3rd Plenary

Michaela Wrong, Oscar Arias Sánchez, Peter Ackerman, Morten Kjaerum, Daniel Kaufmann, Ngozi Okonjo-Iweala, 12th IACC, Plenary transcript, Governance, Development, Sustainability, Energy Market, Financial Sector, Human Security, Climate Change, Natural Resources, Civil Society, Private Sector

Michela Wrong:

[…] Welcome. The first person to talk to us today is the President of Costa Rica, Oscar Arias Sánchez, winner of the Nobel Peace Prize. Please welcome him.

Oscar Arias Sánchez:

Quisiera empezar mi presentación agradeciendo la invitación a la décima segunda Conferencia Internacional Anticorrupción , y la oportunidad que me brindan para exponer ante una audiencia excepcionalmente calificada, en la Tercera Plenaria que lleva el título “Corrupción y pobreza: obstáculos para los derechos económicos y sociales”.

En efecto, como lo sugiere el título de esta sesión, la corrupción empobrece y obstaculiza el ejercicio de los derechos económicos y sociales. Materialmente, la corrupción aumenta los costos de transacción en la vida social y los aumenta para quienes menos pueden pagarlos: los más pobres. Ese es, acaso, uno de los resultados más perversos de la corrupción: su carácter fuertemente regresivo. Desprovisto casi siempre de contactos y de influencia política, el pobre frecuentemente no tiene más opción que pagar indebidamente para recibir los servicios o las decisiones públicas que deberían ser su derecho. Y si no puede pagar, tanto peor.

Si eso es serio, mucho más grave es, sin embargo, el empobrecimiento político que ocasiona la corrupción, que como ningún otro fenómeno debilita la legitimidad de las instituciones públicas y lastima al Estado democrático. Y cuando la acción estatal no tiene legitimidad, su eficacia se ve seriamente comprometida. Sólo la confianza en las instituciones y la percepción de que estas dan respuestas efectivas a las necesidades de todos los ciudadanos, hacen posible la adhesión de los individuos a las reglas que rigen nuestra vida en sociedad.

Acaso en ninguna parte del mundo son estos retos más candentes que en nuestra América Latina. Si en verdad queremos que América Latina no regrese a sus desafortunadas tradiciones de autoritarismo político, es urgente que nuestros pueblos recuperen su fe en los mecanismos democráticos, en los partidos políticos y sobre todo en sus dirigentes. Para ello es preciso fortalecer el Estado de Derecho y los mecanismos de control, de pesos y contrapesos, que reduzcan la discrecionalidad y la impunidad en el ejercicio del poder.

Pero eso es apenas una parte de la tarea que tenemos por delante. Porque también hay corrupción cuando los gobernantes y la clase política utilizan el reparto de privilegios para despojar a los partidos políticos, así como a otras organizaciones civiles, de sus principios éticos.

Para que la corrupción se convierta en una enfermedad social, hace falta mucho más que políticos corruptos. Es preciso también tener una población condescendiente, que está dispuesta a tolerar al político “que roba pero hace”, que está dispuesta a suscribir un pacto faustiano en el que se aceptan obras a cambio de entregar derechos políticos sagrados, que opta por renunciar al precepto que sostiene toda forma de vida civilizada: el de aspirar a ser gobernados por las leyes y no por los hombres.

También, y sobre todo, para que la corrupción ataque al cuerpo social es preciso que existan actores privados dispuestos a corromper. Como lo dije el primer día cuando se inauguró esta conferencia quiero recordarles las palabras de Sor Juana Inés de la Cruz:

¿A cuál es más de culpar aunque cualquiera mal haga:

el que peca por la paga o el que paga por pecar?

En efecto, la corrupción requiere del corrupto y del corruptor. Ambos, al actuar, no lo hacen desprovistos de valores. Todo lo contrario: hacen una escogencia ética que privilegia los valores del utilitarismo individual por sobre los valores cívicos. He aquí una de las claves de esta discusión. Si hemos de luchar contra la corrupción, es necesario que eduquemos a nuestros niños en una ética que les haga valorar algo más que el interés individual, algo más que el beneficio material y algo más que la gratificación inmediata.

Durante muchos años nuestras sociedades han creído que la educación cívica consiste en poco más que un saludo a la bandera que se enseña a niños de primaria, con el objeto de hacerles remembrar viejas batallas de héroes ancestrales. Al hacerlo, estamos desdeñando la más elemental forma de combatir la corrupción: la creación de una cultura cívica, capaz de inculcar en los individuos el respeto a la ley, la convicción de que sin normas no es posible la vida social y que la efectividad de ese entramado legal es una forma elemental de solidaridad para con los más débiles, porque una sociedad sin normas es una sociedad donde prevalecen el más fuerte y el más rico.

Y, así, llegamos al mismo punto de siempre, a la realización de que el dilema fundamental que enfrentamos como latinoamericanos tiene que ver con mucho más que la definición de una estrategia de crecimiento económico o a las modalidades que deben asumir nuestros sistemas políticos. El dilema radica, más bien, en la esfera de los valores morales, en la realización por los latinoamericanos de que es necesario construir sociedades racionales, solidarias y justas, que reserven a cada ser humano un lugar digno bajo el sol.

América Latina tiene que optar por una ética. La ética que América Latina se debe a sí misma puede resumirse en la sencilla frase de Martin Luther King: todos estamos unidos a un mismo destino. La denigración de un hermano nicaragüense me disminuye a mí también, la pobreza de una niña guatemalteca ha de vaciarme el estómago, la ignorancia de un campesino salvadoreño me despoja de los libros que he leído, y la prebenda que paga un ciudadano costarricense a un funcionario público, para obtener el favor temporal y egoísta, nos reduce a todos como región hermana.

Es eso lo que hay que enseñar en nuestras escuelas y colegios: no los himnos europeizantes que a niños de 9 años les recitan palabras extrañas, sino la simple noción de que, fuera de nuestros hogares, más allá de nuestro limitado interés personal, existe un interés colectivo, un bien superior, al que todos debemos servir como humilde pago por el privilegio de haber nacido en una democracia.

Muchas gracias.

Michela Wrong:

Thank you very much. My name is Michela Wrong. I am a journalist and I spent a lot of the last thirteen years writing and covering Africa, beginning in the Ivory Coast, moving to Zaire and finally Kenya. I think Zaire is a model, in a bad way, for people interested in corruption. There was something called Article 15 which was a joke. It was an invented part of the constitution, an article of the constitution which meant 'you must fend for yourself', and it covered the entire service industry that had been born inside the Congo as a result of corruption from the very top, and these were services that people provide, provided corruptly that in any decent society should have been provided for free. So you would pay somebody to get you through the airport, you paid somebody to get your documents through the ministry; you paid somebody to teach your children even when it was supposed to be a national public school. And of course these were very inventive strategies, but they were actually the strategies of despair because this very rich country had been totally destroyed by corruption.

I then moved from Zaire under Mobutu Sese Seko to Kenya under Daniel arap Moi, and on the surface I thought I had moved to a very different African country, but the longer I stayed in Kenya – and it's a place I visit very often now – the more I realised that actually Article 15 also applied to Kenya, only in Kenya they call it something different. They call it 'kitu kidogo', which is a phrase in Swahili meaning 'a little something' and it means it applies to the little something that a policeman or an official asks you for to do what is his job anyway. So the entire team of this plenary today is going to be about these kinds of arrangements and how we deal with them. The connections between poverty and corruption, and we're also going to hear some firsthand examples of how you go about trying to deliver development given these problems.

So the first person I'd like to introduce is Peter Ackerman on my immediate left. He became interested in non-violent resistance of the type developed and recommended by Mahatma Gandhi. When he was a young man he then joined Wall Street and came back to this passionate interest of his. Later on he set up the privately funded International Center on Nonviolent Conflict in Washington. He is one of the world's experts on civic disruption and I think it is very interesting, during my time in Africa it was very clear that people hated the way they had been forced to live, they hated having to use Article 15 and kitu kidogo, but they were also very uncertain and very incompetent about arranging and organising themselves to do something about it. The strikes were very badly attended; they often didn't work at all. Demonstrations were also poorly attended, individualism seemed to triumph and Mr. Ackerman is going to talk to us about the strategies that ordinary citizens can use and why they actually have more power than they often realise.

Thank you.

Peter Ackerman:

This is an excerpt from the Executive Summary of the goals of the 12th IACC that I believe to be of profound significance: "History demonstrates that there is no reason to expect corrupt officials and political leaders to reform themselves". In other words there can be no positive change without specific and unwelcome pressure on the beneficiaries of all ill-gotten gains and misused power.

The purpose of my remarks to you today is to advance the idea that the premeditated use of acts of civic disruption, also referred to as 'strategic nonviolent resistance' or 'people power', have been, and if we continue to understand the potential, will continue to be a critical factor in breaking the so-called vicious cycle to find in this plenary session as corruption and poverty that eviscerate social and economic rights. At least intuitively we all sense that where corruption is the most severe, democratic processes and civil liberties are usually absent or anaemic. So levels of corruption correlate strongly with levels of violence or state oppression. Rid society of the later and the process by which this is achieved will likely rid society of the structural and cultural bases for corruption to continue.

Recently the International Center on Nonviolent Conflict co-authored with Freedom House a study that analysed every transition to a stable democracy in the last 35 years. The study presented three major findings:

  • First, 50 out of 67 transitions were driven by bottom-up tactics of civic disruption, including strikes, boycotts, mass protests, and myriad forms of civil disobedience.

  • Second, to the extent the movement eschewed violence there was much more freedom after the transition.

  • Third, to the extent the movement enjoyed wide scale popular support and participation; there was the highest level of freedom after the transition from autocratic rule.

It is fair to assume that these higher freedom rankings also meant less corruption, so in other words, the vicious cycle in the last three and a half decades has been broken repeatedly by active campaigns of people power. Let's for a moment get specific. People power did it in Poland where the whole system of privilege and rights for party bosses and bureaucrats was brought down by a workers' movement. Solidarity used strikes including the famous one in the early eighties at the Gdansk shipyard to create the first free trade union. Then they leveraged that success by getting 20 percent of the population to become union members. After a period of martial law, Solidarity's resurgence after new strikes knocked the props out of the communist system. Who would dispute that Poland today experiences far less corruption than was the case a quarter century ago.

People power did it in the Philippines where the term was invented. In 1983-1984 civilians joined in increasing numbers in protest campaigns against state corruption. Ultimately the focus shifted to President Marcos's effort to steal another election. When the outrage over Aquino's assassination led to the split and defection in the military, Marcos was forced from office and in the subsequent years Philippine elections brought to office a series of relatively clean and democratic governments.

People power also did it in South Africa when successful boycotts of white business and strikes by black workers sparked a wave of nonviolent resistance that made the country ungovernable and led to the end of the apartheid regime. Also finished was an era marked by huge slush funds for apartheid supporters, illicit ivory trade by senior defence personnel and related acts of official theft.

People power also succeeded in Serbia. A timely coal strike linked to mass protests prevented Slobodan Milosevic from maintaining power after clearly losing the election of October 2000. A few years earlier experts could hardly imagine how the 'Butcher of the Balkans' would be forced to leave office without the benefit of a military confrontation. Yet after a decade of failed wars and personal graft, many rallied to the slogan, 'he has stolen the best years of our lives'.

People power did it in Georgia where the Rose Revolution was called by one of its leaders, 'a revolt against a kleptocratic government,' and people power also created the Orange Revolution in the Ukraine where the outgoing president had been implicated in the killing of a prominent journalist investigating government corruption. Millions demonstrated against a fraudulent election and gave backbone to the nation's heretofore pliant top court. That court confirmed the fraud and demanded - over the objections of the current regime and Russia - a timely recount which the opposition won. Significant anticorruption initiatives have since been implemented.

Because strategies to mobilise civil society to disrupt the status quo have been successful over many decades and diverse geographies they offer important lessons for current campaigns against corruption worldwide:

  • The first lesson is that where government is oppressive and corruption is pervasive, successful people power campaigns must mobilise large numbers of civilians. Numbers create staying power against oppression and shake the loyalties of those once considered to be the regime's allies.

  • A second lesson is that a campaign has to unite diverse groups - and not just some parties and classes – behind pragmatic and achievable goals. There also must be recognised a replaceable leadership that commands the respect needed to mobilise opposition at critical moments.

  • The third lesson is that a campaign has to plan continuously and marshal resources to achieve tactical capacity that goes beyond simple protests. It has to raise the costs of the system by varying the types of pressure it applies and constraining the options of those controlling the system. Economic pressure such as boycotts and targeted strikes can be decisive.

  • And the final lesson is that a campaign has to maintain nonviolent discipline. If it degenerates into freelance agitation or violence, it will lose civilian participation, political legitimacy and the advantage of surprise, because oppressive rulers and corrupt organisations expect to know how to quell violence against them.

When a campaign against corruption emulates the great nonviolent movements of the past by applying these and other principles, it will divide the ranks of those who accept, justify and uphold the corrupt system. What before seemed unassailable will be under attack, not just by opposition parties, NGOs or foreign watchdogs, but by the people themselves.

My organisation, the International Center on Nonviolent Conflict, distributes to people everywhere who ask for it the knowledge how to develop nonviolent strategies to fight for their own rights. Dozens of movements that oppose corrupt governments in Africa, Asia, the Pacific Islands, the Middle East and Latin America are applying this knowledge and we would be delighted to share it with you and anyone here today. Thank you.

Michela Wrong:

Thank you very much. Civic action of course needs all the help it can get and we have here today to talk to us Morten Kjaerum. He is the Director of the Danish Institute for Human Rights and an expert on international law, and he is going to be talking about the role that human rights institutes can play; the partnership across the world that can form and can be very helpful, and the role of UN treaty bodies in that kind of work. Thank you.

Morten Kjaerum:

Good morning Ladies and Gentlemen. It's really a great pleasure to be here today because I actually think it is high time that the world of organisational institutions combating corruption and the human rights institutions, the human rights world; start interacting more closely, more dynamically than we have done hitherto. So if I should start with one of my conclusions I would hope that one of the results of this conference is an increased interaction between the human rights world and the world fighting corruption because there is no doubt that corruption is one of the major components leading to violations of human rights - both civil and political rights as well as economic, social, and cultural rights. Of course due to time constraints it will be difficult to develop that further and I would rather spend my five minutes to focus on two general comments, two particular issues and then on two specific ideas for further action.

The first general comment: I would like to underline that the rights-based approach to development which is now rapidly getting more flesh and blood, offers a unique possibility to move rights awareness from an exclusive focus - almost exclusive focus - on civil and political rights to also include economic, social and cultural rights. The awareness-raising and instrumentalisation of civil and political rights in the last 20 years has undoubtedly empowered many marginal groups around the world. When people actually realise that the international community shares their view that the violation of their rights is inhumane, this empowers them and gives them a willingness to stand up and actually defend their rights. That is an important lesson learned from the work with civil and political rights and I truly believe that the global democratisation process of the last 20 years got increased momentum because of that awareness. Today we may actually prosecute a torturer from Country A in Country B. I think we could work towards a situation where a person who has seriously violated economic, social and cultural rights through a corrupt behaviour could equally be prosecuted in foreign countries if the home country is not willing to. It has an effect. If the past decade was about civil and political rights, this decade could thus be about economic and social rights. If awareness is created that the right of the individual to healthcare services etc., that this right should be met by a duty bearer, there is someone out there who has a duty to ensure this particular right that will automatically lead people to start identifying, at least trying to identify, who is that duty bearer out there who has the responsibility, the obligation to ensure my rights.

In this process NGOs and others will have to learn how to read budgets of municipalities and governmental structures in order to follow the flow of resources in our societies. Knowledge needs to be conveyed regarding democratic standards for transparency, access to information and a number of other issues relevant to the fight against corruption and of course areas Transparency International already is working on to a large extent. So that would be my first point, the rights based approach to development and what that offers.

My second point links to the added value that by including a number of new international institutions in the fight against corruption what that would bring to the work. What happens in the human rights world these days which is interesting and has an interesting potential in the fight against corruption is that the link between the international level and the national level is being tied much more closely than it was before with the emergence of national human rights institutions and human rights ombudsmen worldwide, we so to say, we have got the missing link between the international and national levels. So we see today that the international and regional monitoring mechanisms are becoming still more relevant in the implementation of human rights treaty obligations of states because key national actors have been established today in more than 100 countries. In 1990 we were five National Human Rights Institutions worldwide and today there are more than one hundred. It has been a tremendous development with quite a strength.

So my suggestion, and these would be my two suggestions, is that first of all that there should be increased interaction and dialogue, as I opened my remarks, between the world of or the institutions working fighting corruption and the national human rights institutions. There is a big network of national institutions that you can tap into to identify ways to create a higher level of interest, insight and knowledge about the role of the national human rights institutions in the fight against corruption. Some of our colleagues are already working in this field, so they could take the lead together with some of you. National institutions have the strength in that they have a pluralistic composition of their governing structures, comprising NGOs, labour market representatives, parliamentarians, religious groups, etc. So strategies developed by national human rights institutions get a strong input a diverse group within society as well as these groups can also help to create a strong spreading effect.

My second suggestion is that discussion should be initiated on how the international monitoring mechanisms - the UN treaty bodies, special rapporteurs and others – how they can address the issue of corruption within their mandates to a much larger extent. In my preparation for this meeting or this discussion today I read through a number of the concluding observations of treaty bodies and it's in there but not very forcefully, and when you then actually go into the discussions that the treaty bodies have had with state parties corruption features much more prominently but there still is a long way to go, and this is what we should try to explore in common. One other problem is to identify where actually is the borderline between human rights, a legitimate human rights analysis, and a legitimate concern on the one side and then what is being perceived of the state parties on the other side, politicising in internal affairs of the country? This is a delicate balance but this is where I think a more focused dialogue can lead to some results.

So in conclusion, I believe that both the organisations and institutions working in the field of anticorruption as well as human rights would greatly benefit from closer collaboration. The collaboration will solve neither the issue of corruption nor human rights violations, but the interaction may add important new dimensions that strengthen the overall issue of these global concerns. So in short there is an increased democratic space in the world today which creates a lot of new opportunities. Let's grab them. Thank you very much.

Michela Wrong:

Thank you. We are going to now turn to our first case study, quite a large case study. The Senior Commissioner of the Ministry of Supervision of China, which I am told is the equivalent of a Deputy Minister, Mr Zhenjun Wu, is going to be talking to us today. The Ministry of Supervision is China's most powerful anticorruption organisation, it employs 400,000 people, so that's the size of a small town and it's responsible for punishing and preventing corruption across the country. We all know what extraordinary growth China is currently seeing. Obviously that raises corruption issues. I think many people in this hall will also be very interested in hearing what he has to say about the struggle against corruption inside the country given the growing and often quite controversial role that China is playing in the developing world, particularly in Africa. So please, Deputy Minister.

Zhenjun Wu:

Chinese 34:40-41:45

Michela Wrong:

Thank you very much. I'd now like to turn to our second case study, another not small case study. We often hear from many people in these conferences who are outside the system but our second guest, like the Deputy Minister, is rare and she was in the very beating heart of government. She is Dr Ngozi Okonjo-Iweala who was the former Finance Minister of Nigeria. She left the World Bank to join the government of President Obasanjo in 2003 and she is regarded as one of the key architects behind a pioneering economic reform and anticorruption program that was adopted in Nigeria at a time when oil revenues were booming. She struck a mould-breaking debt write-off deal with the Paris Club and I hope she can tell us something about the lessons she has learned during her tumultuous time in government.

Ngozi Okonjo-Iweala:

A recent report prepared for the African Union by the African Development Bank on the impact of corruption on the continent estimated that corruption directly and indirectly was costing the continent about $148 billion – about a third of Africa's GDP: That is the size of the type of problem we have to deal with. So it's undoubtedly true that for the continent, and for my country in particular, we've had difficulties over the years, a reputation that has unfortunately marred the whole country where 99.9 percent of Nigerians are honest hardworking people who just want to make a living and get on with their lives. The idea of corrupt behaviour spiriting away the country's resources and its impact on the poor people and the population as a whole, but particularly on the poor people of the country, has been a devastating one. Poor infrastructure, poor delivery of services to the very poor, and a holding back of development have been the hallmarks of both corruption and inefficient management in the country.

But one can spend a long time lamenting what has happened under regimes that were not always open and were more dictatorial. I think much of the energy should be spent on what has been done or is being done to reverse this, something that is not as celebrated or acknowledged as it should be. And this is what during the time of the second administration of President Obasanjo in Nigeria [inaudible] he was determined to tackle this frontally. In fact he had started in the first administration, but from 2003-2006 we've waged a concerted battle on corruption. So let me share with you a few points on how that was done and the results.

First of all the most important lesson or idea that we had was that corruption should be fought not alone but as part of a comprehensive package of reforms. This is very important - that people see the impact. How corruption is related to other parts of the economy and not see it in isolation as something that you fight because when it is systemic and pervasive it is linked to all aspects of the economy. So we developed a comprehensive reform program that had the fight against corruption and entrenchment of transparency in public finance and doing business as one arm of that fight. And the comprehensive reform program involved public expenditure management reform; public sector reform - reforming the public service and the civil service; privatisation of public enterprises where inefficiency or corruption was entrenched and where it was having a direct impact on the public purse; as well as a direct fight against corruption.

In looking at the fight against corruption again we did not just talk generally, but we tried to look at where are those areas where is the biggest impact on the public purse - if you want to call it grand corruption where there is really a massive impact on the public purse - and we identified several areas.

When I say 'we', this fight was, this whole reform of the economy was being carried out by an economic team of which I was the head while I was in government with the president giving the political support and the backing, often getting him involved himself in terms of how the corruption fight was waged. So there was a lot of political will. There was a set of people who were committed to doing these reforms comprehensively and to fighting corruption. So it was not a battle being waged by one person, there was a critical mass of people who were doing these things. So that is what I mean by the 'we'. But within that group there were a couple of people who were directly charged with the fight against corruption and I was hoping that one of my colleagues Mr Nuhu Ribadu, one of the bravest people in the country, that he would be here also. […] They were leading this fight directly within the group. But let me say that what we did was to study those areas and we came up, as you would suspect, with two or three areas where there was very great impact.

The area of public procurement was a very important one to look at and this is where, you know, direct action was taken by the administration. Public procurement in Nigeria has been an area of a large amount of leakages and studies showed that up $300 million a year prior to 1999 was leaking due to various practices: inflated contracts, over-invoicing, diversion of public funds in public procurement and so on. Unit costs of procurement were several times – three to four times – higher than in neighbouring countries for similar projects (in say Ghana for instance). Therefore having identified this as a substantial source of leakages, the issue was to put in place direct action to tackle this, and a value for money audit of public contracts was put in place, as well as promotion of public competitive tendering for contracts. This mechanism alone which was one of the most difficult and hated reforms, which was hard fought by vested interests, led to a situation in which since 2001 we have been able to save the equivalent of more than $1.5 billion that would have gone out the window in over inflated contracts, in diverted funds and so on.

So one of the key things about fighting corruption is also to be able to measure how much you have been able to save or avoid being taken out of resources from this activity because it's only when you can measure it people will also begin to appreciate the magnitude of the work that is being done. So this value for money audit, the competitive tender, the insistence that you cannot have money dispersed for a public contract unless you had a certification that you could bring to the Accountant General that would show that, yes this contract has gone through the process. That was one of the very important things that was done to close the loophole between the due process office or the whole process of the value for money audit and the disbursement of moneys for the contracts. So if you actually didn't bring or you actually did not present that due process certification that this had been looked at, you would not get any money disbursed. So that was one concrete reform that has saved and is saving us a great deal of monies.

The second area to look at was in public expenditure management and there a whole set of reforms to tighten the management of our public finances was put in place. I don't want to go through all of them in great detail, but one of the things we did was to try and make budgeting and public finance much more transparent. We adopted a medium term expenditure framework which would set out what our budgeting and our revenue and the expenditure framework would be in the medium term. We also adopted a medium term sector strategy to set out what the various sectors of importance would be spending, so that this information would be more transparently available to the population.

We adopted [inaudible] in the past when oil prices were high there was a tendency to budget everything and that led of course to lots of money being available for spending and opened the door for more corruption and for diversion of resources. So when oil prices were high we spent everything and when they were low we crashed. We instituted a fiscal rule, what we call a 'fiscal rule', to delink the budget price of oil at which we budgeted from the existing oil price, and by doing this we were able to save a considerable amount of money.

For instance, when oil prices were about $35-40 a barrel we budgeted at $25, when they moved to fifty-something dollars we budgeted at $30 and on. During the time that I was there we saved up to $27 billion by applying this rule, which enabled us to not only put more money in infrastructure but also use some of the proceeds to do a debt deal. After a Paris Club debt forgiveness of $18 billion we were able to purchase back the balance of our debt and wipe out $30 billion of Nigeria's debt from external creditors. So being able to have such a mechanism saving the resources and directing them to other activities which people can see are clearly being used for the benefit of the country was very very important.

But one of the most important reforms that was put in place was one that didn't cost very much money and it was to improve the transparency of public finances by publishing every month and eventually for the past five or six years what each tier of government received in terms of revenues. As you know Nigeria is quite a large country, 150 million people with 36 states and 774 local governments, and in the Constitution these arms of government are entitled to a certain percentage of resources. They spend up to 50 percent of the revenues actually that the government receive, but people in the states and local governments would not know how much their local government received each month, how much their state received. Without this knowledge you could not hold anyone accountable for misuse of resources, so publishing those things in the newspaper every month and then eventually publishing a booklet that people could go to, was one of the most revolutionary things in terms of the fight to entrench transparency and entrench transparency that one could do. Who would think that such a booklet would have such an impact? Because then you could go and see that, ah my state got so many millions of dollars or billions of naira over the past few years, and you could see why people began to ask questions: why are the roads not being repaired? Why don't we have electricity? Why is there no chalk in the schools? And it was just the sharing of information that led to that. I think that this is one of the more popular reforms and I think that Nigerians will continue to ask for this information in the future.

The third area we identified was the area of oil and gas as an area where Nigerians were generally suspicious about what was happening. We did something about that too by enrolling the country in the Extractive Industries Transparency Initiative. President Obasanjo took the step of making the country one of the first to enrol in this and to form a stakeholder group. Now there was a whole session last night chaired by Peter Eigen on EITI, the Extractive Industries Transparency Initiative, so I won't say much about it except that we've enrolled in it. I think that Nigeria is one of the countries that is most advanced in terms of what it is doing by having the whole oil sector audited for the past five years of activities both financial audit, physical audit and process audit. All the information on the results of the audit is on a website which you can access (www.neiti.org).

Now you know this EITI is a 'publish what you pay' initiative, but I want to just mention one thing that would need to be looked at. While we need a publish what you pay initiative, I think we also eventually need to extend this EITI to a 'publish what you don't pay' initiative because there is a tremendous asymmetry of information and skills capacity between the oil companies and the governments they are dealing with. A lot of money is not paid, so we need to extend it to find out what those monies are. I'll give you an example of about $300 million of Nigeria's that was not paid by the companies. When the oil prices rose above $30 a barrel there was an agreement that they should pay these monies but for a long time they dilly dallied, they didn't pay it, and of course if we had notarized the capability through an oil and gas unit to look at the agreements, to make the estimates, the calculations of what they should pay us and then to insist that they should pay, who knows what would have happened. $300 million wouldn't have been lost. So I think once we have entrenched this as a way of looking at our oil and gas sector, I also think the initiative should be extended to publish what you don't pay.

Now the other thing that we did was in addition to all these direct actions that yielded results, we also coupled it with an initiative to actually show that corruption does not pay by instituting a mechanism for tracking those who are corrupt and trying to bring them to justice. And this is where I think that if Nuhu is here you will be hearing from him on the activities of the Economic and Financial Crimes Commission that has tracked so many cases of corruption in the country.

The phenomenon of the big man or big woman, not being brought to justice for corruption is becoming something that is no longer possible in the country with above 5,000 people having been arrested over the past three years, some of them very high profile people in government, past judges, past governors and so on. You can see that a great deal of effort is being made in this direction. So let me conclude by saying that indicators such as the ones developed by Dani Kaufmann and even TI show that these actions are yielding results. Nigeria's indicators are pointing in the right direction; the trend is in the right direction. There is still a great deal that needs to be done and we are focusing on those things concretely and I want to end by urging you that as we fight this corruption, you also turn your attention to those on the other side of the divide - those who receive corrupt resources. I would like to see a conference in which finance ministers from developed countries are on stage talking about what they are doing to stop their banks and their institutions from holding corrupt monies in developed countries. Thank you very much.

(Applause)

Michela Wrong:

Thank you very much, that was great. We are going to end our interventions here with Daniel Kaufmann who must be the most hardworking member of this conference. He is the Director of the Global Programs at the World Bank think tank, which is the World Bank Institute, and an international advisor on governance and someone who has pioneered the methodologies that are increasingly being used to compare and contrast corruption in different countries and he is going to wrap this up for us.

Daniel Kaufmann:

Thank you. For those that know me I will do something shocking, which is to present without PowerPoint and which present the first problem because we are all prisoners of PowerPoint these days but I think it can be quite liberating. The second problem I have is that given all the inspiring reforms that some leaders like Ngozi Okonjo-Iweala has done, I had put in my remarks I prepared some very specific mentions, but now she said something nice about me everybody will think that I am just returning the compliment, but I will try to assure you that it fits in the context of the main remarks I will make. Since I have only a few minutes before us, I will concentrate on four points without pretending obviously to cover the ground or doing justice to each one. Each one referring to a pitfall in the area we are working on together here and perhaps adjusting the constructive mirror image of moving ahead regarding that pitfall. You will be surprised that despite being from an institution like the World Bank, I will try to start with a point which has a bit of modesty or humility.

So the first pitfall refers to the tendency of fingerpointing elsewhere, which applies for many things – for governance and particularly the problem of corruption. The homework and the example always have to start at home. That is one of the clear lessons we have learned already for many years. Let me be a bit personal and suggest very quickly two homes in my case, one of mine is my institutional home which is the World Bank and many of you will know that until just over a decade ago - the mid-nineties – we were prohibited from working in this area. It was a taboo issue, corruption, so we couldn't even write it up. It was a c dot dot word. We have worked very hard, thanks to the predecessor of the current President the work started. Jim Wolfenson in ´96, very much embedded and supported by Transparency International that had started earlier (Peter Eigen and his people). [Inaudible] management, together with partners, but not so well in supporting civil service reform, judicial reforms and certainly not very well in supporting transparency related reforms or in engaging much more resolutely with the private sector, which has a key role in anticorruption. So we discussed some of these yesterday and the day before; in the context of the scaling up of our strategy in the context of governance and anticorruption brought very valuable and frank feedback so we will not take all the time on this now because I want to move to the second home, my original home which I am very proud of as well, which is Chile.

In many dimensions nowadays Chile's standards of governance have reached those of many rich industrialised countries. In anticorruption Chile is consistently ranked in the top 25 among over 210 or so countries. It exemplifies alongside some countries in Eastern Europe, Botswana, and others, the fact that we don't have to be a very rich country to afford the luxury of good governance and anticorruption - it's the other way around. But no country is devoid of corruption, let's be frank. Chile's no exception, my own country. From time to time there is a scandal. The real issue is not having zero corruption, it doesn't exist anywhere, but instead how do the institutions of a country react when there is an exposure or a scandal of corruption. A few years ago in Chile we had a few scandals. We had a scandal related to a bribe of $20,000 to the Deputy Minister. In some other places it would not have been news. In Chile it caused a political earthquake. In my country the reaction was swift in terms of prosecutions and in terms of serious reforms. Two years after such an event Chile was rated in international benchmarks, in our indicators, TI indicators, better than before the scandal. Today we have another scandal regarding political campaign funding. Once again we see it as an opportunity. Rather than thrashing my own country and focusing on the negative it is an opportunity of adopting serious reform regarding a strong well-funded electoral commission, for instance, that can truly monitor and ensure disclosure. So this is the first point. Rather than focusing exclusively on challenges outside of our own control in our institution or our country, it is key to take the destiny in our own hands, we say in Spanish tomar al toro por los cuernos, the bull by the horns, and get on with the homework which leads to the second point which will be, the last three points will be much quicker, which is the tendency to fingerpoint, particularly when we fingerpoint one culprit, one perpetrator, we tend to forget the importance of collective responsibility.

It is not the sole responsibility of mid-level public sector officials within developing countries to address corruption. We tended in the past to lecture mid-level public officials. That missed the point entirely in many cases. Instead the challenge of anticorruption, integrity within the political leadership, within parliament, the judiciary and then the crucial role of the private sector. We showcased already yesterday data showing the extent to which in so many countries domestic firms, well over half of them, are paying bribes to obtain public procurement contracts, and let's mince no words also about the international dimension. Many transnational multinational companies in spite of the fact it is illegal and the OECD, FCPA and its conventions, still bribe significantly abroad. Our data suggests that about 30 percent of the multinationals are still bribing in developing countries and among the poorer developing countries the share may be approaching one half. So the private sector side of the problem needs to be tackled. In our institution we are starting with some initiatives. One of them we are the only institution that publicly discloses in the web well over 300 companies and individuals which have been de-listed for being engaged in international bribery regarding projects funded by the World Bank. There are other initiatives. For the second time I'll move to the third point which leads from this discussion.

This is a pitfall of paralysis. Because in fact the irony that we have an increasingly sophisticated understanding of the daunting and complex challenge of corruption worldwide. Nowadays, and we have heard it here, there is very good sophisticated talk of paradigms and paradigm shift in this context. Remember the days when we focused just exclusively on administrative bureaucratic bribery models of corruption? Well now we have state capture models, the kleptocratic model, the patronage and clientelistic approach, political finance corruption, legal corruption, networks and even now embedded networks. These all are very good and all have merits. But in the real world in practical terms there is much more complementarity among all these than perhaps many writers would care to admit. The simple bottom line is that out of the estimated about $1 trillion or so of corruption [inaudible] every year worldwide a significant share is due to conventional high level corruption on large procurement contracts for example, or embezzlement for the budget another share, another share is medium level and petty forms of corruption, another with embedded or not so embedded networks, another to state capture and so on. The bottom line is that we need at the practical level to assess them all and to concretely move forward. Instead of focusing on one universal paradigm it's important to understand each particular context and tailor the country and international circumstances to that. There are approaches and tools to combat different types of corruption whether network capture, administrative and so on, which makes me move to the last point – proactivity and practicality. Let me end with that last point.

When not being fatalistic there is still a pitfall of becoming the transmitter of Christmas trees. So many missions to countries with fifty pages of lists of two-hundred recommendations of what the country should do. Instead a much more practical approach to the basics in terms of prioritising and keeping focused on those basics is important. Let me end by suggesting that at the end of the day, irrespective of which paradigm or model in the analysis we may prefer, there are three elements which are crucial and unfortunately not sufficiently in abundance today in many countries or many institutions. The first is leadership - champions of reform. Second - serious and effective transparency reforms which have been underestimated. And third - a frontal attack on impunity. Leadership is so obvious and for a lack of time I won't mention, but inspired by Ngozi's speech and her work as Minister of Finance, let me only suggest what was suggested before, that this type of gathering and many others should get the ministers of finance and the central bank governance involved. The Guatemalan Minister of Finance is very interested in that.

Let me end then by suggesting also that transparency reforms is absolutely crucial. In Guatemala Guatecompras for procurement is an example, so it Mexico, Chile, Korea. In political funding transparency, expenditure disclosure, voting records, disclosure of assets of politicians and many others. But nowadays only one quarter of the world have adopted Freedom of Information acts, many have not implemented these acts. Thank you very much. (Applause).

Michela Wrong:

Thank you for wrapping it up and we're now going to take some questions from the audience and we'll take a couple at a time, not one at a time. If everyone can stand up it makes it easier to see you. Say who you represent or who you are and then put your question. Please fire away.

Question 1/comment from the floor:

Voy a hablar en español. Creo que la traducción podría hacerse al señor Wu, el representante del Ministerio de Supervisión de China. Nosotros estamos teniendo una permanente visión de China cada dos años en la Conferencia Internacional Anti-Corrupción. Los avances que se han logrado en China son sumamente importantes y vemos ahora de la exposición que las decisiones se están orientando mas a la economia del mercado, es decir las grandes transformaciones en China, como el hecho de convertir el país en una economia de mercado [interrupción].

Mi pregunta es: se estableció la pena de muerte contra la corrupción en China. Pero después de varios años de esta experiencia tengo entendido que estarían Ustedes flexibilizando estas decisiones ya que las instituciones son mas fuertes y eso [inaudible] a la construcción de una nueva sociedad en China. Le pediré una reflexión sobre este tema por favor.

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