A Long, Slow Struggle to Weed Out Corruption

New Global Treaty Takes on a Festering Problem

VIENNA, Austria, OCT. 18, 2003 (Zenit.org).- After nearly two years of negotiating, the United Nations reached agreement on an international treaty to fight corruption. The news came in an Oct. 2 press release from the U.N. Office on Drugs and Crime in Vienna.

The document, known as the U.N. Convention Against Corruption, was kicked off by a decision of the U.N. General Assembly in December 2000. On Oct. 1 the committee in charge of drafting the document finally reached agreement. The text now goes to the General Assembly, which is expected to adopt it and open it for signature by member states in Merida, Mexico, from Dec. 9-11. The convention takes effect when 30 countries ratify it.

“This convention can make a real difference to the quality of life of millions of people around the world,” said U.N. Secretary-General Kofi Annan in a message to the negotiating committee marking the close of their efforts.

The convention points out that corruption can impoverish countries and deprive their citizens of good governance. Corruption also destabilizes economic systems, because of the flourishing of organized crime, terrorism and other illegal activities.

Among the principal points of the treaty are the following:

— Prevention. Corruption can be prosecuted, but first the treaty proposes preventive policies, such as the establishment of anti-corruption bodies and enhanced transparency in the financing of election campaigns and political parties. It recommends that public servants should be subject to codes of conduct, requirements for financial and other disclosures, and appropriate disciplinary measures.

— Criminalization. The convention requires countries to establish criminal and other offenses to cover a wide range of acts of corruption, if these are not already crimes under domestic law.

— International cooperation. The treaty proposes cooperation among countries in every aspect of the fight against corruption, including prevention, investigation and the prosecution of offenders.

— Asset recovery. Countries agreed on asset-recovery, which is stated explicitly as “a fundamental principle of the Convention.” This is seen as a particularly important issue for many developing countries where high-level corruption has plundered the national wealth.

Perceptions index

Days after agreement on the convention was reached, Transparency International published its “Corruption Perceptions Index 2003.” Berlin-based TI is a nongovernmental organization devoted to combating corruption. It has more than 90 independent national chapters worldwide.

The index points to high levels of corruption in many rich countries as well as poorer ones, noted TI Chairman Peter Eigen at a press conference Oct. 7 in London.

The index draws on polls and surveys from 13 independent institutions carried out among business people and country analysts, including surveys of residents, both local and expatriate. It reflects perceived levels of corruption among politicians and public officials in 133 countries. Seven out of 10 countries score less than 5 out of a clean score of 10 in the index. The problem was worse in developing countries, with nine out of 10 developing countries scoring less than 5 out of 10.

At the bottom of the index, with scores less than 2, came Bangladesh, Nigeria, Haiti, Paraguay, Myanmar, Tajikistan, Georgia, Cameroon, Azerbaijan, Angola, Kenya and Indonesia. Scoring higher than 9, with very low levels of perceived corruption, are Finland, Iceland, Denmark, New Zealand, Singapore and Sweden.

Eigen called upon Western governments to show they are serious about tackling their own companies that bribe abroad. The Organization for Economic Cooperation and Development Anti-Bribery Convention, which outlaws bribes to foreign public officials, came into force in 1999, but has yet to trigger any prosecutions in the courts of the 35 signatory countries, Eigen contended.

In fact, a report May 8 by London’s Financial Times revealed evidence that governments are finally moving to prosecute bribery. A consultant who negotiated contracts for oil fields in Kazakhstan on behalf of Mobil Corporation is in trouble for paying a $51 million “success fee” to the government’s adviser.

James Giffen, the U.S. consultant who received the money and represented the Kazakh government, has been arrested and charged. In total, authorities have accused him of taking more than $78 million in commissions and fees from Mobil and other Western oil companies and then illegally funneling them to senior Kazakh officials.

According to the Financial Times, the U.S. Commerce Department estimates that between May 1994 and April 2002, bribery may have affected the outcome of 474 contracts worth $237 billion.

The importance of reducing corruption in oil producing countries was singled out as a priority area for action during TI’s presentation of its index. Laurence Cockcroft, the group’s chairman in the United Kingdom, said corruption mars potentially wealthy oil-rich countries such as Nigeria, Angola, Azerbaijan, Indonesia, Kazakhstan, Libya, Venezuela and Iraq.

“To turn around this situation so that ordinary people share in the oil wealth of their country, TI is campaigning, along with other NGOs, for international oil companies to publish what they pay to governments and state oil companies,” said Cockcroft. In this way, citizens would have a clearer picture of state revenues. This would enable them to “call their governments to account where the state budget is not used to improve scarce public resources, but instead disappears on expensive vanity projects or into the secret offshore bank accounts of politicians and public officials.”

Bad for business

In recent years the World Bank has taken the fight against corruption more seriously, according to a Washington Post analysis published July 4. In the late 1990s, World Bank officials became aware that corruption was hindering economic progress in developing countries.

World Bank President James Wolfensohn said that before he took office in 1995 the bank considered corruption “an issue of politics,” as opposed to one of economic development. Now, “it is now central to what we do.”

The World Bank developed internal controls to audit its projects and compiled a blacklist of nearly 100 companies and individuals banned from receiving bank-funded contracts because of bribery, theft or other infractions.

Some critics say the World Bank should be doing more. They observe that the bank has continued to fund projects in countries where corruption is said to be rampant, such as Bangladesh. And only one country, Kenya, has been prohibited from receiving bank loans because of its government’s corrupt practices, and that was temporary.

Corruption’s cost to development was made clear in a speech this year by Jak Jabes, director of Asian Development Bank’s Governance and Regional Cooperation Division. According to United Press International on May 27, Jabes told a conference that corruption can cost up to one-sixth of a country’s gross domestic product in Asia. Jabes believed governments pay between 20% and 100% more for goods and services because of corrupt procurement practices.

Corrupt practices can also result in scarce resources being squandered on uneconomical projects because of their potential to generate lucrative payoffs, while priority sectors such as education or health can suffer disproportionately, Jabes added. He cited an internal report of an unnamed Asian government that found state assets have fallen by more than $50 billion over the last decade. The losses were mainly due to corrupt officials deliberately undervaluing them in trading off big property stakes to private interests or to international investors in return for payoffs. For countries struggling to compete in a world economy, corruption is nothing to wink at.

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