID is one of The fellowship program provides experts and the main subcontractors to PADCO, Inc. LGID professionals from Eurasia with the opportunity to experts helped six selected Bosnian municipalities to work with a multinational team on comparative organize the development of their strategic plans for research and policy analysis. In doing their research, economic development, to improve the citizen partic- fellows construct policy recommendations aimed at ipation process and to establish the Citizens Informa- improving governance and public administration in tion Centers, and to conduct public hearings on the their own countries. LGI publishes the results of municipal budget. The work plan for year two of this those studies and works with fellows to enact the project is currently under development. reforms called for in the reports. LGID also contributed to developing the year LGI will announce next year’s fellowship topics three work plan for the USAID Serbia Local Govern- in March 2004. ment Support Program, where LGID is providing For more information on the LGI fellowship international management expertise and advice in var- program, please visit http://lgi.osi.hu/fellowship/ ious municipal/local government development areas or contact Scott Abrams at [email protected]. as a subcontractor to Development Alternatives, Inc. For more information on LGID’s activities, con- LGID projects underway tact Executive Vice President Ulian Bilotkach at in the former Yugoslavia [email protected]. A two-year EUR 2.5 million program to support 15 LOGIN gets new partner municipalities in Eastern Serbia, launched in Septem- ber 2003, will be implemented by a consortium that and FDI funding from USAID includes the Local Government Initiative Develop- The Romanian Federation of Local Authorities ment (LGID Ltd.), the British-registered, not-for- (FALR) has become the newest country anchor in profit consulting company associated with LGI. the Local Government Information Network LGID will provide key international expertise— (LOGIN), which seeks to promote the professional in the areas of municipal diagnostics, institutional development of local government officials and their strengthening, human resources development, and staff and to strengthen the capabilities of organiza- information technologies—for the consortium, tions that support the reform of public administra- which is headed by GTZ International Services. tion at the local level. The project, funded by the European Agency of FALR will add another local presence for the Reconstruction (EAR), is called “Eastern Serbia LOGIN network, which already consisted of nine Municipal Support Program.” It’s one of many partners in eight countries and acts as an informa- activities that LGID is undertaking to assist munici- tion clearinghouse for fiscal decentralization. palities in the former Yugoslavia, and plans for more LOGIN has received funding from USAID within work are underway. the framework of the Fiscal Decentralization Initia- LGID is also a subcontractor to the Urban Insti- tive (FDI) to finance existing, new, and future coun- tute on two USAID projects—the Montenegro try anchors. Good Local Governance (GLG) project and the Five new country anchors will be selected, with Croatia Local Government Reform II project (LGR three based in South Eastern Europe, and one each II). The GLG project in Montenegro is a $12 million, from the Caucasus and Central Asia. three-year activity and the LGR II in Croatia is a $14 FALR is a nonpartisan, non governmental orga- million, three-year project. LGID’s role in both pro- nization uniting the four main associations of local jects is to provide expertise in the areas of municipal and regional governments in Romania in order to treasury, municipal budget management, strategic speak with a single voice. planning, infrastructure development, and public par- For more information on the Federation, go to: ticipation in local decision-making. http://www.falr.ro. The LGID-led international consortium for the For more information about LOGIN, go to: EAR-funded “Support to the Kosovo Institute for http://www.logincee.org.

SPRING 2004 • 53 LOCAL GOVERNANCE BRIEF

Planning underway for Fiscal Platform for an Enriching Culturally and Ethnically Decentralization Initiative Diverse Europe (PECEDE), a project that is co- sponsored by the European Commission and the The LGI hosted a November 13 conference in Open Society Institute. Budapest to help define the content and scope of a Conference proceedings are to be published in $2.3 million program to support regional policy summer 2004 by LGI. development, policy implementation, and capacity For further information, please visit the web site building activities, while supplementing the existing at http://lgi.osi.hu/ethnic, or contact Petra Kovacs work of local Soros foundations and USAID offices at [email protected]. in South Eastern Europe, Caucasus and Central Asia. LGI bids Jose de Barros farewell The program, funded jointly by the Open Society Institute/LGI and USAID (U.S. Agency for Interna- The LGI bid farewell to Jose de Barros, program tional Development) runs from 2003-2005. It will manager for the Public Policy Centers Initiative become a cornerstone of activities pursued within (PPCI) of LGI. the Fiscal Decentralization Initiative (FDI)—a joint Jose was a founding father and active supporter undertaking of LGI, the United Nations Develop- of the Soros-Related Centers Network (RCN), for ment Program, the World Bank Institute, the Organ- which he wore many hats as manager, supervisor, isation for Economic Cooperation and Develop- mentor, and promoter. In a recent farewell letter sent ment, the Council of Europe, and USAID, with the by RCN members, Jose’s contributions to its found- secretariat based at LGI. It will provide an opportu- ing are warmly remembered and appreciated. Darina nity for expansion of the Local Government Infor- Kandunkova of the European Institute in Sofia mation Network (LOGIN) into the Caucasus and wrote: “I want to thank you, on behalf of all of us, Central Asia. for the wide range of specific knowledge and variety In terms of content, the program will cover pre- of financial and exchange projects, opportunities dominantly fiscal issues of local government reform, you gave us access to and which themselves led to with topics ranging from more general issues of rev- the development of the initial network, national, enue and expenditure assignment to specific techni- regional, and international policy oriented track cal problems of capital funding or fiscal reporting. record. I would like also to express our deep appre- The Soros Foundations and USAID ciation for your wise, colorful and rich personality offices/implementing agencies offered their input at and unforgettable witticisms.” the conference, which was followed by an FDI steer- LGI wishes Jose all the best in his future endeav- ing committee meeting. ors and thanks him for the hard work and dedication Based on the results of the meeting, LGI was to he has shown LGI for the last three years. prepare a wider strategy for FDI work in 2003-2004, covering issues such as cooperation with the Asian Corrections to LGB Summer Development Bank, fundraising for further activities 2003 issue in Central and Eastern European countries entering Local Government Brief would like to correct two the European Union, creating a more active website, errors that appeared in an article in the Summer and designing new programs. 2003 issue: For more information on FDI activities, please On page 36, the headline of the text box is mis- contact the FDI secretariat, Ondrej Simek, at spelled. It should read: “How-to Plan for Local [email protected]. Governments: Building Integrity Incentives into COMIR event covers Decentralization Policy.” The box is not part of the article, and was not written by the author of the arti- minorities and the EU cle. The editors would like to apologize to the author Experts, NGO representatives, and politicians dis- for any inconvenience the error may have caused. cussed ways to turn the political will to integrate and On page 39, there was an endnote missing. End- protect minorities into concrete legal instruments note 27 should have read: “Some answers to ques- inside the framework of the newly enlarged and re- tions about the implementation and use of such designed European Union, at a January 30-31 con- mechanisms at the municipal level may be possible ference in Bolzano, Italy, organized by the European through monitoring and evaluation activities associat- Academy Bolzano (EURAC) and the LGI. ed with an administrative law reform project, which LGI and EURAC are working together on the is based in Bosnia-Herzegovina, currently directed by project as members of the Consortium of Minority the IRIS Center and supported by USAID.” Resources (COMIR). The conference is part of the Local Government Brief regrets the errors.

54 • SPRING 2004 LGI News Publications available from LGI

The following publications are available from LGI. To order, fill out Swianiewicz, Pawel, ed., 2002, Consolidation or Fragmentation? The Size of the form below and return it to LGI. You can also visit our website, Local Governments in Central and Eastern Europe http://lgi.osi.hu/, to find publications in html and pdf formats. Managing Multiethnic Communities Project (MMCP) Bíró, Anna-Mária and Petra Kovács, eds., 2001, Diversity in Action: Discussion Papers Local Public Management of Multi-ethnic Communities in CEE No. 6: William L. Miller, Ase B. Grodeland and Tatyana Y. Koshechki- Dimitrijevic´, Nenad, ed., 2000, Managing Multiethnic Local Communities na-Are the People Victims or Accomplices? The Use of Presents and Bribes to in the Countries of the Former Yugoslavia Influence Officials in Eastern Europe Feischmidt, Margit, ed., 2001, Bibliography on Ethnic Relations in Eastern No. 7: Zyta Gilowska, Józef Ploskonka, Stanislaw Prutis, Miroslaw Stec Europe and Elzbieta Wysocka-The Systematic Model of the Voivodeship in a Demo- Robotin, Monica and Levente Salat, eds., 2003, A New Balance: Democ- cratic Unitary State racy and Minorities in Post-Communist Europe No. 12: Igor Munteanu-Local Development in Moldova: Concepts and Practices Tishkov, Valery and Elena Filippova, eds., 2002, Local Governance and No. 14: Mátyás Gáspár-Practice of Best Practices Minority Empowerment in the CIS No. 15: Milena Minkova-Regional Development in the CEECs: The Associa- LGI Fellowship Series tion Agreements and EU Regional Aid Policy Davey, Kenneth, ed., 2002, Fiscal Autonomy and Efficiency No. 16: György Gajduschek and György Hajnal-Evaluation of the Hun- O’hara, Sarah, ed., 2003, Drop by Drop: Water Management in the Southern garian General Civil Service Training Program Caucasus and Central Asia No. 17: Galina Kourlyandskaya-Budgetary Pluralism of Russian Authorities Pamfil, Claudia, 2003, Evolving Intergovernmental Relations for Effective Devel- No. 18: Alex Sundakov-Public Sector Reforms in Ukraine: On the Path of opment in the Context of Decentralization Transformation Serban, Daniel, 2002, A Practical Guide for Local Government Training in No. 19: Paul Dax, József Fucskó, Péter Kajner and Gábor Ungvári- Central and Eastern Europe Public Grants and Private Investments in Solid Waste Management: Case Study Sevic, Zeljko, ed., 2003, Gauging Success: Performance Measurement in South on the Alföld Region in Hungary Eastern Europe No. 20: Wolfgang Drechsler-Good and Bad Government: Ambrogio Loren- Slukhai, Sergii, ed., 2003, Dilemmas and Compromises: Fiscal Equalization in zetti's Frescoes in the Siena Town Hall as Mission Statement for Public Adminis- Transition Countries tration Today No. 21: Andrey S. Makarychev-In Search of International Roles: Volga Fed- Studies eral District European Union Enlargement and the Open Society Agenda. Local Government No. 22: George Shakarishvili-The Poverty Index: A Poverty Measurement and Public Administration. System for International Development Practictioners Fuenzalida-Puelma, Hernan L., Health Care Reform in Central Eastern No. 23: Andrey Timofeev-Determinants of Decentralization within Russian Europe and the Former Soviet Union: A Literature Review Regions Gajduscsek, György and György Hajnal, 2003, Civil Service Assistance No. 24: Diane Stone and Heidi Ullrich-Policy Research Institutes and Think Training Projects in the Former Communist Countries: An Assessment Tanks in Western Europe: Development Trends and Procedures Marcou, Gérard, ed., 2002, Regionalization for Development and Accession to No. 25: Peter Rado-The Role of Hungarian County Public Education Funds the European Union: A Comparative Perspective in the Development of the Education of Roma Pupils Locsmándi, Gábor, Gábor Péteri and Béla Varga-Ötvös, eds., 2001 No. 26: Pawel Swianiewicz-Foundations of Fiscal Decentralization. Bench- Urban Planning and Capital Investment Financing in Hungary marking Guide for Countries in Transition (English/Russian) Péteri, Gábor, ed., 2003, From Usage to Ownership: Transfer of Public Prop- No. 27: Dmitry Pashkun-Analysis of State Administration in Uzbekistan: erty to Local Governments in Central Europe Structure and Practice Péteri, Gábor, ed., 2002, Mastering Decentralization and Public Administra- tion Reforms in Central and Eastern Europe Books Regulski, Jerzy, 2003, Local Government Reform in Poland: An Insider's Story Guidebook to Proposal Writing in CEE and the Former Soviet Union '99. Please specify English or Russian version. Documents Hôgye, Mihály, ed., 2001, Local and Regional Tax Administration in Transi- Riga Declaration, Transparency in Local Government in Eastern Europe-Estonia, tion Countries Latvia, Lithuania, Russia, Ukraine Hôgye, Mihály, ed., 2002, Local Government Budgeting Forum on Fiscal Decentralization in Bosnia-Herzegovina-Conference Proceedings Horváth, Tamás M., ed., 2001, Decentralization: Experiments and Reforms. Indicators of Local Democratic Governance: Concepts and Hypotheses by Gábor Russian edition. Soós Kandeva, Emilia, ed., 2001, Stabilization of Local Governments Writing Effective Public Policy Papers: A Guide for Policy Advisers in Central Mlinar, Zdravko, ed., 2000, Local Development and Socio-spatial Organization and Eastern Europe by Eóin Young and Lisa Quinn (English/Russian) Popa, Victor and Igor Munteanu, eds., 2001, Developing New Rules in an Old Environment. Local Government in Eastern Europe, Caucasus and Central Asia. English and Russian edition. Please indicate the publications your organization would like and fax to (361) 327- Soós, Gábor, Gábor Tóka and Glen Wright, eds., 2002, The State of 3105, or post to our mailing address. Orders can also be processed via e-mail: Democracy in Central Europe [email protected]. Please include the information below for our reference. Stryuk, Raymond L., Managing Think Tanks: Practical Guidance for Matur- ing Organizations Title: ...... Name: ...... Tausz, Katalin, ed., 2002, The Impact of Decentralization on Social Policy Position: ...... Series Institution: ...... LGI/ECMI Series on Ethnopolitics and Minority Issues Daftary, Farimah and François Grin, eds., 2003, Nation Building, Ethnic- ity and Language Politics in Transition Countries Address: ...... Gál, Kinga, ed., 2002, Minority Governance in Europe City: ...... Local Government Policy Partnership Series (LGPP) Davey, Kenneth, ed., 2002, Balancing National and Local Responsibilities: Post Code: ...... Education Management and Finance in Four Central European Countries Davey, Kenneth, ed., 2003, Investing in Regional Development: Policies and Country: ...... Practices in EU Candidate Countries Lux, Martin, ed., 2003, Housing Policy: An End or a New Beginning? Phone:...... Péteri, Gábor and Tamás M. Horváth, eds., 2001, Navigation of the Market, Regulation and Competition in Local Utilities in CEE Fax:...... Swianiewicz, Pawel, ed., 2001, Public Perception of Local Governments

SPRING 2004 • 55 Local Government and Public Service Reform Initiative OPEN SOCIETY INSTITUTE

A FINAL WORD OSI’s Iraq Revenue Watch to monitor use of income from oil Like a similar initiative the ments to deal with the “resource curse”early, the Open Society Institute hopes to help countries such as Iraq Institute has undertaken in avoid these problems. The Open Society Institute currently supports a the Caspian, this effort seeks recently launched initiative, Caspian Revenue Watch, to promote transparency which monitors the development of oil production in the Caspian basin. The goal is to promote transparen- In May 2003, George Soros announced a new initia- cy, accountability, and public oversight in the manage- tive of the Open Society Institute, the Iraq Revenue ment of oil and natural gas revenues. Watch, which is intended to help ensure that Iraqi oil Iraq faces even greater challenges than the Caspian revenues are managed with the highest standards of region. If Iraq is to become an open, democratic soci- transparency and that the benefits of national oil ety it will need to develop transparent, accountable wealth flow to the people of Iraq. The monitoring institutions for ensuring honest management of oil done by Iraq Revenue Watch complements existing revenues. Open Society Institute initiatives that monitor rev- There is an urgent need for Iraq Revenue Watch, enues produced by the extractive industries. given the current occupied status of the country. The In many parts of the world, the lack of proper United States should establish rules that ensure com- stewardship over oil resources has resulted in corrup- plete transparency regarding Iraqi oil revenues. Doing tion, the continued impoverishment of populations, so will foster a stable, democratic Iraq, and will protect and abuses of political power. By prompting govern- the United States from charges of wrongful misap- propriation during this period of trusteeship over Iraq’s oil industry. Two new reports by the Iraq Revenue Watch About LGI (www.iraqrevenuewatch.org) highlight an absence of The Local Government and Public Service Reform Initiative transparency and inclusiveness in the reconstruction (LGI), publisher of Local Governance Brief, is an international of Iraq and the management of its public finances. development, policy research and grant-giving organization Iraq’s First Public Budget is the first in-depth analysis within the Open Society Network. Its mission is to promote of the Iraqi budget. The report highlights the lack of democratic and effective government, primarily in Southern transparency and accountability in the $6.1 billion and Eastern Europe, the Caucasus and Central Asia. LGI sup- budget, which was put forward in late 2003 by U.S. ports public administration reform, decentralization, improve- Ambassador Paul Bremer. (http://www.iraqrevenue ment of governance techniques and public policy formulation. watch.org/reports/080503.pdf) Iraq's Reconstruction Contracts: Telecommunications ana- LGI, Open Society Institute–Budapest lyzes the lucrative tender that the Coalition Provision- Nádor utca 11 al Authority announced in July to provide wireless H-1051 Budapest phone services to Iraqis. (http://www.iraqrevenue Hungary watch.org/reports/082803.pdf) To receive notification of new reports, please enter Tel: (+36-1) 327-3100 your e-mail address on the Iraq Revenue Watch web- Fax: (+36-1) 327-3105 site. To contact Iraq Revenue Watch, write to [email protected]. E-mail: [email protected] • http://lgi.osi.hu/ This article was adapted from www.iraqrevenuewatch.org.

SPRING 2004