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Public Sector Governance On this page
IMF Issues Code. International Budget Project Highlights Need for More Public Information
An increasing amount of analysis of governmental budget practices is being pursued by the International Budget Project, which publishes ratings on the fiscal transparency performance of 40 countries and plans to increase coverage to 80 countries. Warren Krafchik, Director of the International Budget Project, argues that greater transparency in national budgets enhances governmental accountability and provides vital information to the public. He agrees that it is also important for the public to obtain greater budget information at the sub-national level from local public entities that directly provide services. In its most recent study of 40 countries in late 2006 the International Budget Project analyzed the responses to a 122 multiple-choice questions. It concluded: “Accurate, timely, and comprehensive information during each stage of the budget cycle is required to ensure the accountability of government to citizens. The Open Budget Index’s results suggest that 90 percent of the countries covered do not meet this standard.” Posted 7/17/07 * * * This Report is from the May 7, 2007 Newsletter of TI Australia The Australian Government through its international aid agency, AusAID, released a new policy on anti-corruption on Friday 30 March. The development of a more rigorous approach to combating corruption was recommended in the White Paper review of the Australian Aid program in April 2006. TI Australia was consulted in the development of the new policy. The new Anti-Corruption for Development Policy is intended to provide a stronger framework under which to plan, resource and review anti-corruption activities on a regional basis and in every country program funded by AusAID. The policy has a three pronged approach: To include activities that assist institutions, groups and individuals to foster integrity and accountability in leaders, support the collection and dissemination of information about the costs of corruption, and foster demand for change by mobilising support for anti-corruption reform efforts. To include initiatives that bolster transparency and accountability in budget processes, public financial management and procurement systems, and support implementation of clear legislative and regulatory frameworks to reduce opportunities for corruption. To include initiatives to investigate and prosecute corrupt behaviour, and promote a professional, merit-based public service. The new policy includes a welcome emphasis on the role of civil society organisations and community based anti-corruption activities, recognising the need for increased public awareness of the costs of corruption and for successful measures to counter corruption and maintain a momentum for reform. In particular the policy identifies the need to improve transparency in public sector processes and to strengthen the capacity for civil society to monitor budget processes and public expenditure. With the release of the new policy framework, TI Australia will be following up with AusAID on the details for its implementation plan particularly in relation to regional programs in the Asia-Pacific and individual country programs. TI Australia will also ensure that other TI chapters in the region are consulted and involved as far as possible. In addition, as the White Paper signalled in its recommendation for the development of the new policy, TI Australia will be seeking information on how this policy informs a whole-of-government approach to combating corruption in cooperation with other Australian agencies, including Attorney General's, Treasury, * * *
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East Asia |
Indonesia |
Philippines |
Malaysia |
PNG |
Cambodia |
Micronesia |
Eastern Europe/Central Asia |
Albania |
Lithuania |
Armenia |
Macedonia |
Estonia |
Turkmenistan |
Latin America |
Argentina |
Chile |
Antigua/ Barb |
Haiti |
Barbados |
Suriname |
Middle East/North Africa |
Iraq |
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Algeria |
Morocco |
Djibouti |
Libya |
South Asia |
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Bangladesh |
Pakistan |
Afghanistan |
Maldives |
Africa |
Cape Verde |
Sao Tome/Pr |
Benin |
Malawi |
Angola |
Mauritius Mauritania |
Posted 12/29/06
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Michel van Hulten, a distinguished former senior Dutch public official and an important participant in some of the early strategy meetings held in Europe to consider the potential development and launch of Transparency International, has written an insightful paper based on his home country’s experience. The full paper can be obtained from www.corruptie.org - “State and Development of Fighting Corruption and Safeguarding Integrity in the Netherlands.”
Summary of the Paper
The fight against corruption and safeguarding integrity in the Netherlands, how these phenomena developed over the past fifteen years * Some concrete data * The 2005 Government White Paper on Corruption Prevention * The case of Amsterdam
The Polish Government established in its Interior Ministry an ‘Anti-Corruption Team’ to foster the fight against corruption and to improve and safeguard integrity. The ministry received (under an EU-umbrella) assistance by experts from Northern Ireland and the Netherlands who helped to develop institutions, to improve the law and to set up training for better implementation of rules and regulations, aiming at public officials and politicians at national, regional and municipal level, in particular the big cities. This assistance was strongly linked to an internal Polish document, the Anti-Corruption Strategy.
The question was raised about how a country like the Netherlands is trying to do the same. This paper tries to answer that question in cataloguing what institutions, older ones and newly established for this purpose, exist, how they work, on what legal basis and what results they produce. A historical approach has been chosen, beginning with an official anti-corruption approach by the then Dutch minister of the Interior in 1992, not even fifteen years ago, and ending with the 2005 Government White Paper on ‘Corruption Prevention’.
The document gives the official figures with regard to corruption which are rather low, figures used by several Dutch ministers of Justice since 1992 who seem to be convinced that indeed these figures represent reality. Moreover Transparency International is quoted as also consistently rating the Netherlands among the ten least corrupt countries of the world. Nevertheless, others do not share this view and doubt whether these data reflect reality or rather reflect a reality which misses the point as corruption is ill-defined or too narrowly defined. OECD and GRECO-reports are used as they report about the phenomenon of corruption in the Netherlands as seen by experts from abroad also using input data not only provided by the Dutch Government, but also by representatives of civil society, business, local and regional authorities. Special attention is given to some business and local initiatives, highlighting in particular what is done in Amsterdam, the municipality that seems to be the best developed one in this respect.
A second question was posed by the Polish authorities: what education exists in the Netherlands for staff who deal with corruption and integrity issues? Although a rather large number of educational establishments have been consulted, not much has been found. There is not a single full-time academic study dealing with these subjects, but students can shop in various programs at several Universities and Colleges and compose their own curriculum. Quite a number of the courses are taught in English and are open to foreign students.
Website addresses with names and e-mail-addresses of staff are given, opening the way to more detailed information.
Posted 8/18/2006
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A new "white paper" by the UK's Department of International Development (DFID) outlines a bold and unconventional new foreign aid policy for the UK that focuses on promoting good governance and anti-corruption as a means to reducing poverty.
To download this article as .pdf
Speaking in the House of Commons on July 13, 2006, Mr. Hilary Benn, the UK’s Secretary of State for International Development, stated, “How countries progress and improve the lives of their citizens is a complex process, but we know that governance is fundamental to it. Development doesn’t happen without effective states, capable of delivering services to their citizens and helping economies to grow.” On introducing the new “White Paper,” which is designed to direct UK foreign aid policies for the next five years, the Minister stressed that a new £100 million (about US$185 million) Governance and Transparency Fund will be established to support civil society, a free media, parliamentarians and trade unions in improving accountability.
Minister Benn told the parliament that, “To ensure that our aid is used to best effect, we will in future regularly assess the quality of governance, transparency and commitment to reducing
poverty in the countries in which we work. We will publish these assessments, and will use them to help make decisions about our aid.”
The Minister noted that, recognizing that bad governance and corruption are international problems too, the UK Government will:
In the Preface to the “White Paper” the Minister writes that, “I am determined to ensure that our rising aid budget is used for the purpose for which it is given helping to lift people out of poverty. We have to show results. That is why we will make a careful assessment of the best way to do this in each country and vary the way we give our aid accordingly. And we will be resolute in the fight against corruption. In the end, governance from the global right down to the village level is about people and their relationships, one with another, more than it is about formal institutions. What makes the biggest difference to the quality of governance is active involvement by citizens - the thing we know as politics.”
Chapter 2 of the Report Is Headed “Building Effective States and Better Governance”
In this chapter the Government notes: Effective states are central to development. They protect peoples’ rights and provide security, economic growth and services like education and health care. Building better governance takes time and has to come from within each country, but international partners can help. This means we need to work not just with governments, but also with citizens and civil society. Good governance is essential to reduce poverty.
Effective states and better governance are essential to combat poverty. States that respect civil liberties and are accountable to their citizens are more stable. The document continues –significant improvements in governance can take place. Botswana, Ghana and Tanzania have strengthened their public institutions in recent years. Rwanda, Mozambique, Vietnam and Cambodia have successfully rebuilt their countries after devastating conflicts. And East Asian countries, such as Malaysia and South likely to attract investment and generate long term economic growth. They can also cope better with calamities. Famines, for example, are less likely where there is a free media, because the press creates pressure on governments to provide relief. Unless governance improves, poor people will continue to suffer from a lack of security, public services and economic opportunities. The contrast between Tanzania and Zimbabwe over the past decade is striking.
The Report Then Asks the Question: “So What Is Good Governance?”
It answers: Good governance is not just about government. It is also about political parties, parliament, the judiciary, the media, and civil society. It is about how citizens, leaders and public institutions relate to each other in order to make change happen. Elections and democracy are an important part of the equation, but equally important is the way government goes about the business of governing. Good governance requires three things:
To download the full version of Chapter 2 of the "White Paper" follow this link.
For the full “White Paper” see www.dfid.gov.uk.
* * *
Parliamentarian Anti-Corruption Programmes Must Help Build Political Capital if They Are to Succeed
by Bryane Michael and Aare Kasemets
The following is a policy-makers brief of the authors' paper, "The Role of Incentive Design in Parliamentarian Anti-Corruption Programmes." To read the full paper please follow this link.
The “first wave” of donor sponsored anti-corruption programmes usefully focused on elaborating recommendations for parliamentarians or tried to train them in anti-corruption. Now it time for these programmes to take into account parliamentarian incentives to adopt these recommendations or use this “knowledge.” These incentives revolve around building political capital by managing voter demands, political competition, and enforcement.
Many previous anti-corruption programmes and recommendations assumed that parliamentarians would “do the right thing.” Yet, parliamentarians are – and should be – politicians. Politicians are vote maximisers. Pope (2000) notes, “in one EU member country, Austria, Freedom Party Jörg Haider ran a successful political campaign in 1999, in part on an anti-corruption plank.... Haider doubled the Freedom Party's share of the Austrian vote between 1985 and 1999, in part because of his inclusion of anti-corruption as a campaign platform.” Thus, anti-corruption recommendations should be expected to be adopted to the extent that they help these politicians gain votes. More technically speaking, these programmes need to be incentive-compatible for the maximization of political capital.
...Many donor programmes can reduce the cost of implementing anti-corruption recommendations. For example, providing parliamentarians with alternative funding sources would reduce the political costs associated with alienating pro-corruption constituencies. Promoting education about tendering procedures would also, in theory, reduce the work parliamentarians must do to educate businesses in their constituencies. All of these activities would shift the expense curve up thereby increasing political capital for less politically risky increases in anticorruption activity. On the other hand, if donor work can increase the popularity of anti-corruption work done by parliamentarians, then both anti-corruption and political capital rise. The wide press coverage received by the UN Convention on Corruption represents an example of such an activity.
Given the simple political economy framework used in this analysis, donor work on
parliamentary anti-corruption must increase political capital while decreasing the costs of acquiring that capital. Figure 2 shows some donor actions which correspond to the recommendations to parliamentarians made by the Inter-Parliamentary Union’s recommendations. Actions are grouped according to the extent to which they help increase political capital, promote “good” political competition (competition which eventually could help the parliamentarian) and the “progressiveness” or liberalness of regulation.
Figure 2: IPU Recommendations and Possible Donor Activities
Recommendation |
Political Capital Effects |
Political Competition |
Liberal Regulation |
Law-Making |
- Offer good PR for “Mr. Clean”
|
- Indirectly promote political competition between parties - Criticism of overly sectarian legislation |
- Provide liberal models - Methods of “parliamentary enforcement” |
Oversight |
- Promote funding of parties and countries with a good record on corruption - Fund equipment needed for institutional communication |
- International independent monitoring of national “independent monitoring” - Hard Accounting Systems |
- Support to other stakeholders - Support of vision |
Representation |
- “Lump” interest groups together - Fund investigative journalism |
- External appraisal - Internal Education |
- Work on “harmonization” - Teaching non-government orgs to “do it yourself” |
While such donor work would appear “depoliticised” or “bureaucratised,” this work is political and should be treated like any political decision – namely widely discussed. Such work should also not interfere in parliamentarian work. Parliaments are designed to incorporate the political values of the country and not to serve the interests of international organisations. Too close links with the international organisations may well threaten their perceived sovereignty as well as the parliament’s legitimacy. Such work should also avoid being “captured” by parliamentarians.
Bryane Michael is currently a tutor in economics and management at the University of Oxford. He is also the Managing Director of Oxford Business Knowledge, a consultancy and training company in the UK. His prior work experience includes almost 5 years with the World Bank and the OECD and he has advised over 6 governments and 14 international businesses and NGOs.
Aare Kasemets is currently at the University of Tartu in Estonia. He has previously worked with the Estonian Riigikogu (Parliament) for over 10 years and has served as the Editor in Chief of the Journal of Estonian Parliament from 1999-2001. His other experience includes work with the Centre of Policy Research (PRAXIS) and the Ministry of Population.
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Excerpts From the Report:
Mission
The Asian Development Bank’s (ADB) Anti-Corruption Policy, approved in July 1998, designates the Office of the Auditor General (OAG) as the initial point of contact for allegations of fraud or corruption among ADB-financed projects or ADB staff. ADB established the Anti-Corruption Unit in OAG in September 1999 to handle all matters related to such allegations. Effective January 1, 2005, the Anti-Corruption Unit became the Integrity Division (OAGI). The upgrading provided greater recognition to OAGI’s activities and it further strengthened the supervision, management, and autonomy of its activities.
Complaints and Sanctions
In 2005, OAGI received 199 complaints (concerns or allegations of fraud or corruption related to ADB-financed activity or staff). After screening, OAGI opened 102 investigations and closed 59 complaints after concluding further investigation was not warranted. OAGI presents investigative findings, recommendations for reinstatement, and requests to close investigations to the Integrity Oversight Committee pursuant to the ADB Integrity Guidelines and Procedures. This body determines if firms or individuals involved in ADB-financed activities violated the policy and may impose sanctions. The Integrity Oversight Committee consists of three members, and three alternate members who fill any vacancies that may occur due to absences or conflict of interest. Members are nominated by the Auditor General and approved by the President annually. The principal director of Central Operations Services Office and an assistant general counsel advise the Integrity Oversight Committee.
Cases Considered by Integrity Oversight Committee in 2005
31 cases to consider OAGI investigative findings
40 firms debarred for periods ranging from 1 to 7 years
2 firms and 1 individual reprimanded
22 individuals debarred for periods ranging from 2 to 7 years
11 individuals debarred indefinitely
7 cases to consider reinstatement of eligibility (upon expiry of minimum sanction period)
8 firms and 3 individuals reinstated or removed from ineligible list
1 case to discuss amnesty to of certain entities prepared to cooperate with an investigation
3 cases approved for OAGI to terminate the investigation
Sanctions (since 1998)
As of 31 December 2005, 146 firms and 148 individuals were declared ineligible to participate in ADB-financed activities.
Disclosure
The ADB does not publicly disclose the names of firms and individuals ineligible to participate in ADB-financed activities pursuant to the Policy (see paragraph 60). OAGI shares that information on a confidential basis with other MDBs and international organizations as well as others with a demonstrated need to know. ADB staff may access the list of sanctioned entities to ensure compliance with the sanctions. The ADB notes: “Some ADB member countries, NGOs, and other stakeholders have questioned ADB’s policy not to publicly disclose the names of sanctioned individuals and entities. As noted in paragraph 44, ADB staff have access to the list of debarred entities, and OAGI shares the information with other MDBs, international organizations, and others with a demonstrated need to know. The Auditor General and OAGI have often considered and continue to reassess the benefits and weaknesses of publicizing ADB's Anticorruption Sanctions List, and concluded that, under the present circumstances, ADB can best implement its Policy by retaining the current practice that those names are not publicized. OAGI has posted on the internet a detailed explanation of this decision and will continue to engage stakeholders to help them better understand the rationale for maintaining this policy.”
Strengthening Key Institutions
Providing assistance to strengthen supreme audit institutions is an important component of ADB’s policies on governance and anticorruption. OAGI seeks opportunities to work with supreme audit institutions in DMCs to enhance public accountability, a key element of good governance, and to reduce waste and abuse of public funds, thus contributing to combating corruption. In addition to exchanging best practices with supreme audit institutions, OAGI provides training in forensic accounting and other investigative techniques to financial analysts and project implementation officers affiliated with supreme audit institutions.
Rising Expectations
The increasing expectations and growing awareness of the importance of fighting corruption have led to growth in volume and complexity of OAGI’s workload. OAGI receives an increasing number of allegations of fraud or corruption each year as illustrated in Figure 6. In 2005, OAGI received 199 complaints, an increase of 44% compared with 138 complaints received in 2004. OAGI believes that the increase in complaints may be attributed to the OAGI’s awareness-building activities among staff, heightened media coverage of corruption issues and capacity building efforts with key institutions and government officials in ADB’s developing member countries.
ADB’s projects are frequently located in environments and industry sectors where fraudulent and corrupt activities, as defined by ADB, are institutionalized and pervasive. For example, OAGI investigated allegations arising from one project and found evidence of bribery, extortion, collusive bidding/bid rigging, phantom bidders, fake tender advertisements, conflicts of interest, defective pricing, rigged specifications, leaking of bid information, tampering with bidding documents, bid evaluation manipulation, forging of authorization letters, and false bid securities. OAGI has opened a total of 14 investigations since 2003 arising from this project. As of 31 December 2005, these investigations had led to the debarring of 26 entities. A procurement review undertaken by ADB operational staff as part of their oversight of another project identified 30 allegations of fraud and corruption for investigation by OAGI in 2006. As of 31 December 2005, OAGI had opened 12 investigations relating to this project.
* * *
Author and development expert Michael H. Wiehen developed a key guide for the German development agency GTZ: Avoiding Corruption in Privatization - A Practical Guide
Summary
Despite all efforts to contain corruption, the privatization process in any country is still very vulnerable to corrupt initiatives. While it has long been recognized that the quality of public governance in a country is the major determinant for the spread, the impact and the significance of corruption, it has emerged more recently that the quality of private sector governance is a major factor as well. The vulnerability of the privatization process to corruption is critically determined by the chosen privatization method and modalities, but also the general governance environment, the quality of the legal and economic systems and rules, the existence of a clear and transparent privatization policy and strategy, the existence of effective and functioning legislative, judicial and administrative institutions and structures (e.g. the existence of a central privatization agency), and of an effective internal and external audit and parliamentary control system.
A particularly significant factor across the board is the degree of transparency of the government processes – the more open and transparent the administrative assessment and decision making processes are, the more difficult it is to manipulate, falsify and corrupt them for personal benefit.
Most single-enterprise privatization processes follow the same pattern: After (i) strategic considerations and decisions have been made, the (ii) detailed preparation of the privatization takes place, followed by the (iii) marketing and finally the (iv) evaluation of offers and bidders, negotiations and conclusion of the contract. Each one of these four steps offers numerous entry points for corruption. The paper is structured according to these four steps and demonstrates for each one manifestations and possible weak points for corruption and suggests many measures that can be used to contain/minimize or avoid corruption. As a fifth element, it is strongly recommended to accompany the entire process with a careful monitoring procedure and to subject every single privatization to a careful post-audit.
Experience clearly shows that the more transparent the processes, the more difficult it is to manipulate them for personal gain. (i) Open or controlled competition or tendering for the acquisition of the enterprise should be done with the benefit of an Integrity Pact, under which both the state and all the bidders commit themselves prior to the start of the process to refrain from all corruptive acts and submit to sanctions if violations of any of the commitments occur. Integrity Pacts are normally monitored by civil society organizations such as, but not exclusively, national chapters of Transparency International. The Integrity Pact process is also characterized by a high degree of transparency. (ii) The process of selecting consultants for any of the steps of the process could also employ the Integrity Pact model, and should in addition include requiring of the interested consultants the submission of an “integrity statement” in which they confirm/pledge their independence of potential bidders and the absence of previous integrity problems. (iii) Conversely, state officials involved in critical decision making in the privatization process should be required to sign ethical commitments such as “I will not accept or demand any bribes myself or tolerate bribery by others, and I will voluntarily disclose any potential conflict of interest”.