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Hearing Before the Financial Services Committee of the House of Representatives Highlights Nigeria and Romania as Case Studies and Key Insights into Money Laundering
Excerpts of the statements to the Committee by Nuhu Ribadu of Nigeria, Monica Macovei, former Justice Minister of Romania, and Raymond W. Baker, Director, Global Financial Integrity
Capital Loss and Corruption: The Example of Nigeria
…. The corruption endemic to our region is not just about bribery, but about mismanagement, incompetence, abuse of office, and the inability to establish justice and the rule of law. As resources are stolen, confidence not just in democratic governance but in the idea of just leadership ebbs away. As the lines of authority with the government erode, so too do traditional authority structures. In the worst cases, eventually all that is left to hold society together is the idea that someday it may be your day to get yours. This does little to build credible, accountable institutions or put the right policies in place.
In Nigeria, it is believed that former President Abacha took himself between $5-6 billion and invested most of it in the West -- in 80% of the grand corruption that takes place in Africa the money is kept somewhere else, enabled by systems of poor regulation that allow abuse by those looking for ways to profit.
Between 1960 and 1999, Nigerian officials had stolen or wasted more than $440 billion. That is six times the Marshall Plan, the total sum needed to rebuild a devastated Europe in the aftermath of the Second World War. When you look across a nation and a continent riddled with poverty and weak institutions, and you think of what this money could have done – only then can you truly understand the crime of corruption, and the almost inhuman indifference that is required by those wield it for personal gain.
The West must understand that corruption is part of the reason that African nations cannot fight diseases properly, cannot feed their populations, cannot educate their children and use
their creativity and energy to open the doorway to the future they deserve. The
crime is not just theft. It is negligence. Wanton negligence, the full impact of which is likely impossible to know.
Corruption is often
viewed as a political challenge, and many donor nations would rather support
I urge you to view he fight against corruption as the ultimate humanitarian effort, for surely there is no stronger chain to shackle the poor to their lot. Corruption may have taken some shots at us, but what it is doing to ordinary Nigerians every day is far worse and far more fatal. When corruption is king, there is no accountability of leadership and no trust in authority. …How can you call on your government to address what ails society and build stronger institutions?
Monica Macovei, former Justice Minister, Romania
Problems encountered in discovering, disclosing and deterring corruption in Romania
Approximately 20 ministers and parliamentarians (“sitting” and “former” at the time of the prosecution) were indicted for corruption or fraud in the last three years, along with many other high officials in the central and local administration, police or members of the judiciary, as well as heads and administrators of companies. These prosecutions have been a premiere in Romania.
However, deterring sanctions did not come. Once before the courts, the high political
corruption cases in particular have not received solutions on the merits. Instead, they have
been postponed for months and even years, for a variety of reasons:
In parallel to the law enforcement investigations in high level political corruption cases, the legal stability and efficiency of the anti-corruption (and anti-crime in general) framework was endangered by a Chamber of Deputies’ 2007 decision which amended, at its own initiative, the criminal procedure code, introducing, for instance, the rule that interceptions could only be possible after the person under investigation had been informed that an investigation takes place.
This and other provisions constituting strong obstacles against criminal investigations (and international police and judicial cooperation in cross border organized crime) did not enter into force following the President’s decision to return the law to the Parliament and request its re-examination. Among others, the then US Ambassador and the European Commission also sent public signals on the danger of adopting such provisions which would at least hamper the efficiency of international cooperation in criminal cases. Those provisions are not in force, but the attempt to take away important instruments in the fight against corruption and organized crime was clear.
Raymond W. Baker
The Context within Which Corruption Thrives
Since the 1960s, we in the Western world have created and expanded an entire, integrated global financial
structure to facilitate the movement of illicit money across borders… This system now comprises a number of elements:
…. The fight against global corruption is not being won. It cannot be won while at the same time maintaining a
shadow financial system that moves trillions of dollars of other forms of ill-gotten gains around the world.
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A Crucial Governance Test
Exclusive analysis for Ethicsworld
Anti-Corruption at the Core of Government Change in Bangladesh: What Next?
By Iftekhar Zaman
Executive Director of TI-Bangladesh and a Board Director of Transparency International
Dhaka, 03 January 2009.
Election to the 9th national Parliament in Bangladesh was held on December 29, 2008 peacefully with an unprecedented 87 percent turnout of registered voters bringing to power the opposition coalition led by the Awami League with nearly three-fourth majority. Held after two years of a caretaker government backed by the country's military, the election has been commended highly by a huge contingent of national and international poll observers as free, fair and highly credible by any democratic and standard, though there were some allegations of irregularities considered insignificant.
People participated in the election with great enthusiasm and a huge expectation for change in a country that has been ranked on top of Transparency International list of countries where corruption has been perceived to be highest for 5 successive years from 2001 to 2005 and then in the 3rd, 7th and 10th position respectively in 2006, 2007 and 2008 respectively.
The Awami League, led by Sheikh Hasina, former prime minister (1996-2001) and leader of the opposition (2001-6) capitalized in its election campaign on the public concern against widespread corruption by the Government that ruled from 2001-6. It also promised effective control of price of foodstuff and other daily essentials; fight against growing influence of faith-based politics and religious militancy and a long-standing national issue of trial of war criminals during the war of the country's independence in 1971. The Awami League also appealed to the young first time voters who formed 30 percent of the electorate by promising strong action against corruption, war criminals, employment and job creation and e-governance.
Most pre-election commentaries and forecasts predicted an Awami League victory, but the way the ruling 4-party coalition led by the Bangladesh Nationalist Party (BNP) that ruled the country during 2001-6 performed surprised everybody. The BNP led by Khaleda Zia, former prime minister (1991-6 and 2001-6) and leader of the opposition (1996-2001) whose two sons and most of her cabinet colleagues were alleged to be beneficiaries of deep and wide corruption, got only 29 seats in a parliament of 300 members against its 193 seats in the previous parliament. By contrast the Awami League captured 231 seats (out of 299) where election was held against its 62 in the pervious parliament. The Awami League captured 49.02 percent of votes against BNP’s 32.74 percent. Together with partners the Awami League-led coalition will have over 263 seats. The election was also a strong public verdict against fundamentalist forces as the Jamaate Islami which was a coalition partner of BNP in the 2001-6 government with 17 seats was routed almost completely getting only 2 seats.
But overriding every other commitment would be its capacity to control corruption, especially, making corruption punishable without fear, favour and partisan consideration and through due judicial process. Equally important will be the degree to which Awami League is able to deliver on its commitment to make the key institutions of democracy and national integrity system effective, particularly the parliament by embarking on a change of political culture characterized by a “winner takes all” approach. The Awami League’s challenge will also include making the other vital institutions effective like the judiciary, the election commission, the anti-corruption commission, the public service commission, etc., which underwent significant reforms at the initiative of the outgoing caretaker government.
It will also be important to observe to what extent the new government owns some of the other recent policy and legal reforms introduced by the Caretaker Government, like implementation of commitments as a State Party to the UN Convention against Corruption, the Human Rights Commission, the local Government Commission and the Right to Information Ordinance, all of which are viewed to have created new opportunities to institutionalize democracy, promote good governance and combat corruption with greater effectiveness.
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A Statement from the Committee for Economic Development
Washington, D.C. January 23, 2008 - The presidential campaign has achieved unanimity among all of the candidates – both Republican and Democrats – and among virtually all of the voters – including independents. Almost everyone agrees that “Washington is broken.” Every candidate wants to bring “change,” and a deciding issue seems to be whose background, experience and skills can best achieve that “change.”
Washington is broken. Civic debate has become uncivil invective; analysis has been displaced by ideology; and vital public issues are not solved, but rather stored for future partisan use. Our political system has not addressed the rising public debt, ballooning and crippling health-care costs, a looming Social Security shortfall, and serious energy and environmental problems. Efforts to deal with our educational system are woefully inadequate. If our political system cannot confront these visible challenges, where will it find the reserves of comity and trust to face the unknown crisis that can erupt at any time?
All of the Presidential candidates acknowledge that our system is broken – but their ideas about what do to fix it are superficially and patently ineffective. The Committee for Economic Development, an organization of 200 business executives and education leaders that has addressed key public issues since 1942, has studied our political and policy processes for the last two years, and has issued specific recommendations to fix Washington. We hereby challenge the candidates – for president and for every federal elective office – to answer the tough questions, and say whether or not they would support the key actions that could achieve change – the key policy steps that are needed to make Washington work.
We offer four such actions to test whether the candidates are willing to step up to the challenge of fixing Washington.
First, are you willing to make the key nonpartisan policy changes to put the right people on the job in Washington?
State legislatures have engaged in outrageous gerrymandering – incumbent-protection schemes – for decades, resulting in House elections that return a higher percentage of incumbents than the elections for the former Supreme Soviet. Such legislative reapportionment has driven Representatives toward ideological extremes, and has made bipartisan cooperation an object of nostalgia. Will you seek federal legislation, or at least jawbone the states, to put redistricting into the hands of nonpartisan commissions, which
The cost of congressional elections has skyrocketed, forcing Representatives and Senators into constant fundraising campaigns in which they unavoidably become obligated to big money donors. Are you willing to go to the taxpayers to advocate for a public investment in a Congress that is not for sale – with a public two-for-one match for small (up to $200) contributions, so that typical voters, not big money contributors, can become the key funders of political campaigns?
Are you willing to take on the Congress to end lobbying and ethics abuses?
The limited lobbying and ethics reforms adopted last year allow Members of Congress to
The Congress has proved unwilling to create an independent Office of Public Integrity to enforce its ethics rules. Instead, it tries to investigate itself, through Ethics Committees that routinely procrastinate and deadlock on any important issue. Are you willing to direct the Congress to create a blue-ribbon Office of Public Integrity to guarantee the public that their elected representatives will avoid conflicts of interest?
Will you bring an end to the scandal of earmarking?
Last year, the Congress passed an appropriations omnibus with more than 9,000 earmarks. Congressional leaders reward or punish their Members with earmarks. A federal indictment was handed down on an exchange of bribes for earmarks. Lobbyists ask representatives to give earmarks to their clients, and their clients to give contributions to their representatives. Over the years, a Congress that increasingly ingratiates itself to its constituents with earmarks will appropriate increasing amounts of spending to pay for more earmarks. Will you demand that congressional rules allow any single representative to challenge any earmark with a point of order, and demand that the President refuse to implement congressional report language that recommends earmarks that have not been offered, with proper notice, for legislative action?
Will you ask the Congress to run by rules that are on the level?
The House continues to squelch debate and amendments from the Minority. The Senate
These questions are just the beginning of a discussion of CED’s recommendations for making Washington work. They also could be just the beginning of a serious campaign discussion of “change” in a Washington that is “broken.” Who will force the candidates to answer these tough questions? Can we start that debate now, before we select the next President of the United States?
Visit the Committee for Economic Development
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Transparency International Georgia urges transparency in aid assistance, or risk corruption
Questions are being asked about the precise uses of the billion dollars in economic assistance that the Bush administration has announced the U.S. is giving to Georgia in the aftermath of the humanitarian crisis there. Two days before Bush’s pledge, European leaders announced that the European Union will also provide aid for reconstruction in Georgia. Transparency International Georgia issued a strong plea to the United States, European Union member states, and multilateral and donor agencies involved in aid to Georgia to provide assistance “in a transparent manner, in line with the principles outlined in the 2005 Paris Declaration on Aid Effectiveness.”
“TI Georgia calls on all parties involved in current and future aid negotiations to open the process to public scrutiny and public debate,” says Tamuna Karosanidze, Executive Director of Tbilisi-based TI Georgia. “Aid to Georgia will only be effective if the process of allocating and implementing aid is transparent and open to substantive input from - and oversight by - Georgian citizens, legislators, interest groups, aid agencies, and civil society representatives.”
In an article that appeared in Georgia Today, an English language publication in the country, TI-Georgia purports that out of the one billion dollars promised, $370 million are guaranteed, $200 million are likely, and the other $430 million may or may not appear over the coming years. Transparency and proper oversight will be key if all one billion dollars of aid are to be spent responsibly.
So far, the only figure to have been made public to date is $150 million of the package, to be provided through the Overseas Private Investment Corporation, a U.S. company helping other American firms invest in emerging markets. No other U.S. agency has published a breakdown of the remaining $570 million. The ongoing negotiations surrounding the $570 million aid package seem to be limited to representatives of the US and Georgian leaderships, the IMF, and the World Bank, TI-Georgia said. Parliament, the media, and aid agencies have not been provided with updates about the progress of talks.
According to TI-Georgia, “These figures raise concerns about transparency.” TI-Georgia could not find any clauses or agreements that would govern how the money should be spent – a finding that could open to door to corruption.
Both the United States and the major European donor countries are signatories of the 2005 Paris Declaration on Aid Effectiveness. Their commitment requires them to:
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The IMF, the multilateral official institution responsible for safeguarding the global financial system, has taken the first key steps towards reforming a governance system that has been criticized for favoring the United States, Japan and Europe’s leading economies.
The IMF French Managing Director, Dominique Strauss-Kahn, who took office last year, announced the appointment of a “committee of eminent persons to assess the adequacy of the Fund's current framework for decision making and advise on any modifications that might enable the institution to fulfill its global mandate more effectively,” in an IMF press release.
The Committee is being headed by South African Finance Minister Trevor Manuel, and is expected to report by next April. Mr. Strauss-Kahn said he hoped that concrete reform proposals can be determined by the Fund’s leaders by September 2009.
For all of its 60+ years the IMF and the its sister organization, the World Bank, have been led respectively by a European and an American. The U.S., as the largest shareholder in these organizations has always insisted that it nominate the president of the World Bank, the leading global aid agency. Other major shareholders – notably the Japanese, the British and the French – have always supported the U.S. and in return the U.S. has always supported a European to lead the IMF. But, the Bush Administration’s highly controversial nomination of former U.S. Deputy Defense Secretary Paul Wolfowitz to head the World Bank caused controversy, and the scandals that led to Mr. Wolfowitz’s resignation triggered far-flung protests about the secretive manner in which the leadership of these organizations is determined. The protests became all the louder when, once again with the most recent appointments, the decisions were taken behind closed board room doors of the organizations, and traditional decisions were reached – an American, Robert Zoellick became head of the bank and Mr. Strauss-Kahn took the helm of the IMF.
Not only has there been mounting support from academics, NGOs and many expert observers for a more open system of appointments, there has also been support for major efforts to ensure that the leaders of these institutions are selected solely on merit, rather than nationality. Underlying these discussions, however, are more fundamental issues related to the shareholdings (called “quotas” in the IMF) in these countries. Where once it might have been argued that the allocation of shares reflected the relative economic size of the member nations, this is no longer the case. The older, more mature industrial nations dominate the shareholdings, while the newly emerging economies, with China at the fore, continue to have very small holdings – albeit ones that were modestly increased in recent years - and thus, by implication, little influence on the governance of the organizations.
It is against this background that the decision to form a top-level committee is particularly timely and significant. It will be widely seen as suggesting that the major shareholders clearly recognize that there is some merit to the rising volume of criticism.
Mr. Strauss-Kahn stated that careful consideration needs to be given to the composition, the relative importance, and the responsibilities of the various IMF’s governing bodies, notably its Board of Governors, the International Monetary and Financial Committee (IMFC), the Executive Board, and Fund Management. He said, “The committee's perspective, which I hope to have by next April, will provide yet another important input to our reform efforts, which have benefited recently from important work by many groups and individuals, including the Fund's Independent Evaluation Office; the Fund's Executive Directors, who have formed a working group to focus on these issues; numerous academics and analysts; and civil society groups. I want to thank these eminent persons for agreeing to bring their experience, expertise, and wisdom to bear on the on-going reform of IMF governance.
Background from the IMF:
The IMF is governed by, and is accountable to, its member countries through its Board of Governors. There is one Governor from each member country, typically the finance minister or central bank governor. The Governors usually meet once a year, in September or October, at the Annual Meetings of the IMF and the World Bank.
The day-to-day work of the IMF is carried out by the Executive Board, which receives its powers from the Board of Governors, and the IMF's internationally recruited staff. The Executive Board makes key decisions as well as selects the IMF's Managing Director, who is appointed for a renewable five-year term. The Managing Director reports to the Board, serves as its chair and is the chief of the IMF's staff, is responsible for ordinary business subject to the direction of the Board, and is assisted by a First Deputy Managing Director and two other Deputy Managing Directors.
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The government watchdog group Citizens for Responsibility and Ethics in Washington (CREW) publicly condemned a recent D.C. court decision to overturn a conviction against David Safavian, a senior government official accused of accepting lavish gifts from notorious lobbyist Jack Abramoff in exchange for giving up inside information. Safavian was convicted for lying to Senate investigators, General Services Administration ethics officials and the agency's inspector general about his relationship with Abramoff. The Abramoff scandal broke about four years ago, but Safavian was the only person who opted to go to trial rather than accept a government plea deal, The Associated Press reported on June 17, 2008. He had faced 18 months in prison.
CREW’s executive director Melanie Sloan stated:
“Jack Abramoff routinely offered up meals, tickets and trips to government officials who seemed susceptible to such offerings and who were in a position to help him. David Safavian was just one such official. To make it clear to all other government employees that such conduct will not be tolerated and that they will be held accountable, it is imperative that the Justice Department retry Safavian for his crimes.” Sloan, a former federal prosecutor, continued, “The court’s decision today should have little bearing on any other Abramoff-related prosecutions. Anyone looking to the court’s decision here to save them from prosecution will be sadly disappointed.”
CREW provides numerous resources that give background on the case, including a number of e-mails exchanged between Safavian and Abramoff and past news stories on the issue.
The Abramoff scandal sparked huge controversy in the United States over the relationship between public officials and those who lobby them. This incident was very influential in U.S. government ethics reforms, instituted about a year ago. (See EthicsWorld coverage).
If you are interested in other emerging stories on public official accountability, CREW regularly updates its website with news and analysis directly related to this topic.
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By an overwhelming majority, European Parliament lawmakers adopted a report recommending a mandatory public register for lobbyists that seek to influence decisions at the European Union's institutions, Deutsche Welle reported on May 9, 2008. Critics say the more than 15,000 lobbyists who court the EU legislators have held far too much sway in the drafting of EU laws and measures concerning everything from blacklisting bad chemicals to deciding how to set carbon dioxide emission caps. Erik Wesselius of the Amsterdam-based NGO Corporate Europe Observatory estimates that the lobbyists spend up to 1 billion euros [$1.5 billion] a year to influence decision-makers in Brussels.
The proposal seems like an initial attempt to mirror a U.S. ethics reform bill which was passed in August 2007 in order to regulate lobbying activities. (See EthicsWorld coverage).
The decision to ratify the proposal made by the European Parliament's constitutional affairs committee is based on an earlier report by Finnish MEP Alexander Stubb. The European Commission had previously adopted the European Transparency Initiative to address concerns about the influence of interest groups. The Stubb report is a response to the European Commission’s proposals. The main recommendation from the report, on which the European Parliament voted in favor on May 8, was the implementation of a mandatory, public register of lobbyists’ professional activities and financial background that would serve all EU legislating bodies.
The following is a brief outline of the Stubb report which covers an array of reforms regarding lobbying activities. The new measures proposed by the European Parliament are hoped to be instituted by June 2009, according to Deutsche Welle.
The European Parliament recognizes that lobbying has significantly increased with the broadening of European Union activities and is having a particularly large influence on the allocation of funding. The report recognizes transparency as a “two-way street” and a “prerequisite for legitimacy” of the EU legislating bodies.
The European Parliament already has a mandatory register in place and a Code of Conduct outlined in its “Rules of Procedure.” The Code, available online, requires Members of Parliament (MEPs) to make detailed declarations of their professional activities and to refrain from accepting gifts or benefits. Registered assistants of MEPs are also required to declare their other paid activities.
See the full report.
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China’s continued suppression of activists who are speaking out against high levels of pollution is an alarming feature of the country that will soon host one of the world’s most high-profile events – the 2008 Olympics.
The cover of this week’s Economist magazine features the maniacal eye of a red dragon with the headline “Angry China.” Among the other negative headlines in the international media on China’s crackdown in Tibet, its questionable business relationships and allegations of child labor in Chinese factories, China’s response to pollution can be added to the list.
The Economist article tells of a zealous environmental activist who has won accolades from international organizations but intense ire from Chinese local authorities. The complete degradation of Tai Lake, which the environmental activist Wu Lihong brought to light, has become “one of China’s biggest environmental scandals since the Communist Party came to power,” the article reported. Attempts have been made to restore the lake to its once famous beauty, but the damage has been done. Even more disturbing is the Economist’s account of how Mr. Wu was in the meantime, arrested on charges of fraud and blackmail and sentenced to three years in prison.
Mr. Wu is not the only one. The article gives evidence that public discontent is cannot be ignored. The figure given by Chinese officials, and quoted in the article, put the number of ‘mass incidents,’ most likely a reference to public protests, rose from 10,000 in 1994 to 74,000 in 2004. The government is now reporting a decrease of 22 percent, but one has to wonder whether this is just an attempt by the government to put a happy face on a still unstable situation.
International criticism of China has been common, but stories of domestic discontent points to the real depth of the problem. The environment is clearly an issue the Chinese care very much about, and they are largely brushed aside, or in the case of Mr. Wu, imprisoned. An editorial in the Economist on the same subject admits the Chinese government does have cause for concern, but it also has much to learn. China’s response to protests from its own people will have to be faced head-on, the editorial argues, to maintain internal stability. The Chinese people are demanding it.
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First briefing advocates general budget support with active engagement of civil society organizations
The International Budget Project (IBP) published its first brief on current trends in aid spending for civil society group involved in budget tracking. If industrialized countries actually follow through on their aid spending targets, foreign aid is expected to rise substantially which highlights the importance of making sure the money is spent in a responsible manner. In general, IBP describes two types of aid spending. Project spending involves the donor country allocated a certain amount of funds on the condition that it is spent according to specific guidelines and procedures, laid out by the donor country. In this form, recipient countries must spend large amounts of time and money reporting back to these donors. “Budget support,” on the other hand, is money that is given to boost a specific sector or the country’s general budget and is spent through pre-existing budget mechanisms. This form of aid spending is more efficient, and according to research cited by IBP, has increased pro-poor spending and in some cases, strengthened financial management systems. Currently, IBP states only five percent of total aid goes toward budget support.
Although IBP recognizes the risks involved in budget support, such as corruption, the briefing paper advocates more movement toward this type of spending accompanied by specific action plans to support it.
Recommendations to donors:
Most importantly, donors “need to ensure they do not displace parliament and civil society voices” in the budgeting process.
Recommendations to civil society organizations:
It is particularly important that when increasing budget support spending, civil society groups are allowed to be very active.
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More serious cooperation between the Sri Lankan government and the Gulf states is key to protecting all workers’ rights, HRW says.
In a recent study, Human Rights Watch (HRW) found widespread abuse taking place in the Gulf states against Sri Lankan migrant, domestic workers. In interviews with 100 Sri Lankan women, as well as numerous governmental and non-governmental institutions, HRW documented an alarming number of cases where labor laws in the Gulf States do not meet international labor standards for migrant workers and Sri Lankan policies are too weak to provide adequate protection.
HRW found that a large number of Sri Lankan women are working for barely any pay, are forced to work an excessive number of hours, have had their identification cards confiscated, are suffering a range of physical, emotional, and sexual abuse from their employers, and in some cases, are forbidden to return home before their contracts have expired. Furthermore, since laws in these countries exclude them, these women have little to no recourse to take action against their employers. In some cases, HRW found these women suffered even worse forms of abuse for attempting recourse.
Foreign employment is extremely lucrative for the country of Sri Lanka. HRW reports that the country receives $2.33 billion in remittances each year as a result of overseas employment, roughly nine percent of the gross domestic product. Because of large inflow of money, the Sri Lankan government actively promotes foreign employment. As a result, the human element often gets left out and women are treated more like commodities. Sri Lanka has one organization, the Bureau of Foreign Employment, that is supposed to ensure labor recruitment is done legally and that corruption is minimized. However, HRW shows there are many gaps in the system. Some women have been given misinformation as to the country they will be working, the amount of salary they will receive, and have even been subjected to some pre-departure medical treatment without their knowledge or consent.
Sri Lankan women endure this system only as a matter of survival. Despite the fact that Sri Lankan women have some of the highest literacy rates and widest access to health care in southeast Asia, they are highly discriminated against in the domestic and economic arenas. HRW reports that the International Labor Organization has called the gender pay gap in Sri Lanka, “rocketing.” Men are being paid significantly more than women. There are also very few opportunities for women in the workforce, so they are forced to find work elsewhere. Many women also endure a high level of abuse in Sri Lanka. Laws against domestic abuse are weak. The Sri Lankan government has reported that an estimated 60 percent of women experience domestic violence. Seeking foreign employment is one way to escape an unhappy life to make a new one.
Yet unfortunately for many Sri Lankan women, life as a domestic worker in the Gulf states is not any better. HRW details the personal experiences of many women who have suffered extraordinary abuse by their employers and have no way to seek justice. HRW makes several recommendations to both the governments of the Gulf states and Sri Lanka in order to meet international human rights standards, which are clearly not being met.
In Sri Lanka, the government should provide more information to potential migrant workers so they can make more informed decisions and have more control. HRW also recommends instituting a better system for monitoring and regulating labor agents and subagents involved in foreign employment recruitment. Fuller support of women in distress at Sri Lankan embassies and consulates is also necessary. Redress mechanisms should be enhanced and counseling should be provided to those women who return to Sri Lanka after having suffered abuses.
In Saudi Arabia, Kuwait, Lebanon, and the UAE, there is a serious need to revise labor laws to provide equal protection for men and women migrant workers. Workers should be able to change employers, and governments should ensure that employers will be prosecuted if they are found to have caused abuse. Finally, HRW recommends much stronger cooperation between the governments of the Gulf states and Sri Lanka to strengthen labor laws and policies.
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A special committee, appointed by the board of directors of the World Bank calls for far-reaching reforms of the Bank’s Department of Institutional Integrity (INT)
The independent panel, chaired by Paul Volcker and involving Gustavo Gaviria, John Githongo, Ben W. Heineman, Jr., Prof. Walter Van Gerven and Sir John Vereker, stressed that it recognized the critically important contribution that a coherent and forceful attack on corruption can and should make to the Bank-wide goal of facilitating economic development and reducing poverty and that INT must play a central part in that effort. It cannot do so effectively in isolation. What is necessary is a fully coordinated approach across the entire World Bank Group, which would put an end to past ambivalence about the importance of combating corruption.
The Volcker Panel added that, in addition, the World Bank Group, and INT within it, should work with other multilateral institutions in developing, defining, and following “best practices” in protecting institutional integrity and investigating corruption. The Bank should be at the frontier of best international practice in tackling corruption. These recommendations are designed to ensure that the Bank as a whole, and INT in particular, can play that part with conviction and effectiveness.
World Bank Responds:
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Findings reveal that for every dollar companies spend on lobbying, companies receive $28 in earmark revenue.
The number of lobbyists has greatly increased over the past several years raising questions about their influence on Congress and their impact on the companies they serve. Companies are required to disclose how much they spend on internal government affairs staffers, and Congressional representatives have recently been pressed to disclose the amount of money they spend earmarks, clauses added to appropriation bills by individual members of Congress. However, Business Week conducted an investigation in order to fill the data gap on how much companies rake in from lobbyists’ activities. Business Week examined almost 2,000 earmarks that went to companies in fiscal year 2005 and compared the earmark funding each company received with the amount it spent on lobbying the prior year. The investigation concluded that for every dollar spent on lobbying, companies receive $28 in earmark revenue.
Essentially, companies who spend a significant amount of money on lobbying have a troubling amount of control over government expenditures. The Business Week investigation found that more than 20 companies pulled in $100 or more for every dollar spent, a ratio the article notes is way out of proportion: “Look at the results in direct marketing, where an extremely successful campaign might bring in $5 in revenue for every dollar spent.” However, Business Week warns that there is no way to know for sure how companies’ money is really allocated, but its hypothesis is that the true return on companies’ lobbying activities is probably far higher than what the investigation found.
The defense industry is the most dependent on government contracts and thereby the biggest winner of earmark returns. Boeing Co. was by far the largest recipient of earmark money at a total of $456 million. However, Boeing does not disclose how much it spent on lobbying for earmarks versus the many other projects it has pending with the federal government, but earmarks were just a small slice of the $28 billion the company booked that year in government contracts, Business Week reported.
The problem with this process is that earmarks are awarded without competitive bidding, unlike the government contracting process. Members of Congress have wide discretion over what company gets how much money for which projects. Earmarks have the potential to be outright bribes and have been used in such a way in the past. Just one example is Senator Ted Stevens, a Republican from Alaska, who is under investigation for earmark scandals.
Business Week contests that lobbying is on the rise because it is such a lucrative endeavor. In 1998, 1,447 entities hired lobbyists to work on budget and appropriations issues, according to Taxpayers for Common Sense. By 2006, that number had swelled to 4,516 lobbying clients. The future of ethical lobbying reform still remains to be seen since Congress passed extensive new disclosure requirement in August 2007. However, Business Week thinks it is having an impact. It reports that the defense-spending bill in 2005 included 2,657 earmarks worth $11.6 billion; whereas in 2008, the still incomplete defense-spending bill includes 1,337 earmarks worth less than $4 billion.
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The Government for Accountability Project Finds Major Failings in the World Bank’s Anti-Corruption Unit
The Government for Accountability Project (GAP), a not-for-profit whistleblower protection group based in Washington DC, alleged that World Bank’s anti-corruption unit, the Department of Institutional Integrity (INT), has conflicts of interest, has been excessively harsh on Bank staff, has had a bias of hiring American citizens despite the multilateral character of the Bank, and has at times pursued its work in other questionable ways.
GAP has a published a report that comes just a few weeks before the release of a report on INT’s operations by a high-level independent commission that the Bank’s Board of Executive Directors established several months ago after Bank staff complaints about INT – complaints of a kind that appear in the GAP report. The independent commission is headed by Paul Volcker, the former U.S. Federal Reserve Chairman who headed the special United Nations investigation into corruption in the UN’s oil-for-food program for Iraq.
GAP, which by its very nature listens to whistleblowers and pursues interviews with current and former Bank staff members who are willing to talk to it, may as a result be expected to take the side of those who have complained. Nevertheless, the report is likely to raise public awareness of the World Bank’s efforts to investigate alleged corruption in own operations and set the stage for the Volcker report due to be released soon.
Conflict of interest in management. GAP takes the view that, to be most effective, the INT needs to be seen as independent from management. Thus, GAP raises red flags about possible conflicts of interest with regard to INT Director, Suzanne Folsom, who holds this position as well as being an advisor to the Bank’s president.
Performance assessments are excessively critical of staff. The Performance Improvement Plan (PIP), issued to employees who need to meet specific performance goals by specific dates in order to continue at the Bank, appear to be used as an aggressive form of harassment rather than an improvement program, according to some Bank staff. Some PIPs are vaguely worded so that standards to be reached are not objectively measurable, and in some cases, have been warnings to whistleblowers. The Department of Human Resource records show the proportion of INT employees on PIPs for the FY06-07 is excessively high, said the GAP report.
Staff attrition. Attrition rates after the appointment of Suzanne Folsom to Director of INT, in FY06, rose sharply, noted the report going from around 12%-15% of staff in 2004 to over 30% in 2006. GAP said that this led to an over-reliance on outside consultant, which was inefficient and not transparent.
Non-compliance with authorized audits. After a decision was made on an agreed division of labor to be carried out by INT and another department, INT failed to produce a report on time, and the audit was suspended due to insufficient information. Also, INT failed to make requested documents available that would reveal its administrative expenses in a number of categories related to short and long-term contracts. The lack of documentation revealed INT’s inability to demonstrate transparency in its selection of consultants, GAP noted.
Annual Report shortfalls. Despite the increased budget that was implemented after Ms. Folsom took her position and her increased access to the President, case closures fell dramatically between FY04, 341 cases closed, (the last year an annual report was produced) and FY06, 241 cases closed. The Director wrote that the drop in case closures were due to a higher influx of more complex cases over the years. Although GAP does agree that this is the case, it believes the budget increase should have made up some of the difference.
Investigative practices. In FY04, Bank staff and consultants had been the source of 56 percent of the allegations made to INT, and apparently their confidence in the department dropped significantly (to 32 percent) by the end of FY05, when department leadership was in transition. Nor was it restored by current INT leadership in 2006, when the figure for internal reporting still stood at 32 percent for the year. Employees contend that within INT there were breaches of confidentiality; lack of consultation with staff or affected government counterparts; a presumption of guilt in some cases and suppression of evidence in others; and, the routine provision of confidential information about ongoing investigations to another of the president’s counselors. The GAP report provides an in-depth analysis of both external and internal investigations carried out by INT that illustrate these failings.
In conclusion, GAP urges that INT establish itself as an ally of Bank staff in anti-corruption efforts and as an independent investigator. It will require an explicit set of procedures for prioritizing cases and investigating them, as well as the authority and flexibility to go where the evidence may lead.
The full report can be accessed at the Government for Accountability website.
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The freedom and rights of indigenous people have often been marginalized. The International Labor Organization cites that most of the world's estimated 350 million indigenous people are marginalized in almost every aspect of daily life. Indigenous peoples’ ways of life are often perceived as outdated and inefficient by development organizations and national governments. However, it is important not to overlook the merits involved in many of these practices. The International Labor Organization seeks to raise awareness about the plight of many indigenous people, especially in regards to their labor practices.
For years, the Chepang, a small indigenous group of people living in Nepal, have practiced “shifting cultivation,” a technique which they believe to be more sustainable but which most Nepalese condemn as wasteful and unproductive. Cultivation shifting involves planting crops on a small plot of land, and after cultivation, letting the land rest and grow new vegetation so as to replenish the soil. During this time, the Chepang use another plot of land before switching back to the original. It’s a way of naturally using the soil effectively, but may produce less product over time.
The official practice in Nepal is permanent farming, not cultivation shifting. Certain phases, such as controlled burning, have been banned by the government, which has disrupted the ago-old agricultural practice. However, new research by the International Labor Organization and International Center for Integrated Mountain Development has revealed that if practiced correctly, cultivation shifting is actually more sustainable than permanent farming.
The first Nepalese land survey in the 1970s didn’t allow registration of land used for shifting cultivation. Therefore, no one had rights to the land. Much of it was appropriated by the state and turned into community forests where shifting cultivation as well as fishing and hunting are strictly prohibited. The ILO is particularly concerned that Chepang rights have been violated in the areas of rights to land and natural resources, access to services and facilities, and consultation and participation in decision-making. Although Nepal has ratified ILO Convention No.111 on Discrimination in Employment and Occupation, it has not yet ratified ILO Convention No. 169 on Indigenous and Tribal Peoples.
The Project to Promote ILO Policy on Indigenous and Tribal Peoples (the PRO 169) began in 1996. It co-operates with governments, employers' and workers' organizations, NGOs and indigenous and tribal peoples` organizations to carry out its objectives. The Project emphasises the basic concepts of consultation and participation, contained within the Convention, as its starting point in the initiation of activities concerning indigenous and tribal peoples. The Project mainly focuses on Africa and Asia since this kind of work is more advanced in other regions. To read more about the ILO’s objectives in this area, click here.
The ILO hopes to generate a better dialogue between indigenous people and national governments so that people like the Chepang have the freedom to practice traditional labor and better sustain their way of life.
To read the full article, click here.
The US House of Representatives overwhelming voted in favor of an ethics reform bill on July 31, 2007 that many legislators say is the most comprehensive ethics bill since Watergate.
The ethics bill addresses some fundamental problems that have contributed to what Democrats have called a “culture of corruption” in Congress. The legislation essentially seeks to change to two areas – the relationship between legislators and lobbyists and the practice of using public funds to pay for pet projects slipped into spending bills, also known as earmarking.
The lobbying bill now requires that every six months, lawmakers disclose any campaign contributions from lobbyists over $15,000, according to an article in The Washington Post on August 1, 2007. Lobbyists must also detail their own campaign contributions, as well as payments to presidential libraries, inaugural committees and charities controlled by lawmakers. It will also be illegal for lawmakers to accept gifts, meals or travel paid for by lobbyists.
Although the changes are a big step forward, the bill is weaker on campaign contribution exposure than the previous draft. According to The Washington Post, a lobbyist could theoretically give $30,000 to a candidate in one year without ever having to disclose the payments under the current bill.
A Congressional Quarterly article on August 1, 2007 reported that some lawmakers fear new burdens will be placed on already difficult to manage federal campaigns. Some are also concerned with the bureaucratic nature of the legislation because it may set up people to fail.
However, Public Citizen, a US government watchdog, advocates tougher measures. In its lobbying reform summary, it advises quarterly electronic filing for all lobbyists on a Web-based database, reporting the frequency and subject of each lobbying contact and recording the names of authors of legislative provisions, as well as requiring lobbyists to disclose previous federal government employment, among other provisions.
The “revolving door” issue has been a serious problem within Congress. A Public Citizen report reveals that those members of Congress who left office between 1998 and 2004, 43% went on to become lobbyists. Also, of the 952 lobbyists representing drug companies, HMOs or industry-funded groups in 2003, 431 were previously employed by the federal government.
This serious conflict of interest is addressed in the current bill. The Congressional Quarterly reported that Senators have to wait two full years before becoming registered lobbyists, but House representatives refused to extend the same waiting period for House members, which will remain at one year.
One of the most contentious parts of the bill concerns earmarking. Time reported on July 31, 2007 that the current bill requires the content and sponsors of earmarks be listed on the Internet 48 hours in advance of a bill vote and that lawmakers must prove neither them nor their families will financially benefit from the spending projects. Many Republicans say the measures are not harsh enough. Both Senators Jim DeMint of South Carolina and Tom Coburn of Oklahoma have denounced the measure as ineffective.
By most accounts, the bill is not perfect. However, Time reported that Fred Wertheimer, president of Democracy 21, a nonprofit group that focuses on campaign finance reform, characterized the bill as “landmark,” despite some compromises. "With legislation there's never perfection, but this delivers on the commitment that was made by the Democratic leadership to respond in fundamental ways to the corruption scandals of the last Congress," Wertheimer said.