Local Government Brief: Anti Corruption at the Crossroads

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

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