1. Tackling Corruption in Land Governance Key Findings & Highlights from a forthcoming «Legend» Analytical Paper Lucy Koechlin, Julian Quan and Hari Mulukutla World Bank Conference on Land and Poverty Washington DC March 14 2016

2. Background and motivation The land sector is one of the most fertile arenas for corruption. Globally, one in five people reported paying a bribe for land services (GCB 2013); in E.Africa every second person, with only the police and the judiciary were found to have higher levels of corruption (EABI 2015). Corruption associated with unresponsive, unaccountable and ineffective land governance, as recognised in the VGGT (§ 3.1.5). Particular concern about the role corruption may play in affecting the processes and outcomes of large scale land investments. Knowledge gap: lack of evidence and systematic analysis of the relationship between drivers, actors and types of corruption in land governance, and of the links between corruption in land administration and in agri-business investment.

3. Approach and Focus Analyze Causes, Types & Effects of Corruption in Land Governance Review of relevant literature on Land Governance & Administration, Agribusiness investment and corruption. Data Sources assessed and triangulated where possible where possible (NGO Reports, Corruption Indices and LGAF) Focus on study and data from Africa Identification of approaches that can work in curbing corruption Broad set of recommendations for different actors, and implications for donor programming on land

4. Defining corruption Corruption is understood broadly as "use of entrusted power for private gain". Corruption flags the abuse of power, be it simple bribe taking, grand kick-back schemes, systematic rent-seeking behaviour, or complex political patronage and patron-client relationships. Conventionally, "petty" corruption, i.e. low, often routine payments to low-ranking officials, is distinguished from "grand" corruption, describing large financial and economic opportunities higher up the political echelon. Administrative corruption is frequently on the petty side, but can also be systematic, and there is a continuum. Rent-seeking can be seen as a particular form of corruption leading to additional income and creating incentives to maintain the institutional forms and conditions that enable it. Activities can include bribery and coercion but also legal activities such as lobbying (Khan 2001). Political corruption involves beneficiaries who can make or influence government decisions., such as senior officials, and politicians, but also, under decentralisation, local officials.

5. Using Political Economy Analysis This report premises land governance being shaped by power relations that underpin institutions and relationships between actors. Land is essential for livelihoods, economic opportunity and shelter but also a key asset in power and patronage networks; land values are rising everywhere Formal laws and rules of land management may not predominate in social, business and institutional practice; and may promote corrupt practices. Elite capture e.g. of titling or land development schemes by networks of local leaders and officials, and State capture by particular groups to gain control of land are useful concepts in understanding land corruption. – State capture can be defined as the efforts of firms to shape the laws, policies, and regulations of the state to their own advantage by providing illicit private gains to public officials (Hellman and Kaufmann 2001).

6. Levels & Dimensions of Political Economy Analysis Source: The authors, drawing on DFID (2009, 8) and Hudson and Leftwich (2014, Chapter 7).

7. FINDINGS - Corruption in land administration

8. Findings from literature review and LGAF reports Bribery, informal fees and payments extracted from land service users most common form of corruption LGAF findings suggest that patterns and specific forms of corruption in the land sector are highly country-specific, but also have some common features. Land and other government officials are involved in both small-scale and systematic rent seeking linked to land allocation decisions, registration of plots and transactions Actors also include customary leaders, land professionals, and commercial developers Problems greatest in urban/peri-urban areas where land competition and “density” of land administration is greatest, also involving manipulation of planning decisions, land subdivisions and transfers and issue of building permits – some good studies from W.Africa Politicians and senior high-ranking public officials may be key actors benefiting from more systematic and political corruption in land allocation and development. Systems to detect and manage corruption in land administration are largely non -existe nt

9. Analysis of LGAF Ghana country report Confirms widespread public perception of extensive corruption in land administration and an almost universal need for bribery or payment of informal fees to chiefs and officials to gain access to land get land documents processed.  18 citations of informal fee payments, 8 of rent seeking and 15 of general “corruption” in accessing land services.  28 references to a general lack of transparency in land administration, in relation to the complexity of procedures involved, non-publication of applicable fees, the management of public land transactions and the allocation of customary land by traditional chiefs  36 references to excessive use of compulsory purchase powers and incomplete or non-payment of compensation by the state; only approximately 10% of lands expropriated are compensated  No mechanisms in place for the control of illegal behaviour by public land officials.  To obtain access to customary land, customary tribute of “drinks money” must be paid to chiefs, has become inflated so as to be a market price for leasehold purchase, but not disclosed or taxed in any way.  Customary land is a main source of urban residential and commercial land, and generates considerable leasehold revenues: lack of transparency and allegations of corruption in distribution and use of these revenues both by the state and by chiefs themselves  SCOPE TO EXPAND AND SYSTEMATISE LGAF CORRUPTION METRICS?

10. Corruption in National Land Governance & Administration The literature and data on land governance confirms the importance of a number of factors: The prevalence of discretionary power in land administration, (including and associated problems of fraudulent access to land, falsification of documents and rent seeking by / bribery of officials; and privileged access elites to land titling schemes); The role of parallel institutions for land management, including overlapping customary and formal systems of tenure and authority, partial or non-recognition in law of established customary rights; (and in that context, historically incomplete policies, institutions, legislation and land records) as a breeding ground for corruption and malpractice at multiple levels; Extensive state powers of “eminent domain” in terms of authority over land, often not limited in law, and applied to enable private gain Corruption in the allocation or conversion of public land and customary land for private use emerges as a principal nexus for discretionary decision-making and political interference; policies promoting rapid / large-scale privatisation or titling have high risks.

11. Addressing corruption through land administration reform - lessons Historical donor approach for transparent systems in land registration: safeguards against corruption, legislative and policy reforms. Technical assistance and capacity building alone proved ineffective, due to resistance to change and vested interests in maintaining scope for rent seeking and private schemes Corruption leaves few auditable traces > sanctions largely ineffective Simplification of tenure formalisation and delivery of real property rights have been regularly attempted in last decades, with poor results & can exacerbate elite capture Successful interventions have two critical dimensions: 1. Completeness and inclusion in cadastre / LIS ; 2. Community Participation & Accountability In-depth understanding required of the procedures, mechanisms, financial circuits, institutions actors, private interests and incentives involved in land rights allocation, conversion, transfer and development (Alain Durand Lasserve 2015)

12. Technology to promote innovation and integrity in land administration ICTs can reduce corruption by promoting good governance, strengthening reform- oriented initiatives, reducing potential for corrupt behaviours, enhancing relationships between government employees and citizens, allowing for citizen tracking of activities GIS and LIS software systems to make land and cadastral information publically available online to increase transparency. The electronic land record system in Karnataka, India, was estimated to have saved 7 million farmers 1.32 million working days in waiting time and Rs. 806 million in bribes to local officials in its first several years. - Innovative uses of mobile money and secure “block chain” technologies to reduce opportunities for bribery and falsification / manipulation of land records, and by pass level officials. Use of social media platforms and Open Source Intelligence Tools (OSINT) to gather information about land deals land corruption, enable independent whistleblowing and disseminate examples of successful anti-corruption action.

13. FINDINGS – Corruption & Agribusiness investments

14. Large Scale Agricultural Investments - Analysis and experience suggest that corruption is involved in large scale land acquisition, but conclusive documentation is not available and difficult to prove. - The Land rush” leads to a changing incentive structure and relationships between actors framing land governance:  Rural land in the Global South becomes sought after and defined as commercial asset (through sales, rising land values, speculation and commercial investment etc.)  New, influential actors increasingly shaping land governance (e.g. int. investors, MNCs, brokers, etc.), and subsequently new and frequently “unchartered” relationships emerging (e.g. between MNCs, local firms, officials, communities or customary leaders)  Vesting of land in the State, and exercise of eminent domain, particularly where user rights are unspecified and customary rights are neglected or not protected create large potential for elite capture and corruption at various levels.  “Frontier markets” for investors often characterized by with weak land governance.

15. Systemic corruption risks for agribusiness investment  Statistical modelling suggests that high levels of land deals are associated with corrupt environments but sustainable returns to investment with lower corruption  Weak governance in host countries on all levels (justice system, rule of law, political accountability as well as sectoral policies, e.g. investment policies or regulatory authorities);  Lack of accountability and impunity of power-holders  Vested interests in land investment of senior government figures and influential people able to manipulate and capture land allocation and investment decisions; and / or state capture by e.g. party, military, business and criminal networks  Lack of transparency with regard to contract negotiations and details of contracts; lack of clarity of who beneficial owners of companies are  Low or absent legal literacy of land users regarding their rights, planning processes, consultation, negotiation and contract procedures.  But not all perceived corruption is corrupt: legal contradictions, weak institutions and low human capital may allow self-interested behaviour to thrive.

16. International Business Attitudes to Corruption Survey 2014/15 Control Risks (global risk-consulting firm) surveyed 638 companies across the world on attitudes to corruption. Although 84.9% said anti-bribery policy was in place, findings "point to a disconnect between what head offices believe about the adequacy and effectiveness of their anti- corruption programme” and reality on the ground. “It is usually possible for companies to secure the services that they require without paying bribes, but it requires a much higher degree of management determination, and a willingness to accept ‘wasted’ time and higher costs.”  “Remote office problem”: local offices or subsidiaries have budgets dedicated to facilitating operations though bribes and ex-gratia payments. (Control Risks 2015, 40).

17. Investment Chain Level Actors/RelationshipsCorruption Risks Upstream  Investors  High net worth individuals  Commercial banks; other lenders  Pension funds; Mutual funds  Life insurance firms  Sovereign wealth funds  Development finance institutions  Asset Management Firms  Opaque Structuring of Corporate Entities  Lack of Beneficial Ownership Information  Potential for facilitation and other undisclosed payments/ownership interests  Lack of transparency and publicly available information on formal and informal contracts Midstream  Agribusiness conglomerates  Operating companies, local subsidiaries & partners  Host government (company official / unofficial relationships with Government officials, “Politically Exposed People”)  Trade Associations & Employees  Enterprise affiliates, brokers & agents  Ruling Parties, military, mafias and secret societies  Customary & community leaders  Political corruption  Opaque company structures obscure vested interests of national elites in investment deals  Collusion of public officials to direct payments (bribes / kickbacks) or other favours for their benefit in exchange for land -and profit-related concessions.  Conflict of Interest  "Facilitation payments" to and via brokers and agents  Bribery of local officials and customary leaders Downstream  Contractors/Suppliers  Buyers  Local land administration and government officials  Customary and community leaders  Lack of transparency of contractual relationships between company and contractors./ suppliers  Kick-backs in sub-contracting  Corrupt behaviour by suppliers to secure land /contracts  Conflict of Interest by government officials involved in private business

18. RECOMMENDATIONS

19. Scope for action by investor country governments Support stronger Enforcement of OECD anti-bribery legislation; and engage non- OECD countries (e.g. China, India, Indonesia, Malaysia, Thailand). Support legislative measures that address transnational corruption (e.g. UK Bribery Act, FCPA). Support strong anti-money laundering (AML) laws in the financial centres, Financial Action Task Force (FATF) guidelines, scrutiny on Politically Exposed Persons (PEPs). Whole government approaches to investment that promote implementation of VGGT and the Principles for Responsible Investments in Agriculture and Food Systems. Pursue disclosure of large-scale agricultural investments and beneficial ownership of companies originating in investor countries and promoted by official aid and subsidy Condition financial participation in large-scale agricultural investments on implementation of anti-corruption measures, as part of adherence to the VGGT and application of appropriate due diligence on investment projects (e.g. New Alliance Due Diligence analytical framework).

20. Recommendations for the private sector Demonstrate leadership toward zero-tolerance of corruption. Implement best practice and mainstream encompassing corporate anti-corruption policies on all operational levels throughout the investment chain. Ensure compliance with national and international anti-corruption legislation Develop clear rules and standards of engagement on national and local level for large- scale international agricultural investment, guided by the VGGT and the Principles for Responsible Investments in Agriculture and Food Systems; Mainstream ESG assessments and follow-up procedures throughout the investment chain. Set up an internal, secure Whistleblowing Mechanism, that enjoys commitment at CEO level, falls under the responsibility of senior management, is clearly communicated throughout the company, and provides safeguards against retaliation. Participate in voluntary reporting of land rights footprints and impacts of agri- investments and supply chains e.g. through Global Reporting Initiative

21. What would effective national action look like? Prioritise Land Administration Reform and legal reforms to ensure recognition of multiple forms of tenure including customary rights, to promote inclusion and mitigation of corruption in allocation, conversion and development of customary and public land Introduce a more performance oriented culture and system of remuneration into land administration to provide alternative incentives to rent-seeking Support for helplines, complaints and grievance mechanisms, such as Ombudsman and Legal Advice Centres. Enhance training and capacity development for integrity institutions and follow up on corruption complaints Implement UNCAC to strengthen vertical & horizontal accountability mechanisms Effective income and asset declaration systems for public officials – feature a credible threat of detection of illicit enrichment and consequences for breaches and false-filing a criminal offence. Transparency and public disclosure of investment contracts and approval processes for agri- investments and land transactions

22. Recommendations for Civil Society Legal awareness and empowerment of local communities on land and land rights; systematic training and advocacy for citizens, on use of VGGT and associated tools to achieve greater transparency and accountability. Public awareness campaigns on how to identify potential corruption, conflicts of interest. Whistleblowing and reporting: set up and run own reporting hotlines, guided by the Do No Harm principle, to increase transparency on corrupt practices in land administration; use of ICTs, social and broadcast media Promotion of public dialogue to reduce corruption

23. Recommendations for donor programming Diagnosis of land corruption as part of political economy analysis of programming options, especially in fragile and conflict affected states Link land governance in partner countries to broader support to implementation of anti- corruption strategies in business and public service and land governance Prioritise support for legal reforms to ensure recognition of multiple forms of tenure Mandatory corruption risk assessments and mitigation measures for all land administration support Direct linkage of land governance support and related anti-corruption measures to agricultural and infrastructure investment programmes, and others that involve corruption risks. Geographically targeted support to fit-for-purpose land administration, planning and accountable mechanisms and legal empowerment support in agricultural development zones and corridors Use the SDG Goal 16 Promote peaceful and inclusive societies, provide access to justice for all and build effective, accountable and inclusive institutions at all levels as a frame of reference to mainstream anti-corruption programming in land governance.

24. Incremental strategies to curb land corruption 05 04 03 02 01 Open land contracts, Transparent LIS, Accountability mechanisms; Action to promote integrity in public service, business & politics Legal and administrative reforms to reduce scope for corruption. Action by investor countries Improved donor programming Better data and diagnosis / PE analysis of corrupt practices and risks Civil society action to promote transparency & disclosure

25. THANK YOU Corresponding author: Lucy Koechlin lucy.koechlin@Streamhouse.org lucy.koechlin@Streamhouse.org LEGEND – CLST: Julian Quan: j.f.quan@gre.ac.ukj.f.quan@gre.ac.uk Lorenzo Cotula: lorenzo.cotula@iied.orglorenzo.cotula@iied.org Anna Locke: alocke@odi.org.ukalocke@odi.org.uk