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Article by Alexandra Wrage for Policy Innovations
The following are excerpts. To read the full articles, please visit www.policyinnovations.org
"We are old friends by now," says the official, spooning sugar into his coffee. "And friends take care of each other."
He places the sugar bowl back on the silver tray and slides it toward you. "We are friends, aren't we?" he asks when you hesitate. "As friends, we would like to help you, because as friends we know you will help us."
Your company has invested thousands of man-hours and hundreds of thousands in travel and consulting costs while competing for the job. You have made it to the final round on the strength of high technical scores and a competitive price, but those strengths were not enough to forestall this conversation.
If the scene took place in Nigeria, the official probably would ask, "Are you going to smile on me?" In other African countries he might ask for "tea money." If it were in Thailand, he might inquire, "Are you going to make me happy?" In Jordan, the official might discuss the cost of educating a son in the United States and ask about company scholarships. Every society has its own vernacular for conversations about bribery.
I established TRACE to enable companies to address commercial bribery collectively—to share information, to exchange best practices, to have an emissary that could speak to corrupt officials, their customers, without fear of alienating them. Major multinationals cannot easily meet with ministers of health, or defense, or petroleum and suggest that corrupt demands stop. TRACE, as a neutral third party, can. While I recognize that bribery undermines democracy, poverty alleviation, and confidence in public institutions, I chose to focus TRACE's efforts on increasing transparency in commercial transactions. TRACE serves two groups in the business community—multinational companies and their commercial intermediaries: sales agents, local representatives, distributors, consultants, suppliers, and so forth. Within this community, TRACE can have a considerable impact on supply-side bribery, training members on the financial, legal, and reputational risk associated with bribery.
Over time, TRACE has not only researched and reported on international standards in this field, but also shaped them, bringing greater clarity to an area of uncertainty. If a lavish gift to a government official might be deemed a bribe, who defines "lavish"? If a government official asks for help obtaining a visa, is he asking for a favor or a bribe? If potential customers are touring your factory in southern California on a Friday afternoon, can you invite them to Disneyland the next day to build goodwill, or must you end the meeting with an abrupt handshake once the tour is complete?
In 2006, four major oil and gas companies worked with TRACE to design antibribery training for employees and their government points of contact in Equatorial Guinea. The companies hosted the event and invited key government officials to the table, but I was able to deliver an antibribery message that may have been too difficult for the companies to deliver. Antibribery compliance has grown more sophisticated and member companies have begun to target their efforts to problem spots. To support this, TRACE launched www.BRIBEline.org in 2007 to gather data on the nature and frequency of bribes. Bribe demands can be reported anonymously in 21 languages and the results are collated and reported to the public.
It is not enough for a company to know that a country has a high level of bribery. Are there large numbers of low level demands by customs officials? By the police? Or are the demands more likely to be for very large amounts and requested by officials at the highest levels? With this information, companies can train the right employees and put audit and other controls in place to minimize risks. It has been notoriously difficult to get data on bribery as a criminal activity, but BRIBEline is changing that.
The key to TRACE's success to date has been our emphasis on the business community's shared interest in greater transparency. Although bribery can be toxic to communities and trigger significant ethical issues, our members trust us to find business-friendly solutions to the problem: direct communications with government, industry-specific training, dissemination of effective techniques, and case studies.
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UK-based NGO, Global Witness, received the 2007 Commitment to Development Award, sponsored jointly by the Center for Global Development (CGD) and Foreign Policy magazine.
Global Witness has crusaded to stop the plunder of rain forests in Cambodia and Burma and helped to bring the problem of conflict diamonds in Africa to the world's attention. Its first investigation of illegal timber sales by the Khmer Rouge in Cambodia shut down that trade in 1995. A headline-making Global Witness report in 1998 showed how rebels in Angola were financing a deadly civil war by selling diamonds. That work, along with a January 2000 report by Partnership Africa Canada, another crusading NGO, on the role of diamonds in the civil war in Sierra Leone, figured prominently in the establishment of the Kimberley Process to certify diamonds that are not mined from conflict zones. Global Witness was also a founder of the Publish What You Pay campaign, which seeks transparency about how resource-rich governments spend their share of mineral revenues.
Global Witness is now continuing to expose corruption in various areas, including corruption in the natural resource trade, ending impunity, and the role of financial institutions in money laundering. The three co-founders and their 35 member staff post new articles daily on their website trying to keep global leaders on their toes.
The Center for Global Development posted a Q&A session with Global Witness co-founder Patrick Alley about how the organization has achieved its high level of success and credibility on a shoestring budget. In the beginning, “What we were literally doing was getting permission from London Underground to shake cans outside tube stations at 5 in the morning to try to get a little bit of money to pay for the international phone calls and the research we did in our spare time to build up a baseline of information to work with,” Alley said.
Now the organization has a staff of 35 and a £3 million budget, with the international credibility to back them up. One of the decisions Alley said the group made at the start was that they would not go the way of some other NGOs by exaggerating and sensationalizing their data. “We based our figures on the minimum firm information that we knew,” Alley said. Accurate and reliable information has led to real global action.
When asked how the organization keeps its edge, Alley pointed to the importance of Global Witness’s “intellectual capital, combined with a real anger about some of the injustices in the world.”
To read the full interview, please see the Center for Global Development website.
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Database study suggests donor agencies need to better communicate their strategies and tackle the big issues.
The U4 Anti-Corruption Resource Center has compiled a database of 427 projects developed by different types of donors, civil society and the private sector in an effort to find out more about their anti-corruption initiatives, with whom they are cooperating, and how their strategies are conducted. The study is meant to be an introductory exercise to identify initial trends and also to raise more questions about what is not being done. U4 is a web based resource center for donor practitioners representing and financed by six development agencies: Norad (Norway), DFID (UK), CIDA (Canada), GTZ (Germany), MinBuZa (the Netherlands), and Sida (Sweden). U4 emphasizes that the database is by no means “complete” but can still offer some helpful insights.
In gathering information from the member organizations of the database, authors Harald Mathisen and Markus Weimer found a general lack of strategy for the comprehensive dissemination and communication of anti-corruption initiatives. Furthermore, there was little definitional consensus as to what constitutes an official anti-corruption project. Thus, the database has been divided into those projects with “explicit” anti-corruption goals and those with “implicit” ones. According to U4, explicit projects are those with the words “transparency” and “corruption” in the title. Implicit projects may have better governance and/or anti-corruption activities as their secondary or tertiary goals. Along these lines, 20 percent of private sector engagement was found to be involved in explicit anti-corruption initiatives, whereas the rest was implicit. Explicit projects were mainly undertaken with the public sector as the entry-point. When the private sector was the designated entry-point, anti-corruption activities were less likely to be the main goal.
Overall, multilateral agencies financed the largest number of projects. The International Finance Corporation lead the multilateral category, having financed 30 percent of anti-corruption initiatives represented in the database. USAID topped the bilateral category and Transparency International in the nonprofit category. Both groups together financed about 20 percent of all the initiatives in the database. Nonprofit organizations were found to be the most “outspoken,” in that they tackled corruption initiatives most directly, and multilaterals were the “least vocal.” Most projects targeted Africa, but the most explicit projects were being done in central and eastern Europe, as well as the Americas.
In terms of design, U4 found most “interventions by various agents are remarkably similar.” Mathisen and Weimer expressed concern that this trend could mean more organizations are using a generic blueprint for their projects, a practice which U4 believes is ineffective. In addition, the time scales for most projects tended to be between two to four years. According to U4, this amount of time is really too short to effectively change a corrupt environment. The donor agencies in the database often responded only to specific requests from host governments, other social partners, or projects in areas where they’ve had previous experience. The database records show a general unwillingness to get involved with the more systemic issues.
U4 believes some lessons can be learned from this initial study. When collecting data from member organizations, there were very little resources allocated to communication of the group’s anti-corruption activities. An effort to promote ongoing learning between private sector organizations appears to be very weak, where organizations are only advertising their successes and ignoring their failures. U4 also states that reforms need to be “nationally owned.” Organizations would be more effective if they started to better address the political economy, vested interests, and power structures within the chosen country.
Mathisen and Weimer emphasized the need for more qualitative, case-based assessments to more adequately measure anti-corruption initiatives and put forth a number of other research questions that are still unanswered. The authors encourage readers to comment on the draft by contacting, Harald Mathisen at email@example.com.
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From the Experiences of Transparency International - UK
Over the last several years, under the leadership of the U.K. national chapter of Transparency International, an extraordinary initiative has been evolving to reduce corruption in the defense business. At initial conferences that brought international experts together there were a host of insightful assessments of the scale and the complexity of the issues, but at best the most cautious optimism that anything could be done about them.
It was evident that military personnel were reluctant to discuss the sensitive issues; that many governments refused to divulge details on the grounds that this was “national security” classified information; and, that many companies, notably outside of the United States, felt that they had to use bribes to win deals in competition with the giant American rivals. Nevertheless, in 2004 the UK and Swedish governments agreed to fund a project managed by TI-UK, which has attained formidable and solid results. Mark Pyman, the Defense Project Leader at TI-UK highlighted current approaches at the recent 12th International Anti-Corruption Conference in Guatemala and, together with Maciej Wnuk, Anti-Corruption Director, Ministry of National Defence, Poland, highlighted some of the experiences and lessons learned in Poland. The following is excerpted from their full presentation (To download the full presentation in .pdf)
Today Transparency International (UK) and the Polish Ministry of National Defence of are working together to progress anti-corruption defence reform in Poland. The experience and knowledge of the Preventing Corruption in the Official Arms Trade (PCOAT) team, combined with the political will seen now in Poland, are coming together in a changing environment, in which the issue of corruption in defence can finally be effectively confronted.
In 2004, it was agreed that the defence environment was changing, and that now was the time to address corruption in defence. We as civil society would engage with both defence companies and with governments. An action plan was made. Two governments, the UK and Sweden, were also committed enough to fund a TI team. This project is now three years old, and we are grateful to DFID (the UK aid agency) for providing core funding for the next three years as well.
At the top is to build awareness, build collaboration with the four key groups, build practical experience, and then apply this in practical work with reform- minded governments. Our practical work has so far been with Colombia, Latvia and Poland. Other TI Chapters have been doing excellent work in parallel on defence corruption, especially South Korea and India, as well as Colombia.
The purpose of this work is to enable defence and security reform, addressing both the demand for bribes and the supply by defence companies. To many, defence is still too difficult, too dangerous, too closed or too corrupt to approach. In some countries it is all of these. But in many others it is not. Good political leaders are well aware of what corruption in defence costs, and are very open to engagement with TI.
Monitoring & Collaboration
A word on Monitoring: it is necessary to find ways to assess the anti-corruption performance of defence ministries and defence companies. But we also need tools for a defence ministry to measure the changes, and the benefits, from reducing corruption.
In the area of building collaboration, defence companies have been coming together, as they announced publicly this summer. This is great news, but it is very early days. We are in discussion with our colleagues worldwide, building on their knowledge of specific national issues, on how to encourage further progress. We need all defence companies at the table, and we need the exporting governments to encourage them.
Arms exporting governments are engaged with us. Their support is critical; no defence company will take action unless their government is supportive. Some of them have been ready to organise workshops, together with TI, to discuss this work with their national defence companies.
Finally, NATO has shown itself ready to work actively with us. They are very important, as they have influence with many countries, and the capacity to advance leadership training and education. The question of corruption in a conflict environment is also critical for them. Many analysts now believe that the current environment in Afghanistan is one where NATO is severely diminished by a failure to address corruption actively or holistically.
Case Example: Lessons Learnt So Far From Working in Poland
We have to have consistency in our activities – breaking down the resistance and inertia of the administration. Changes introduced are often slowed down by inertia or resistance of the administration. Reasons for this differ. Some people think that these are only empty statements. Others seek to protect their interests (profits). Still others simply do not have the capacity to act any other way than what they know.
Additionally, overnight reorganisation in the army and the Ministry of Defence would be difficult – an ineffective ministry is better than a completely paralysed one. Minister Sikorski accepted a strategy of gradual but consistent change. At the end of the first year, this strategy generated results: indications of co-operation are now more frequent than signs of rejection of the new policy.
We need experts from outside the defence sector – to change current thinking and procedures (breaking down the routine in activities). Employment of private sector experts with wide experience (who are unconnected to the defence sector) has been initiated. These people are able to introduce major changes by introducing good private sector practices. Lack of previous relationships with ministry employees enables them to work with ministries objectively and effectively.
It helps to have several sources of analysis – forces decision making after a comprehensive discussion, prevents hiding problems under the carpet. Several sources of analysis are used. This prevents hiding problems under the carpet and forces comprehensive discussion.
We cement reforms by changing procedures – makes them reliable internally and externally. However, the most important principle is basing reforms on procedures, rather than on personnel changes only. It makes the adjustments reliable internally and externally. Personnel changes are inevitable, but focusing on procedures clearly indicates that the requirement is to introduce genuine change rather than merely to replace an old corrupt regime with a new one.
For more information on this project please visit TI-UK
For background please also see the TI-UK press release of July, 2006 “TI-UK welcomes the announcement of the creation of a European defence industry anti-corruption working group.”
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Civil Society Coalition Beats Corruption and Delivers Vital Books to Public Schools in the Philippines
Too often when examining cases of high corruption we forget the real and tangible consequences it has on the public, especially the poor. These consequences take many forms – from shoddy roads due to questionable government contracting; to overpriced or diluted medicine resulting from graft and bribery; to, as was the case in areas of the Philippines, overpriced textbooks that are often never delivered to the schools for whom they were meant.
From April 2005 through July 2006, a coalition of civil society organizations in the Philippines, using a small grant from the Partnership for Transparency Fund, an NGO that funds micro-projects to curb corruption, saved their public schools millions of dollars through a project that ensured low-cost textbooks got to public schools free of corruption. The coalition’s report, prepared by Government Watch of Ateneo School of Government, describes the project and is an inspiring case study in how, with relatively small amounts of money, civil society can be mobilized to combat corruption and produce concrete results for ordinary people. The executive summary is reproduced below. For the full report in .pdf, follow this link.
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Good governance is more than just a technical issue - in weak states emerging from serious conflicts it can mean the difference between recovery and peace and a backslide into war. In its new report: "Escaping the Conflict Trap: Promoting Good Governance in the Congo" the International Crisis Group examines the state of and threats to governance in the Democratic Republic of Congo and makes detailed and concrete recommendations for its advancement. The report, the executive summary of which is posted below, is a useful case study for ensuring sound governance and preventing corruption in post-conflict areas.
Escaping the Conflict Trap: Promoting Good Governance in the Congo
Executive Summary and Recommendations
The Congolese state has suffered from corruption since independence. The logic of the 2002 peace agreement, which established the current political transition, has brought problems of governance into sharp relief. Senior positions in the administration and state-run enterprises were shared between signatories, and state resources were siphoned off to fund election campaigns and private accounts. Between 60 and 80 per cent of customs revenues are estimated to be embezzled, a quarter of the national budget is not properly accounted for, and millions of dollars are misappropriated in the army and state-run companies. The mining sector is particularly prone to corruption, with valuable concessions granted with little legitimate benefit to the state.
These governance problems have an immediate impact on the humanitarian situation. Unpaid soldiers harass and intimidate civilians. Factions within the army and government continue to fight over mines and control of border crossings. The displaced civilians have almost no health services to fall back on, and 1,000 or more die daily as a result.
While international attention has concentrated on elections, the other elements of a stable democracy are weak or missing, including the necessary checks on executive power. Parliament is poorly funded and divided, mirroring the weakness of political parties. Parliamentary inquiries lack necessary resources and expertise to be effective. The judiciary is deeply politicised and inadequately funded. Not a single official has been tried during the transition for corruption. Presidential and legislative candidates should have – but have not – presented detailed plans for addressing corruption in customs, public finance and natural resources.
The incoming government will offer new opportunities for improving governance. The president, parliament and local governing bodies will be democratically elected and in theory accountable to their constituencies. Twenty-six provinces are to be created out of the current eleven, each with locally elected provincial assemblies, and to manage 40 per cent of national revenues raised on their territories. Three new high courts will replace the current Supreme Court. But without international support and funding, these institutions will remain largely a shell.
Donors have treated corruption as a technical problem and emphasised data management systems, training programs and laws. They have shied away from the more political aspects, such as strengthening parliament, courts and anti-corruption and auditing bodies. They finance more than half the national budget and should do more to press charges against corruption suspects, make sure the government complies with the mining code and hold multinational corporations accountable for violating national and international norms.
A complete overhaul of the approach to good governance is needed after the elections, with much greater focus on strengthening institutions, especially parliament and courts. The Poverty Reduction Strategy Paper the new government is to publish later this year is already substantially prepared but it should be supplemented by more detail on anti-corruption initiatives and parliamentary capacity building. Major donors should then launch plans to promote governance over a five-year period and at the same time create a successor group to the International Committee for the Support of the Transition to coordinate their actions and their pressure on the incoming government to implement the promised reforms.
To the Incoming Government of the Democratic Republic of Congo:
1. Fund parliamentary commissions sufficiently and cooperate with their investigations.
2. Strengthen the judiciary by supporting legislation to guarantee the independence of the courts and by funding them adequately.
3. Complete a census to get ghost officials off payrolls and raise salaries of civil servants above the poverty level.
4. Create a National Program in Support of Governance to coordinate all actions on behalf of good governance, headed by an anti-corruption czar appointed by the president upon proposal of parliament and provided with sufficient means to carry out the duties.
5. Promote accountability and transparency in the management of natural resources by:
6. Create an international oversight body within the National Program in Support of Governance and deploy international personnel in all government oversight bodies.
7. Create a cell within the Ministry of Finance responsible for recording and investigating the declarations of assets made by members of government before and after their tenure.
8. Carry out the decentralisation outlined in the constitution by:
To Presidential and Legislative Candidates in the 30 July 2006 Elections:
9. Present detailed programs on how to reduce corruption, in particular in public finances, customs and natural resources.
To the Incoming Parliament:
10. Discuss, during the first session, the Lutundula Commission report on contracts signed during the two wars and renegotiate or cancel mining and forestry contracts that are not in the state’s interest.
11. Create a permanent parliamentary commission on natural resources to review contracts signed since 30 June 2003 and monitor compliance with the mining and forestry codes as well as management of revenues in the mining and forestry sectors.
To Congolese Civil Society:
12. Address issues of governance and corruption through pressure on national and provincial elected representatives, including by tracking their voting records.
13. Put more focus on corruption, including by conducting advocacy based on Congolese laws, as well as on the Organisation for Economic Cooperation and Development Convention on Combating Bribery, the Extractive Industry Transparency Initiative, and the U.S. Foreign Corrupt Practices Act.
14. Create an NGO network dedicated specifically to governance issues with a regularly updated website.
To the World Bank and the International Monetary Fund:
15. Work with the government to ensure that, in accordance with Article 46 of the mining code, titles to state-owned mining fields are granted through open tenders.
16. Promote transparency and environmental protection in the forestry industry by:
17. Participate in a group with major governmental donors to coordinate funding and other actions, in particular in the field of good governance.
18. Increase funding to state anti-corruption bodies, including the proposed National Program in Support of Governance, the State Auditor, the Financial Inspectorate and parliamentary commissions.
To France, the UK, the U.S., Belgium, South Africa, the EU, the World Bank, the International Monetary Fund, the African Development Bank and Other Major Donors:
19. Form a new donors group on good governance to coordinate funding and policy advice to the new government, regularly discuss governance issues with key ministries and government anti-corruption bodies and work closely with the proposed National Program in Support of Governance.
20. Put together a five-year donor plan, based on the new government’s anticipated Poverty Reduction Strategy Plan and the United Nations Development Program’s Congo Action Plan, that conditions a substantial funding increase on steps to increase accountability and reduce corruption and includes:
21. Contract an international auditing firm to train and advise the Ministry of Finance cell in charge of recording and investigating government officials’ asset declarations.
To Major Investors and Trade Partners of the Congo, including Belgium, France, the U.S., South Africa, China, Germany, Portugal and the UK:
22. Use export credits to promote accountability with national companies by granting them only to companies that disclose all payments to governments and demonstrate respect for international and domestic laws and norms, including environmental, labour and anti-bribery laws and norms.
To the United Nations Mission in the Democratic Republic of Congo (MONUC):
23. Create a cell within the Political Affairs Division to monitor and report on good governance in coordination with donors.
For the full report, follow this link.
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