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1 The World Bank Cancer of Corruption Seminar Presented by: Sanjay Pradhan Director Public Sector Governance The World Bank.

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Presentation on theme: "1 The World Bank Cancer of Corruption Seminar Presented by: Sanjay Pradhan Director Public Sector Governance The World Bank."— Presentation transcript:

1 1 The World Bank Cancer of Corruption Seminar Presented by: Sanjay Pradhan Director Public Sector Governance The World Bank

2 2 Governance Problems: Some Examples Governance Problems: Some Examples Grand Corruption: State Capture Grand Corruption: State Capture - Leaders plundering state assets (Mobutu, Abacha) - Powerful oligarchs buying state officials (CIS) - Corrupt leaders colluding with corrupt investors: non- competitive, non-transparent award of contracts (oil & gas) Nepotism and Patronage in Public Service Nepotism and Patronage in Public Service - Political pressure for award of contracts, appointments - Politicized transfers (South Asia) Administrative (Petty) Corruption & Inefficiency: Administrative (Petty) Corruption & Inefficiency: - Bribes for licenses, permits, government services - Diversion of funds for public programs - Inefficient and ineffective service delivery

3 3 The World Bank The Bribe Fee List Unofficial payments by firms in Ukraine Enterprises Type of License/Service/Favor Average fee required admittingneed to pay (1996)unofficially Enterprise registration$17666% Each visit by fire/health inspector$4281% Tax inspector (each regular visit)$87 51% Telephone line installation$89478% Lease in state space (square ft. per month)$766% Export license/registration$12361% Import license/registration$27871% Border crossing (lump sum)$211100% Border crossing (percent of value)3%57% Domestic currency loan from bank on4%81% preferential terms (percent of value) Hard currency loan on preferential4%85% terms (percent of value)

4 4 The World Bank Strengthening Voice and Participation: Report Card of Government Services in Latvia Percent giving favorable rating Post Office State Educational Institutions Office of Social Benefits Polyclinic/Health Services Agency of Immigration & Citizenship Prosecutor Customs Service Courts Local Housing Authority Police

5 5 The World Bank Governance can be Measured – Corruption, Countries Source for data: Kaufmann D., Kraay A., Mastruzzi M., Governance Matters III: Governance Indicators for , WP #3106, August Units in vertical axis are expressed in terms of standard deviations around zero. Country estimates are subject to margins of error (illustrated by thin line atop each column), implying caution in interpretation of the estimates and that no precise country rating is warranted. Good Control Corruption Bad

6 6 The World Bank Proportion of firms affected by capture of … HungaryEstoniaRussiaUkraine Parliamentary Votes Presidential Admin. Decrees Civil Court Decrees The Challenge of State Capture

7 7 The World Bank Latvia (anticorruption) Russia (customs/treasury) India – Andra Pradesh (power; e-gov); Karnataka (right to info) Colombia (diagnostics & civil society) Indonesia (local governance) Uganda (PRSC; education) Jordan (civil society) Examples of major programs launched across countries Pakistan (devolution) Philippines (procurement) Ghana (PE accountability) Bolivia: (public admin.) Albania (public admin.) Guatemala (diagnostic to action program) Tanzania (PSR) Ethiopia (decentralization) Cambodia (PE; forestry) Ukraine (tax admin) Bangladesh (civil society) Gabon (water/electricity) Kyrgyz Republic (governance reform)

8 8 The World Bank Political Accountability Political competition, broad-based political parties Transparency & regulation of party financing Disclosure of parliamentary votes Political Accountability Political competition, broad-based political parties Transparency & regulation of party financing Disclosure of parliamentary votes Institutional Checks & Balances Independent, effective judiciary Legislative oversight Independent watchdog agencies Institutional Checks & Balances Independent, effective judiciary Legislative oversight Independent watchdog agencies Civil Society & Media Freedom of press Freedom of information Civil society watchdogs Public hearings of draft laws Report cards, client surveys Civil Society & Media Freedom of press Freedom of information Civil society watchdogs Public hearings of draft laws Report cards, client surveys Private Sector Interface Effective, streamlined regulation Transparent public-private dialogue Break-up of monopolies Extractive Industries Transparency Initiative Curbing corruption from developed countries: UN, OECD Convention Private Sector Interface Effective, streamlined regulation Transparent public-private dialogue Break-up of monopolies Extractive Industries Transparency Initiative Curbing corruption from developed countries: UN, OECD Convention Good governance and anticorruption has many dimensions & entry points Leadership and Public Management Ethical leadership: asset declaration, conflict of interest rules Meritocratic civil service with adequate pay Transparency & accountability in budget mgnt Transparent, competitive procurement Transparency and accountability in sectors: extractive industries, health, education, infrastructure, SOEs Leadership and Public Management Ethical leadership: asset declaration, conflict of interest rules Meritocratic civil service with adequate pay Transparency & accountability in budget mgnt Transparent, competitive procurement Transparency and accountability in sectors: extractive industries, health, education, infrastructure, SOEs GOODGOVERNANCEGOODGOVERNANCE Local Participation & Community Empowerment Decentralization with accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Beneficiary participation in projects Local Participation & Community Empowerment Decentralization with accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Beneficiary participation in projects

9 9 The World Bank Extractive Industries Transparency Initiative Key Principles Independent review of payments made to the government by oil, gas and mining companies and of revenues received by government from those companies by a reputable third party (i.e. audit firm). Publication in a readily accessible form of payments made by the companies and of revenues received by government. Extension of all of the above to companies including state owned enterprises. Active engagement of all stakeholders in the design, monitoring, and implementation process. Commitment to a work plan and timelines for implementation.

10 10 The World Bank Corruption is not just a developing country problem Percentage of Firms that Pay Public Procurement Kickbacks by Country of Origin of FDI Source: Are Foreign Investors and Multinationals Engaging in Corrupt Practices in Transition Economies? by Kaufmann, Hellman, Jones, in Transition, May-June Note: Survey Question was How often nowadays do firms like yours need to make extra, unofficial payments to public officials to gain government contracts? Firms responding sometimes or more frequently were classified as paying kickbacks. These figures are subject to significant margins of error and thus should be regarded as approximate.

11 11 The World Bank Recent initiatives to curb transnational corruption OECD Convention on Combating Bribery of Foreign Public Officials (1997) OECD Convention on Combating Bribery of Foreign Public Officials (1997) UN Convention Against Corruption Treaty (2003) – 94 countries join UN Convention Against Corruption Treaty (2003) – 94 countries join Financial Action Task Force on Money Laundering (FATF) (1989) Recommendations (2003) Financial Action Task Force on Money Laundering (FATF) (1989) Recommendations (2003) Recovery of proceeds from corruption (Nigeria 2005) Recovery of proceeds from corruption (Nigeria 2005) Publish What You Pay, Extractive Industries Transparency Initiative Publish What You Pay, Extractive Industries Transparency Initiative World Bank blacklists corrupt firms World Bank blacklists corrupt firms Transparency International Principles for countering bribery Transparency International Principles for countering bribery Governance Network of OECD DAC (GOVNET) Governance Network of OECD DAC (GOVNET) Norway s Doers Network on Anticorruption (2004) Norway s Doers Network on Anticorruption (2004) OECD Convention on Combating Bribery of Foreign Public Officials (1997) OECD Convention on Combating Bribery of Foreign Public Officials (1997) UN Convention Against Corruption Treaty (2003) – 94 countries join UN Convention Against Corruption Treaty (2003) – 94 countries join Financial Action Task Force on Money Laundering (FATF) (1989) Recommendations (2003) Financial Action Task Force on Money Laundering (FATF) (1989) Recommendations (2003) Recovery of proceeds from corruption (Nigeria 2005) Recovery of proceeds from corruption (Nigeria 2005) Publish What You Pay, Extractive Industries Transparency Initiative Publish What You Pay, Extractive Industries Transparency Initiative World Bank blacklists corrupt firms World Bank blacklists corrupt firms Transparency International Principles for countering bribery Transparency International Principles for countering bribery Governance Network of OECD DAC (GOVNET) Governance Network of OECD DAC (GOVNET) Norway s Doers Network on Anticorruption (2004) Norway s Doers Network on Anticorruption (2004)

12 12 The World Bank Improvements in Satisfaction: Public Services in Bangalore Source : PAC

13 13 The World Bank Transparency & Community Monitoring: Primary Education in Uganda US$ per Student Intended Grant Amount Received by School (mean) 1999

14 14 The World Bank Philippines: Procurement Reform Mobilizing Public Support Transparency and Accountability Network (20+ member groups) Walang Ku-Corrupt Movement (Youth) (Youth) PAGBA & AGAP (w/in Govt) CBCP (Church) Philippine Contractors Association (private sector – main stakeholder) Local chambers of Commerce (Private sector) Drew other civil society groups into the advocacy efforts and coordinated the activities

15 15 The World Bank Reaching Out Radio: The swath & the dagger The Media Campaign: The Communications Strategy Print Media: Amplifying the problem TV: Raising the ante Advertising: Creating a brand name

16 16 The World Bank BIR Officials Amass Unexplained Wealth By Tess Bacalla, Philippine Center for Investigative Journalism Owner: Regional Director in the Bureau of Internal Revenue; forced to resign; currently facing corruption charges; other officials suspended, also facing charges Media,Transparency, and Combating Corruption

17 17 The World Bank All supplier companies register, indicating areas of business (e.g., IT, construction, furniture) All supplier companies register, indicating areas of business (e.g., IT, construction, furniture) Public agencies submit tenders through internet Public agencies submit tenders through internet Automatic to all companies in selected area Automatic to all companies in selected area Online information on name, position of official in- charge Online information on name, position of official in- charge Online information on results: who participated, proposals made, scores received, who won bid, historical record of agencys purchases and contracts Online information on results: who participated, proposals made, scores received, who won bid, historical record of agencys purchases and contracts Chiles Internet-based Public Procurement: Transparency and Competition

18 18 The World Bank Independent Judiciary Legislative Oversight Civil Society Voice and Participation Decentralization with Accountability Public Financial Accountability Competitive Private Sector Meritocratic Civil Service LeadershipValues & Ethics Leadership, Ethics and Good Governance Public ethics and values are a prerequisite to, and underpin, public trust and are a key stone to good governance – OECD, Policy Brief 6, 2000 Good Governance

19 19 The World Bank Strengthening Public Service Ethics 5 Cs to Counter Corruption Strengthen Values & Ethics: Counter Corruption Strengthen Values & Ethics: Counter Corruption Commitment to Contribute Commitment to Contribute Connectedness Courage Cosmology Care & Compassion Overcoming insecurity & incessant quest for material acquisitions Creating a sense of belonging to society Creating a sense of Compassion to care for the more needy in society Creating a commitment to public service – to give v/s take Broaden vision by seeing life in the context of the huge universe Source: H.H. Sri Sri Ravishankar (Founder, The International Anticorruption Conference, Korea

20 20 The World Bank THERE IS HOPE Countries have successfully undertaken reforms to improve governance TRANSPARENCY IN EXTRACTIVE INDUSTRIES Greater transparency, competition, public participation and oversight in procurement & extractive industries is needed STRENGTHEN SOE GOVERNANCE Reduce day-to-day political interference, greater autonomy with accountability for results STRENGTHEN OVERSIGHT BY CIVIL SOCIETY Oversight and participation by civil society and media are crucial for putting external pressures for improving governance REBUILD LEADERSHIP AND ETHOS OF PUBLIC SERVICE Reform require ethical leadership and innovative programs to rebuild commitment to public service – to give rather than take International Experience: Five Key Messages

21 21 The World Bank Q&A


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