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Anti-Corruption and Democratic Values
An exclusive EthicsWorld article
by Dr. Devendra Raj Panday

The royal government of King Gyanendra arrested me, together with my other three colleagues in the civil society in the early hours of January 19th, 2006.  I was released on  April 25th, the day after the king promised to surrender to the will of the people as expressed in the country-wide 19-day long massive demonstrations of peoples’ power by the most economically handicapped of Nepal. For the despotic regime, my crime was to be one of the leaders of the Citizens' Movement for Democracy and Peace (CMDP). The purpose of CMDP was to support the peaceful agitation led by all the major political parties for the restoration of civil liberties and political rights of the people, reinstatement of the dissolved House of Representatives, the institution of an interim government comprised of legitimate political actors (instead of royal courtiers) and election for a constituent assembly to draft a fresh constitution that would guarantee representative, accountable, and inclusive governance forever. In the context of my association, nationally and internationally, with the anti-corruption movement, an interesting question here would be: did I suffer nearly 100 days of cruel imprisonment for democracy; or was it for anti-corruption? Nepal's may be a good case to learn whether one can fight for anti-corruption without also fighting for democracy.

On February 1, 2005 King Gyanendra completed his gradual stranglehold against the people’s aspirations for democratic rights and fundamental freedoms by assuming full powers of the state in his hands. Soon after, he constituted the Royal Commission on Corruption Control (RCCC), which had the power to investigate, prosecute and adjudicate all allegations of corruption by members of the previous, that is, popularly elected, governments. The 12 years of parliamentary rule and the policies and actions of the succeeding governments had indeed given rise to all kinds of grievances from the people, including those about massive corruption, as is often the case with struggling democracies of the third world. The political parties and their leaders were so irresponsible in their governance methods and ethics that their failings also contributed to the rise and growth of the Maoist insurgency in the country. In these conditions, the king thought that he would pacify the national and international opponents of his political move by showing his commitment to control corruption, provide good governance, and bring peace to the country.

None of this happened. The king, who himself came to the throne with a long history of dubious business engagements, only made a mockery not only of the rule of law but also of the anti-corruption struggles and campaigns within the country. By empowering the RCCC, against all principles of law and justice to investigate, prosecute and punish the alleged individuals, the king only showed his design to intimidate politicians and public servants who might dare to resist his lucre for power and money. Yes, money! Subsequent events have shown with enough evidence that the king's government became immersed in corruption with the king himself freely grazing the national treasury for his and his family's further enrichment. The RCCC became a threat to all political personalities capable of fighting the king's ambition, and one of the former prime ministers was arrested in the middle of the night for corruption. He languished in jail for eight months, until he was set free without any charge or conviction. If the person concerned was indeed corrupt, these events only further reinforced what is called in Nepal the "climate of impunity". As the RCCC was used more for political vendetta and intimidation of political actors than for prosecution against corruption, the Commission for Investigation of Abuse of Authority (CIAA), the constitutional body to control corruption that had finally begun to do a credible job, was pushed on the sideline.

Much has happened in Nepal since then. The people and the political parties including the Maoist insurgents are engaged in a dialogue process to manage the transition and move towards the constituent assembly election. Lots of uncertainties and anxieties remain and we need to make sure that the process is smooth and that the outcome, that is, the new constitution to be formulated, truly guarantees a regime that is conducive to the development of corruption-free governance. In the meantime, one cannot but reflect on how dictators try to hoodwink national and international civil societies by pledging their commitment to control corruption even as their main ambition is to destroy representative institutions and accountable governance for the sake of their own power, perks and profits. This is a serious question because Nepal's is only one of many cases that we have experienced in the world. This is not a new phenomenon. This has happened in Africa, Asia and Latin American for many decades.   

In Latin, they say: Corruptio optima pessima. This means, “the best thing corrupted became the worst”. Is this what has happened to democracy in Nepal and many other parts of the third world? If this is the case, how does one go about designing and implementing the needed reforms? If, to illustrate, we have a dictator who is more honest and efficient than, say, King Gyanendra of Nepal, should we allow him or her to do away with democracy so that he or she may deliver a corruption-free country? The answer depends on how we value democracy and how closely we see its relation with accountable and transparent governance. My own answer is: No!

There are two sides to democratic reform. One is about substance, and the other is about the process. A democratic path to reform that includes, among other things, the establishment of accountability structures, would imply that both of these aspects, the process and the outcome, would have to be democratic. The anti-corruption campaigners must resist the temptation that by supporting an anti-democratic move by a dictator, they can take a short-cut to a corruption-free world. They must ensure that the process does not propose to do away with the fundamental values that should be the foundation of all reforms. If, for example, accumulation of wealth is closely related to corrupt practices, the remedy cannot be sought in a political program that blatantly denies property rights or the right to make a good living through one’s personal skill, efforts and sheer hard work. The campaigns for both democracy and anti-corruption are a part of the learning process in a society. In many countries, the civil society and ordinary citizens, too, need to reform, for the political actors to be able to act as expected in a democracy. In the end, the people will punish and educate the political parties and the political leaders, if only the would-be dictators were allow them to do so.

What is the use of strengthening public accounting and auditing or reforming the procurement system in a country, if the country does not have a representative government, the executive is unelected and the decisions of the government cannot be effectively challenged in the judiciary or in the court of public opinion? We can talk about promoting transparency and accountability in government only when the government concerned is representative, with its policies and actions under the scrutiny of its constituents. If so, no dictator should be allowed to flaunt transparency as one of the norms of his governance process. Obviously, I am aware that the actual practices of democracy around the world fall far short of the ideals we aspire to. The remedy here is to work towards the ideal, not to do away with the effort to nurture democratic practices. All in all, even with inadequate accountability culture and structures, elected governments are less likely to get away with corruption than dictatorships and other forms of authoritarianism. Have we not seen the sights of many corrupt dictators – and democratically elected leaders -- being escorted to the courts of law after some semblance of democracy was restored in their countries in Africa, Asia and Latin America?

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Corruption and the Upcoming Elections in Brazil
A Special Article for EthicsWorld
by Claudio Weber Abramo, Executive Director, Transparencia Brasil

Cynicism As a Way of Life

Brazil holds general elections in October. The polls will take place following a huge corruption scandal involving President Lula’s Workers Party (WP). Lula will seek re-election (in Brazil, incumbents can be re-elected once).

The big question is whether the scandal will significantly harm Lula’s performance, or whether his policies, which distribute money to the least fortunate families across the country’s poorest regions, will win the day for him.

The scandal

Several highly-placed WP officials were involved in a scheme of vote-buying in the Lower House of Parliament. The scandal came to light in May 2005, and the repercussions keep raging, although lately there are signs that they may be abating. Two mechanisms operated.

The first was the distribution of directorships to allies in State-controlled companies, of which there are about 130 in the federal sphere alone. This practice was hardly invented by Lula’s government, but it was in one of those companies (the Post Office) that the scandal began. As it always happens, the directorships were used to defraud public procurement tenders and to engage in other criminal practices.

The second mechanism was regularly paying certain “for-rent” parties’ (as they are aptly called) representatives to secure favorable votes. Because the charge was that the representatives were getting monthly payments, the scandal is addressed by the nickname “mensalão”, meaning more or less “monthly graft”.

As a result of the scandal, Lula lost almost all of his closest collaborators: Chief of Staff José Dirceu, Luiz Gushiken, responsible for communications and other assorted matters (Lula’s government is heavily dependent on marketing strategies), Finance Minister Antonio Pallocci (accused of involvement in a subsidiary scandal) and the entire upper echelon of the WP’s bureaucracy. In fact, the party’s ex-treasurer, Mr Delúbio Soares, is accused of being the master cook of the “mensalão”.

His main opponent will be (at least at the time of this writing, but things might change) Geraldo Alckmin, ex-governor of São Paulo (the richest Brazilian state, with a GDP equivalent to South Korea’s). Alckmin is mainly unknown in the rest of the country, and is perceived as empty of ideas. His outlooks are distinctly conservative, and he has been charged with being associated with Opus Dei, the Spanish ultra-right-wing Catholic organization. Alckmin will run for PSDB, which is the main, center-right, opposition party. His coalition will include the right-wing and oligarchic PFL.

Given the options between Lula and Alckmin, there is a tendency among minorities to refuse to vote for either. Although irrelevant in numerical terms, if the polls are very close, this has the potential of tipping the scales in favor of Lula.

The perceived weakness of Alckmin justify speculation that, if he doesn’t show better numbers in electoral surveys than has been the case so far, he might be replaced as the main opposition candidate by center-left José Serra, ex-mayor of São Paulo. Because he is a “developmentist”, Serra is a proponent of changes in Brazilian fiscal policies, and thus frowned upon by the financial community, both national and international, who for years have enjoyed extra-favorable conditions in Brazil.

Although Lula’s career as a politician was always closely linked with the Workers Party trajectory, during the “mensalão” crisis the President managed to disengage himself from the party. Although Lula is a very strong candidate, the common wisdom is that the Workers Party will suffer this year, although how much is up for speculation.
In 2002, when Lula came to power, the WP also became the bigger party in the Lower House, with 90-plus representatives. Today it has only 81 (among a total of 513), and is no more the biggest.

In the 2004 municipal elections (thus before the “mensalão” scandal), the WP fared well, having elected 399 mayors (there are 5,651 municipalities in Brazil). The party was third-ranking in votes for mayors, behind PSDB and PMDB, the latter being a loose congregation of regional satrapies, often with nothing in common.

As for city representatives, the WP elected 3,609 among a grand total of about 50,000, having ranked fourth in number of votes.

This year, predictions are that, as a result of the scandal, the WP will lose from 30% to 50% of its Federal representation. Thus, if Lula gets re-elected, he will probably face hard opposition in Parliament.

But enough of numbers.

The “mensalão” crisis was managed by the government, the Workers Party and the individuals accused in such a way as to present the malfeasances as a way to collect money to pay for electroral campaigns. As if it made any difference (after all, the money originated in criminal activities), as “merely” electoral crimes are misdemeanors at most, and often go unpunished because they prescribe in one year.

Thus, everything was pictured as a dysfunction in the Brazilian electoral financing framework. To boot, as actually proving corruption is quite difficult, even in the face of overwhelming circumstantial evidence, the political defense became indistinguishable from the criminal one.

In fact, for the first time in the Brazilian history, the “mensalão” crisis was conducted from the perspective of the criminal attorney. Thus, cynicism became the norm and accused people, ministers and party officials unashamedly act as defendants in a criminal court rather than political agents speaking before the public. As lying is expected from accused criminals, politicians started to tell the baldest lies – and it seems that, at least politically, some of them are getting away with it (criminally is another cup of tea; they all face criminal charges).

Two of the accused got to the point of explicitly stating that public opinion (be it the opinion expressed in the media or diffuse outlooks from the populace) is not to be taken into consideration.

With all legalistic-cum-politicking flak going around, the actual origins of the scandal went almost un-remarked. The excessive freedom that people in power have to make political appointments (there are no less than 22,000 just in the Federal Executive, compared to 9,051 in the US) inevitably leads to the partitioning of the State among gangs, political and otherwise. This is what the “mensalão” crisis showed, but will not be addressed in the Presidential (or other) campaign.

Corruption is never a big issue in political campaigns in Brazil, barring the usual innuendo directed to opponents. (Contrary to common belief, Lula, as well as the other candidates, did not address the issue during the 2002 campaign – Transparencia Brasil actually measured the theme’s occurrences in the printed media, and it did not appear at all.)

The fact that the Brazilian State’s efficiency in the three spheres of government is severely harmed by corruption is not seriously addressed by politicians. It makes one wonder why.

In fact, as unfortunately happens in most countries, be they underdeveloped or not, Brazilians are generally unsophisticated in their approach to corruption, moralistic attitudes prevailing over rational appraisal.

Moralists often end up as cynics. Brazilians might be on their way towards just that.

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How to Prevent Politicians From Misusing Charities

The following article was written by Rick Cohen, Executive Director of the Committee for Responsive Philanthropy, a philanthropic watchdog. It appeared in the January 26, 2006 issue of the Chronicle of Philanthropy :

How to Prevent Politicians From Misusing Charities
By Rick Cohen

Members of Congress, lobbyists, and much of official Washington have been bracing for fallout over the scandal involving Jack Abramoff, the Washington lobbyist who lavished favors on lawmakers and is cooperating with prosecutors after pleading guilty to corruption charges.

Politicians have grown so worried about their reputations that they are donating to charities many of the campaign contributions they received from Mr. Abramoff and his associates.

But that windfall should not get in the way of the real damage that Mr. Abramoff has done to the reputation of the nonprofit world. Mr. Abramoff mingled his campaign, lobbying, and personal interests using a series of charitable entities that he hoped would provide camouflage and anonymity for questionable activities. If anybody wants to be cynical about how easy it is to manipulate a charity for nefarious purposes, they need only look to Mr. Abramoff's dealings.

A hint of the problem could be perceived in a November hearing by the Senate Indian Affairs Committee that was ostensibly aimed at exposing how Mr. Abramoff persuaded Indian tribes to make illegal contributions to influence politicians who would be casting key votes on casino-gambling legislation.

Questions for one of Mr. Abramoff's associates rapidly veered into the unusual operations of the lobbyist's philanthropic venture, the Capital Athletic Foundation. Lawmakers asked Mr. Abramoff's associate — described as his tax adviser — about perhaps the most unusual of the organization's activities, the foundation's grant to a school in Israel for sniper equipment and sniper training. The tax adviser explained that she had consulted other experts to conclude that the sniper money was a "permitted distribution" of the Capital Athletic Foundation. Her motivation, she said, was "to square it so we don't screw up the foundation."

Tracking the expert's justifications of what the foundation did with money intended for charitable causes, Sen. Byron L. Dorgan, Democrat of North Dakota, burst out in exasperation that "there wasn't much that wasn't permitted in these transactions. ...It looks like the sky was the limit."

Sen. John McCain, Republican of Arizona, concluded that the Capital Athletic Foundation's grant making "didn't pass the smell test."

Therein lies the danger of Jack Abramoff's philanthropic sideline. From 2000 to 2003, the Capital Athletic Foundation, whose sole trustees were Mr. Abramoff and his wife, served as one of several tax-exempt instruments abused by Mr. Abramoff.

The Capital Athletic Foundation's mission looks almost like satire in light of what has been revealed by the news media in the past year.

According to information the foundation supplied to the GuideStar Web site, the organization's purpose was "to foster character development by promoting the American ideals of sportsmanship" and to encourage "integrity, honor, brotherhood, morality, leadership, and good citizenship."

The foundation pledged to make grants to "support programs and activities that develop sportsmanship, particularly for disadvantaged populations."

But when the foundation in 2002 paid for a Scotland golfing trip for several lawmakers, lobbyists, and Bush administration officials, it is hard to imagine that it did so because the participants were disadvantaged people getting to practice sportsmanship.

One of the participants was Bob Ney, the Ohio Republican who is now stepping aside temporarily from a powerful House position because of the Abramoff affair.

Mr. Ney has been accused of influencing the awarding of a Capitol Hill wireless network contract to an Israeli telecommunications company that had donated money to the Capital Athletic Foundation, probably at the behest of Mr. Abramoff, who represented the telecommunications company.

The foundation-sponsored trip was a bargain for the wireless company: It donated $50,000 to the charity for a trip that cost $150,000 to land a contract worth $3-million. (Mr. Ney has denied any wrongdoing in connection with the telecommunications award.)

Foundation money often went to entities that directly benefited Mr. Abramoff, such as more than $4-million to the Eshkol Academy, a private school in Maryland founded by Mr. Abramoff and attended by his children.

According to informational tax returns filed by the Capital Athletic Foundation, the portion of the organization's expenditures devoted to anything related to its mission was minuscule, amounting to a handful of $500 grants to organizations such as the Boy Scouts, the Jewish Community Center of Greater Washington, in Rockville, Md., and the Washington Tennis Education Foundation, in Washington.

Those tiny grants must have been made to hide an array of some of the most odious philanthropic behavior imaginable.

The litany of Mr. Abramoff's philanthropic misadventures includes more than just gifts to benefit his political associates and lobbying targets. He also set up groups like the U.S. Family Network, which had no agenda but was financed mainly by his lobbying clients.

Scores of red flags about Mr. Abramoff's charitable endeavors were flapping in the wind and should have caught the attention of the Internal Revenue Service, but it does not appear that the tax agency made much effort to look for wrongdoing.

The nonprofit world itself certainly did not catch on to Mr. Abramoff's philanthropic perfidy. As almost a case study of the limits of self-regulation, the Capital Athletic Foundation seems to have escaped the attention of organizations like the Council on Foundations or Independent Sector, the main organizations that represent nonprofit groups on Capitol Hill.

But foundations and charities should let the Abramoff case serve as motivation to seek new regulations that protect tax-exempt groups from the insidious corruption of politicians and political hangers-on like Mr. Abramoff and demand reinvigorated and properly financed oversight by the IRS and state attorneys general. Here's what they should demand:

  • Full disclosure of donors and grants. Any foundation or charity connected to a politician should be required to disclose the source of its donations as well as extensive detail on all expenditures. Under federal law, the names of donors to charities are protected from public view, but that same rule should not apply to tax-exempt groups that are founded by or affiliated with lawmakers. Members of the House and Senate, even after they leave office, make policy decisions that affect every citizen, so the public has a right to know what is being done by politicians under the cover of nonprofit entities.
  • Tighter ethics rules to govern lawmakers. The growth in the number of charities that operate as political fronts stems from the 2003 repeal of a rule that barred members of House of Representatives from accepting reimbursement for travel and lodging expenses in connection with charity events.

Under the more-relaxed standards now in place, lawmakers and their families can participate in charity fund-raising events, and they do not have to disclose how much money they or their favorite causes receive in connection with those events. Lobbyists know that buying tickets to such events helps them gain access to lawmakers, adding to a climate that charities can be manipulated by politicians for personal gain.
The House and Senate ethics committees could go a step further and investigate the misuse of foundations by politicians and their relatives and associates.

  • Increase money for Internal Revenue Service oversight and enforcement. Many nonprofit leaders have urged state and federal governments to step up enforcement of tax-exempt law, but too few have done anything to press for more money to be channeled to regulators.


Expect more Abramoff-style charities if the IRS does not get more staff, money, and leadership to do what it could have and should have done about the Capital Athletic Foundation years ago.

The Abramoff affair should be a clarion call to prevent politicians, their campaign staffs, and their K Street cronies from cloaking dirty dealings behind the sanctimony of charity and philanthropy. Making a handful of grants to Boy Scout and Girl Scout troops does not mask the real function of Mr. Abramoff's tax-exempt groups as money-laundering centers for scoundrels intent on circumventing and unraveling campaign finance and lobbying regulations.

Rick Cohen is executive director of the National Committee for Responsive Philanthropy, in Washington.

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Interview with John Githongo,
Former Kenyan Anti-Corruption Czar

"The most serious corruption taking place in many African countries is taking place under the shroud of what they call national security. National security and the extractive industries have become the last refuge of grand corruption in Africa."

- John Githongo

On January 15, 2003, John Githongo, a long-time crusader against corruption in Kenya and founder and former Executive Director of Transparency International - Kenya, was named by President Mwai Kibaki as his Permanent Secretary for Ethics and Governance.

One year ago Githongo resigned his office, went into exile in the UK, and started to prepare a dossier that has recently been released. It alleges that top officials in the Kibaki government awarded a 6 million Euro passport production contract to a non-existent company, Anglo-Leasing Ltd., for 30 million Euros. Between March 13 and 16, 2006, Githongo presented his evidence to the Kenya Anti-Corruption Commission and the Public Accounts Committee in London.

On March 20, 2006 Mr. Githongo sat down with Transparency Watch, a newsletter of Transparency International, for an interview which is highlighted below:

1. In an article in the New York Times last Saturday, you are quoted as saying that the implications of public release of your dossier on the Anglo Leasing scandal are just beginning, that in fact only 30 percent has come out. What is still to come? Who will go down next and how high will it go?

Well, the point I was trying to make is that this particular scandal is only one of several that I now believe are under investigation by the anti-corruption authority. In fact, the Public Accounts Committee will hopefully be tabling its report in Parliament tomorrow [21 March 2006].

2. You have also stated that the Anglo Leasing deals under the Kibaki administration amount to 50 billion Kenyan Shillings (US$ 700 million). Is that still an accurate guess? How inflated would that make the contracts?

In my estimation, the inflation would be between 25 and 100%. However, here we are talking about transactions that stretch back to the previous administration, really from the middle of the year 2001 until the end of 2004; about US$ 700 million.

3. In your view, what opportunities has Kenya missed out on because of this?

The most important thing about these kinds of scandals is that they cause the general public to lose faith in their own institutions of democracy. It is even more damaging than the direct financial loss. As you know, Kenya is in the middle of a severe drought, and obviously people have said one of the connections that can be made is between the amount of money that may be being misappropriated and the drought and the way it is affecting Kenyans. However, I always assert that the biggest impact of these kinds of issues is usually on democratic institutions and causing people to lose faith in them.

4. You mentioned the drought. There are probably a lot of ways you can make real concrete equivalences with losses. Take, for example, the recent document from Transparency International's chapter in Kenya, "Living Large", which details the waste and abuse of public funds. They suggested that the equivalent of US$ 12 million wasted could have provided anti-retroviral treatment for an entire year for nearly 150,000 HIV/AIDS patients.

That is the truth about the matter, that these resources are fungible. If one looks at where these resources could have been better spent, one sees that the impact is actually very severe.

5. There are those who have equated your whistle blowing on the grand corruption and looting in the Kenyan government with treason. Former Cabinet minister Chris Murungaru claims in the East African Standard that your activities "bordered on spying on the Government of Kenya on behalf of the British government". What do you think of these allegations? Are you still worried about such charges? Does this hamper your ability to return to Kenya?

That is a calculation that I took, that this kind of charge would be made against me, and I am comfortable with that. I shall be returning home as soon as possible, but I don’t intend to stop this fight.

6. Kenya is a democratic country. Why should speaking out against the government be equated with treason?

The most serious corruption taking place in many African countries takes place under the shroud of what they call national security. National security and the extractive industries have become the last refuge of grand corruption in Africa. As corruption has slowly been removed from public procurement processes - for example roads and large infrastructure projects - the last little hole where corruption is hiding is in the area of so called "national security", which means that any whistle blower who causes malfeasance in that area can be very easily charged with treason.

7. You have recently spoken out against British citizens who were complicit in the Anglo Leasing scandal, for example, people living in the UK who helped set up ghost companies. What action should be taken against these people and who should be working on this? From what angle?

Ever since the publication of the Commission for Africa report, there has been a lot of political will in Britain to take action against these parties. What we found, when we were looking into corruption in Kenya, is that there were key players behind this who were able to move in and out of the UK with ease, to use British firms and lawyers to assist them, etc. And this is the kind of thing we are seeking assistance with.

8. Who should assist them? Who should be working on it?

The British government should, first of all, take up this issue as a matter of seriousness, which I think they have started to do. I think Transparency International can also play a very useful lobbying role. I know they are doing that at least with regard to the Defense Sector here. I think there is a role to be played by both civil society and government.

9. There are voices that defend the Kibaki government by claiming that many of the contracts in question were in place before Kibaki came to power. How much do you believe that the government’s hands are tied due to contracts signed under Moi?

That’s rubbish. The issue is that some of these dodgy contracts were entered into by the previous administration, but there was something very unusual about the way we came to power. We assumed ownership of those contracts without asking any questions, without doing any due diligence. We entered into arrangements with individuals who we knew had a terrible record in terms of providing services to the government, who had been cited repeatedly in government documents as being corrupt, public accounts committee reports, reports of the comptroller, the notary general.  That is no excuse. It is like blaming Africa’s problems on colonialism. Colonialism has something to do with it, yes, but that is no longer an excuse which holds much water.

10. So there would have been no legal constraints that would have kept the Kibaki government from breaking these contracts on the ground that they were corrupt?

No, there are no legal constraints. If you investigate something and find it to be corrupt, then it is very easy to be able to escape it. This is number one. Number two, the US$ 12 million which had been returned when the investigations into Anglo Leasing started - that was money which was supposedly based on secure contracts. So why did those people pay back the money? They should have taken them to court. If someone has given you a large contract, you don't just give the money back.

11. In early March, it was reported that a special elite, rapid response unit of the Kenyan police, the Kanga squad, shut down a Kenyan television station, disabled a printing press and burned thousands of newspapers in a midnight raid. The trigger was ostensibly an article claiming that Kibaki had secretly met with an opposition leader. How do you explain this behaviour? Did your dossier do anything to inflame the situation?

I don’t know whether my dossier had anything to do with it. What I do know is that it was outrageous. If it wasn’t so serious in its implications for Kenyan democratisation, freedom of the press and freedom of expression, this would have been a completely hilarious, comical kind of event, because it was carried out in the most ridiculous fashion. But of course its implications for freedom of the press in Kenya are very serious. We may be in a situation where one arm of the state does not know what the other is doing, and I think this is perhaps part of the problem.

12. With coalition government, like the Rainbow Coalition, beholden to so many stakeholders, can it realistically fight corruption in an environment like Kenya?

It depends on whether the top leadership of the administration wants to base the coalition primarily on a coming together of the ethnic interests of the members of the elite. Or whether they want to unite people around a genuine reform agenda, and use that reform agenda to drive politics forward and to fight corruption. In other words, you use the fight against corruption to unite, rather than to divide. Even the most corrupt person would not say in public that they support corruption, and if you have a generalised anti-corruption campaign, what you will find is that even in a coalition, it will have the impact of cleaning out the coalition.

13. So you wouldn’t say they were necessarily at a disadvantage, compared to a unified group?

No, (laughs) we had a very corrupt government under a one party state. It’s just an excuse. It’s complicated. Coalition is complicated. But that is no excuse.

14. What kind of special interests hamstring the Kenyan government? Who is the government serving with its questionable activities?

The excuse given for a lot of these issues is the need to raise money for political party finance. That is the most commonly used excuse, but because there is no transparency about it. You can’t tell whether this is going into people’s pockets, or whether it actually funds parties.

15. But of course, you were a part of the government; you had a role in the government a few years ago. Knowing what you do now, looking back, do you think it was realistic to have taken on the tasks that you did when you joined the government?

It is not a question I could even begin to answer unless I had tried it. I think one has to have high expectations: one has to have aspirations to do that kind of job.

16. In that vein, obviously the current government is not proving effective at tackling the problems it has. What would a Kenyan government look like that was able to successfully tackle embedded corruption? What features would it have that it currently does not have?

The most important thing would be top level commitment on the part of the heads of state in the fight against corruption.

17. In a related question, where do you hope the country will be in five years?

In five years' time, I would hope to see Kenya in the middle of a united East Africa, as one key element of that united East Africa, providing the engine for economic growth for the entire integrated region.

18. In some ways it has been a shock to the anti-corruption movement that some of the initial approaches to fighting graft seem to have not been so effective. Do you think Transparency International is too technocratic in nature? That we ignore the human aspect of corruption?

I think the key thing that we have to re-think in TI is the philosophy of not naming names, especially in cases of egregious corruption. It is a big challenge and will require a lot of analysis and so on, but I think the technocratic component is very important. But more can be done in terms of direct advocacy.

19. Just following up on that, what kind of activities would you like to see in place to help resolve issues more quickly? Is there anything else you can add where TI or other institutions would be able to provide support to people like you who are willing to expose corruption?

To start with, I think for Transparency International to have a designated small team in Berlin with a capacity to do research in the West, that would assist people who are looking into corruption in the developing world, and be able to pick up a phone and check a company’s register in Lichtenstein to see if a company exists or not, that is very important. However, TI does not conduct investigations. There is a broader question there of mandate, which perhaps can be examined along with other broad governance issues that TI has been looking at.

20. To change tracks a little bit, I would like to ask you about aid and corruption. There are those who say that exposing corruption supports the argument that governments and donors should withhold aid, as it will only find its way into the pockets of corrupt leaders. So exposing corruption in Kenya could have negative ramifications in terms of aid and perceptions, not just for Kenya, but also for the rest of Africa. What do you believe exposing the Anglo Leasing scandal has done for the rest of Africa?

I believe it has introduced political accountability into Kenyan political culture, number one. Number two, I am not enthusiastic about the development cooperation partners who, by giving that argument, sometimes are essentially arguing for a cover up of corruption, so they can maintain higher levels of lending to a country. I think that is for the people of a country to decide. If corruption is not important to people within a country, then they will not respond enthusiastically or with outreach when instances of corruption are raised.

21. What do you think of donors or donor governments who would make this claim?

I think that for donor governments, the key challenge is how to remain effectively engaged. I don’t think it is possible at all to be effectively engaged in a situation where you still have high levels of corruption. The challenge is to understand that, in a country, you have various stakeholders, whether it is civil society, the media, the government, etc. and one cannot get a holistic picture of a situation of corruption without engaging with all those stakeholders.

22. In a New York Times article from 18 March 2006 you were likened to an African Lenin. That is a powerful image. I am curious to know what went through your mind when you read that?

Well, you know, I am a traitor or a Lenin, I don’t know which is better of the two. You know the point I was trying to make in that interview is that I know that what I have done has caused some problems for me, and for many other people. But I think it needed to be done. You can’t keep secrets ,and you can’t keep secrets forever. And it has implications, it has repercussions, and I am a piece of that.

23. We’ve talked about a couple of comparisons, names, labels that have been attached to you. Who would you liken yourself to? Do you have mentors or idols you aspire to be like?

I don’t like comparing myself to anyone because it would demean the other person. So I leave it alone. The New York Times chose Lenin - I will have to read more about Lenin and make up my mind if this is a comparison I should use more regularly.

24. Do you have any people you would describe as heroes or role models?

I have always been a great admirer of people like Dr. Peter Eigen, and what he has done - leaving the World Bank, starting TI. Now, more than ten years later, look at it. It has become the premiere anti-corruption agency in the world, pushed corruption into the centre of the global development agenda, and I know it hasn’t been easy. So, I am very lucky to know a lot of people I have admiration for. I have seen them face difficult things and just push on and do it.

25. We interviewed Simon Channing-Williams, producer of The Constant Gardener earlier this month, and he told us about the Constant Gardener Trust, a charity which was set up following the release of the film. What do you think of the Trust and the work that it has done? What is your role with the Trust?

I think it is a wonderful idea: this is really, really special. Film companies usually come into exotic locations in Africa. They change the surroundings, they make their film and then they disappear. This is a very special initiative, a special side of the film industry that has decided to remain engaged in Kenya to reduce poverty. And this is something that should really be able to make things work, and to get others to follow this example.

26. You originally left Kenya fearing for your personal safety, after receiving warnings from colleagues and ministers that pursuing your line of questioning on the Anglo Leasing scandal was dangerous. Do you still feel unsafe? Are you still receiving death threats?

No, it goes up and down. I feel reasonably secure.

27. One last question. We have been hearing a lot of rumours - are there any plans in the works for a 2007 presidential campaign?

No, (laughs) I am a simple student at St. Anthony’s College.

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The Other Side of the Coin: The UK and Corruption in Africa

A report by the British Africa All-Party Parliamentary Group
March 29, 2006

On March 29, 2006 the Africa All-Party Parliamentary Group released a report that lays partial blame for the illicit $150bn that leaves Africa annually on the negligence of the British government.

The report, “The Other Side of the Coin: The UK and Corruption in Africa,” says that the UK government has failed to fulfill the pledges it made last year to the British-led Commission for Africa. In examining Britain’s associations with Africa, the group finds "a lack of political will at the highest levels to take a lead in fighting global corruption" and "the fragmentation and under-resourcing of investigatory and enforcing agencies" to implement the UK government’s pledge.

The Commission, chaired by Prime Minister Tony Blair, called for the increased commitment of developed nations to returning illegally attained property and in compelling banks to report questionable accounts and instances of bribery. The commission’s suggestions were adopted through assurances at last July's UK-hosted summit of Group of Eight leaders.

The report, urging the quick enactment of a new anti-corruption law that has been pending in the UK since 2003, proposes prohibiting companies convicted of corruption from participating in public procurement contracts. It also recommends a European Union-wide blacklist database, to be modeled after a World Bank database of companies the World Bank will not do business with.

The report encourages lawmakers to pass legislation similar to that of the U.S., i.e. withholding government export support from businesses accused of foreign bribery. The problem, the report argues, lies in the  "supply side" of corruption, which it asserts Britain must combat by addressing money laundering and by taking actions to protect development aid from graft. It also stressed the necessity of UK leadership advocating the execution of the UN Convention Against Corruption, which the UK ratified February 2006.

The following is an excerpt from the report:

"The Other Side of The Coin: The UK and Corruption in Africa"

I. Chairman’s Summary

The Africa APPG decided to carry out an inquiry into corruption and money laundering for four reasons. Firstly, the scale, extent and impact of corruption and related capital flight undoubtedly present a critical obstacle to development in Africa.

Secondly, our 2005 report “The UK and Africa in 2005: How Joined up is Whitehall?” identified corruption and money laundering as areas which require better policy coherence.

Thirdly, the UK fully endorsed the report of the Commission for Africa which made a number of recommendations on how western governments can support Africa’s battle against corruption. The UK also chaired the 2005 G8 Summit which committed G8 countries to take action on this issue.

Finally, the issues of corruption and money laundering were raised with us in consultations with members of the African Diaspora living in the UK.

“The Other Side of the Coin” looks at the responsibility of the UK to combat corruption and money laundering. We recognise the extent of the problem globally, but we focus on Africa because this is of special interest to the Africa APPG. We examine what the UK can do to support African countries to tackle corruption, because UK policy is our area of potential influence. We do not excuse corrupt rulers from their ultimate culpability for stealing from their people.

This report is by no means exhaustive but we identify three areas where the UK can and should contribute to the fight against corruption in Africa:

A. By tackling the supply side of corruption; bribe payments and mechanisms in
international trade and credit that facilitate corruption.

B. By tackling the laundering of the proceeds of corruption.

C. By safeguarding aid to ensure it does not become caught up in corruption or inadvertently support corrupt leaders, but is used to fight the problem.

Our detailed recommendations follow as Section 2 of this report. All are important if the UK is to address this issue comprehensively and across all departments. In particular we wish to stress the need for the UK government to:

1. Rigorously enforce existing laws and sanctions against international bribery, corruption and money laundering.

2. Bring to Parliament before the end of 2006 a new Anti-Corruption Bill which addresses the concerns raised about the 2003 draft Bill by the Joint Parliamentary Committee and the OECD Phase Two Review.

3. Fully implement the Third EU Money Laundering Directive as soon as possible and well before the 2007 deadline.

4. Ensure that Crown Dependencies and Overseas Territories deal with corruption and money laundering as robustly as the UK.

5. Report to Parliament annually on international development spending with a particular focus on transparency, effectiveness and details of support for anti-corruption priorities and strategies.

6. Appoint an Anti-Corruption champion for a two year period to coordinate policy coherence and implementation across Whitehall and to work with devolved executives, Crown Dependencies, Overseas Territories and international partners.

- Hugh Bayley, MP Chairman, The Africa All Party Parliamentary Group

II. Recommendations to Her Majesty’s Government


Headline Recommendations:

1. Rigorously enforce existing laws and sanctions against international bribery, corruption and money laundering.

2. Bring to Parliament before the end of 2006 a new Anti-Corruption Bill which addresses the concerns raised about the 2003 draft Bill by the Joint Parliamentary
Committee and the OECD Phase Two Review.

3. Fully implement the Third EU Money Laundering Directive as soon as possible and well before the December 2007 deadline.

4. Ensure that Crown Dependencies and Overseas Territories deal with corruption and money laundering as robustly as the UK.

5. Report to Parliament annually on international development spending with a particular focus on transparency, effectiveness and details of support for anti-corruption priorities and strategies.

6. Appoint an Anti-Corruption champion for a two year period to coordinate policy coherence and implementation across Whitehall and to work with devolved executives, Crown Dependencies, Overseas Territories and international partners.

Further Recommendations

A. Tackling the Supply Side of Corruption

7. Establish effective systems to monitor the implementation of the UN Convention Against Corruption by its signatories.

8. Ensure the full extension of the UN Convention Against Corruption and the OECD Convention on the Bribery of Foreign Public Officials to the UK’s Crown Dependencies and Overseas Territories.

B. Investigations

9. Take a pro-active approach to detecting international bribery, opening investigations and actively cooperating with mutual legal assistance requests. Require all government departments including HM Revenue and Customs to pass on evidence of bribery they come across. Provide training to Revenue and other staff on detecting signs of bribery.

10. Ensure that new arrangements between investigating and enforcement agencies are backed with resources and the necessary powers to carry out investigations. Ring-fence human and financial resources for investigating international corruption to ensure this area is not squeezed out by other priorities.

C. Policy Coherence

11. By the end of 2006 review the anti-corruption policies of all UK Government departments particularly in relation to procurement and encourage the devolved executives, Crown Dependencies and Overseas Territories to do the same. By the end of 2007, in line with World Bank procedures, introduce a list of companies barred from government procurement because of corruption convictions or overwhelming evidence.

12. Robustly enforce the newly revised ECGD anti-bribery and corruption guidelines and work with other export credit agencies to continually review best practice and ensure a high standard globally.

13. As soon as possible carry out a review of international safeguards against mispricing and examine the impact on developing  the introduction§country capital flight. The review should include:  of mandatory price-related signatures from buyers and sellers for all transactions over £10,000  the links with international tax evasion and transfer pricing and the capital flight involved

D. Working with Business

14. Following the passing of a new Anti-Corruption Bill through parliament conduct a thorough prevention and education campaign for the UK business sector.

15. Use Government trade support and advocacy services to inform companies about the illegality of bribe payments, the damage they do to development, and methods of avoiding solicitations for bribes; for example through the UK Trade and Invest literature.

16. Require companies receiving Government trade support and advocacy or companies seeking government funded contracts to sign no bribery warranties from mid 2006 onwards.

17. Bar those convicted of corruption offences from receiving government trade assistance, including participation in trade missions.

18. Educate UK companies about the use of mispricing in transactions as a mechanism to embezzle and launder funds, using an information campaign and existing government to business services.

19. Encourage UK banks to re-asses the compatibility of commodity backed loans with their corporate social responsibility guidelines and encourage them to take advice from the international financial institutions on appropriate levels of disclosure and oversight mechanisms for money disbursed.

20. Encourage UK businesses to take an active role in the UN Global Compact and other voluntary initiatives and support UK companies in implementing the initiatives throughout their operations.

21. Discuss with UK business leaders how best to monitor implementation of voluntary anti-corruption initiatives externally.

E. Tackling Money Laundering

22. Work to improve inter-agency coordination and ensure there is clarity on who is ultimately responsible for money laundering investigations.

23. Give a high priority to investigations into the laundering of the proceeds of corruption, and to tracing, freezing and repatriating these funds where possible. These activities should have earmarked funds to ensure they are not sidelined by the focus of investigative and enforcement agencies on drugs and anti-terrorism.

B. Closing the Loopholes

24. Include within the Company Law Reform Bill a requirement for UK registered companies to declare beneficial ownership and end the practice of directors of registered companies being themselves companies, unless beneficial ownership can be shown. Encourage the UK’s Crown Dependencies and Overseas Territories to introduce similar legislation where they have not done so already.

C. The Third EU Money Laundering Directive

25. In implementing the Third EU Money Laundering Directive, clearly identify corruption within the working definition of a serious crime and highlight the relevance of offshore transactions as a sign of possible corrupt activity.

26. In the run up to the implementation of the EU directive engage in an information campaign targeting all UK businesses that may be affected to ensure they are aware of their responsibilities regarding due diligence checks, politically exposed persons and suspicious activity reports and what signs they should look out for.

27. Work closely with the EU on ensuring continental implementation of the Third EU Money Laundering Directive.

28. Encourage Crown Dependencies and Overseas Territories to introduce legislation along similar lines to the Third EU Money Laundering Directive and the recommendations of the Financial Action Task Force (FATF), where they have not done so already.

Aid and Corruption

A. Safeguarding Aid

29. Apply the highest levels of financial reporting and accountability to both general and sectoral forms of direct budget support in Africa; ensure design of UK budget support contributes to increases in financial transparency and broader governance improvements across recipient governments.

30. Continue to freeze budget support where its integrity can no longer be assured and ensure such decisions send a clear message that the donors no longer turn a blind eye to corruption.

31. In assessing suitability for budget support take into account any results from the African Peer Review Mechanism and encourage prospective recipients of UK aid to take part in the process.

32. Work with multilateral organisations to ensure that anti-corruption strategies, including financial accountability and management, are implemented in all programmes. Ensure increased support for anti-corruption projects and systems that support transparency and accountability.

33. Work with the other major donors to assist the non governmental sector to improve transparency and ensure anti-corruption strategies are mainstreamed throughout their work.

C. Mutual Transparency

34. By the end of 2007 create a list of companies, individuals and organisations convicted of corruption or where overwhelming evidence exists, and debar them from DFID (and all UK Government) programmes and contracts. Provide an anonymous anti-corruption hotline or e-mail, accessible from any country.

35. Encourage the EU to report back to the EU Parliament annually on international development spending with a particular focus on transparency and effectiveness. Include where possible estimates of leakage through corruption and details of the EU’s efforts to minimise leakage and utilise aid to increase transparency and ensure effectiveness.

36. Encourage the multilateral development banks and other multi-lateral organisations to increase the involvement of parliamentarians in both donor and recipient countries in discussing developmental priorities and improving scrutiny and transparency.

C. Aid to fight Corruption

37. Prioritise support for anti-corruption programmes in Africa including anti-corruption commissions, audit offices and programmes to improve the management of public finances, revenue collection and management. Encourage the ratification and implementation of UN and AU conventions relating to corruption. Increase the resources available for such programmes and encourage multi-lateral and other bilateral donors to do the same.

38. Significantly increase support for systems and projects which contribute to the domestic-led fight against corruption in recipient countries. These include support for: The development of independent media; Civil society organisations working on anti-corruption and transparency; Anti-corruption schemes within the judiciary; Parliamentarians in their role as monitors of the executive and scrutinisers of government budgets; particularly public accounts committees; National audit offices.

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“Let’s Engage Everybody!”

Mrs. Evelyn Mungai, Transparency International - Kenya's New Chairman's First Interview
‘Adili’ - The Newsletter of TI-Kenya

Excerpts From Her Interview:

"Corruption is a reality and I don’t think it’s getting any better – to me it’s getting worse. And if so, what is being done that is not right? We have to come up with a new direction in this fight against corruption"


"What everybody expected in 2002 was for corruption to go down. And I think for a while it did go down, at least in the public perception, especially with a few reforms in the matatu sector, for example. But after that, corruption has now started being felt even more than before. And if you ask me about the election in 2007, I worry because it is close and politicians maybe tempted to generate enough money to get back into parliament and into government... one way or another. That’s an issue for TI, because we have to think how we will address this kind of politically motivated corruption.

"I would like to engage everybody - everybody who is, and everyone who should be, fighting corruption in Kenya. That is my vision. Above all I wish us to engage the government, including of course KACC, and the private sector. After all, these are the principal players in corruption! We must continue our great engagement with civil society and the media, the powerful watchdogs, and donors. But I don’t want them to just say, ‘you have to go after the government’. And I don’t want us to be told to ‘go after so and so’."

"I want, as I have said, to engage the government. I would like donors and others to understand that a pure confrontational approach is unlikely to deliver on the anti-corruption agenda. We want to work with the government, we want to work with the other stakeholders."

"I want to go into this in a very positive way. Corruption is a curse in our society, it’s a value we don’t like at all, so how can we and the Kenyan public come up with ways curbing corruption? TI has a wealth of international experience of what has worked elsewhere. Let us be creative and cooperate in making the best of it work here."

“Move From Rhetoric to Decisive

Mwalimu Mati, Executive Director of TI-Kenya Gives Us His Thoughts On Corruption Now And In The Future

Excerpts From His Interview:

What do you make of the current state of corruption in Kenya?

Probably the best evidence of where we are is what Kenyan people said to the “Afrobarometer” Survey, which says that only 20% of them believe that


corruption is being reduced and similar numbers say that things are not getting better and are unlikely to in the near future.

So we are at a stage of disillusionment with the official fight against corruption, the institutions are not trusted and people don’t have faith that these institutions have the muscle or the will to take this fight on. I think we are at a stage where there’s a concern that there is total impunity as regards to grand corruption today.

What are your views on the government’s failure to appoint a PS in charge of Governance & Ethics?

We are disappointed because we do believe that that office was a very significant pillar
in the fight against corruption. Beyond that - it is a very powerful symbolism of the President’s personal commitment. So, not having that office relegates the fight against corruption to a ministerial level rather than a presidential level and that is disappointing. It’s true that this is his prerogative to set up and abolish offices under the current constitution but we would have thought that this office was one of the prime examples of a real commitment. Although, having said that, the office has been vacant for a whole year, in point of fact the office died a year ago and not in the recent cabinet appointments.

What does civil society need to do to get back on track in the fight against corruption?

First and foremost, civil society has to play a non-partisan watchdog role and the importance of being non-partisan is that you don’t take sides on corruption. Corruption is a crime against all Kenyans. It’s not political football. It should not be used to support or attack perceived political opponents. Sadly I would say that in Kenyan civil society, many of us seem to have taken sides. So I would appeal for a civil society to be non-partisan and to see the fight against corruption as a public duty divorced from politics.

The second thing we need to do is to accumulate evidence as a basis for our advocacy work. Too often civil society has knee-jerk reactions to events, and doesn’t accumulate evidence of trends, and it’s not able, therefore, to actually look at the systemic causes of corruption. Civil society cannot fight corruption by police work because we do not have the resources or the capacity to investigate every single corruption case. What we can do is supply the public, the government and other stakeholders with information on the systemic causes: what are the trends? Why is it that “Anglo-Leasings” happen, happened and may happen again? So, I would say that our strategy should be more about evidence based-advocacy.

Thirdly, we should find a way to communicating this evidence to the public, because I see the people as being the ultimate anti-corruption institution. If they come to know about this information, they can put pressure on the decision-makers, through for example their choice of who to vote for in coming elections. Where does the donor community fit into all of this? The donor community plays a significant role in that it finances some of the anti-corruption activities and bodies in Kenya through the Governance, Justice, Law and order Sector (GJLOS) Reform Programme. So we would say to them that they must continue to support these institutions to become stronger and develop the capacity to fulfill their mandate. I am thinking of ,for example, the Kenya Anti-Corruption Commission (KACC), The National anticorruption Campaign Steering Committee (NACSC) and other GJLOS institutions such as the Police, the Attorney General, and so on. But this support should not just be ‘blank-cheque’ - they must hold these institutions into account through rigorous assessments of performance.

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IDLO Director-General Calls Rule of Law "The Millennium Declaration's Keystone

The success of global economic development goals, especially those related to the alleviation of poverty, depends critically upon good governance – this has become the widely accepted view over the last decade.
Still, the issue of rule of law has not been given a prominent place in the roadmap of the United Nations. On the eve of the last UN Summit in New York in September 2005, William T. Loris, Director - General of the Rome-based International Development Law Organization made a major speech on this topic. 


Mr. Loris said, “We need to make the rule of law the keystone of the Millennium Declaration as we move ahead to achieve the Declaration’s overarching goal of halving global poverty by 2015."

Reviewing progress on the objectives of the Millennium Declaration, which was agreed by 150 governments at a Summit in 2000, in a speech at John Jay College of Criminal Justice at the City University of New York, Mr. Loris said, "As we move ahead to work on the laudable social and economic development goals promoted by the Millennium Declaration, so we must recognize that these efforts may be for naught if the basic institutions, including laws, law enforcement, and courts that uphold rule of law are not strengthened simultaneously."

Since the 2000 Summit, noted Mr. Loris, "Child mortality rates have stayed the same in most countries, HIV/AIDS rates remained at catastrophic levels, even growing in many regions, and poverty has been on the increase in many countries. At a time where humanity is recording heretofore-unimaginable technological accomplishments, large swaths of our world live under tyrannical, unjust, or corrupt regimes."
Mr. Loris pointed out that a framework of goals was established following the Millennium Declaration in 2000 that established specific targets and indicators to measure progress. These goals range from achieving universal primary education and halving the number of people without safe drinking water to halting and reversing the spread of HIV/AIDS and malaria. He said, "This framework has catalyzed the international community around specific targets. Explicit and straightforward targets on these critical issues have turned the quite general concept of development into a concrete agenda."

"But," added IDLO’s Director-General, "it is surprising that one area of significance to the achievement of these goals themselves is without performance standards: the rule of law. As an organization solely dedicated to improving the rule of law and good governance, IDLO – the International Development Law Organization - believes that setting targets for rule of law and good governance, would fuel further reforms that are so essential to progress in these areas. Indeed, I believe there has to be recognition that the rule of law should be seen as the keystone of the Millennium Declaration."
Mr. Loris attended the UN Summit as IDLO, headquartered in Rome, Italy, was voted Permanent Observer Status by the UN General Assembly in 2001. IDLO, established in 1983, is an intergovernmental organization with 18 member countries. It specializes in providing legal training and advisory services in the field of rule of law across the developing world. In his presentation Mr. Loris provided examples of IDLO’s work from Afghanistan, Africa and Eastern Europe in noting that IDLO has repeatedly found that training combined with legal and policy advisory services supports positive reforms.
In making his call for to promote the rule of law as the keystone of the Millennium Declaration’s approach, Mr. Loris added, "Raising attention to the rule of law is not only important on intrinsic grounds but, as I have already indicated, it is necessary to support the attainment of many of the specific development goals themselves. Can we achieve health and education goals without efficient and non-corrupt social service providers? Can we achieve gender equity without a legal framework that protects individual rights? Can people engage in commerce to lift themselves out of poverty when they live in fear and have no security?"

Mr. Loris said, "Recognizing the rule of law as the keystone of the Millennium Declaration’s overall development strategy would aid our work immensely. As we’ve seen, jurists and officials in the countries we assist frequently know all too well how bad governance conditions are in their countries, but don’t have straight forward priorities for addressing the problem. As experience with the other key development goals has shown, their very existence rivets the attention of all sectors of society—government, civil society, voters, and the media—towards their attainment. It would add a heightened sense of urgency to the work we are doing and drive those we serve to seek real solutions to the challenges they face."

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The Scale and Impact of Corruption Across Latin America

A remarkable front page article in The New York Times on July 30, 2005 ranges across the continent, quoting experts, highlighting surveys, and bringing to the fore the depth and the complexity of graft.

At one point in the article the reporters, Larry Rohter and Juan Forero, point out that "Corruption has emerged as one of the gravest threats to the hard-won democratic gains of the last 20 years."

They go on to write that, "International groups like the World Bank say official graft and nepotism are so powerful that they are rotting government institutions and stunting economic growth. In recent Congressional testimony in Washington, American officials estimated that official corruption might shave as much as 15 percent off annual growth in Latin America, as public funds are pilfered and wary foreign investors shy away." Peruvian anti-corruption fighter Jose Ugaz is quoted as saying bluntly: "The impact of corruption on our economies is huge, just huge." For the full article please go to New York Times

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A Reaction to a New York Times Article on Corruption in Latin America


by Cláudio Weber Abramo, Executive Secretary of Transparencia Brasil


The NYT story about corruption in Latin America shows a defect too frequently present in the news reporting of American big media addressing the developing world in general and the region in particular: A sanctimonious attitude based on arbitrary impressions and bad reporting. Although I would have something to say about Mexico, I will refrain from doing so and will focus on my country, Brazil.

The piece starts with a too common misinformation, namely, that Mr. Lula da Silva has “boldly pledged to clean up the sordid politics of Brazil. His, he vowed, would be an ethical, honest and moral government the likes of which Brazil had never seen.” I would like to use some space here to point out a detail that is revealing of the type of bad journalism that American newspapers practice when reporting on anything other than American matters (European non-financial media are less prone to it). What exactly is the justification for a reporter (not a columnist, mind you) to write that a country’s politics is “sordid”? Would Mr. Larry Rohter be as bold if he were reporting on Mr. Jeb Bush, Mr. George W. Bush or Mr. Cheney (remember Florida, Haliburton, USAID, Iraq)? Would the editor vetting the reporter’s copy allow such a thing to be published just like that?

The contention that Mr. Lula da Silva has “boldly pledged” this or that is untrue. It so happens that the issue of corruption was not mentioned at all during the 2002 presidential campaign. When I say “at all” I mean it literally, statistically. Transparencia Brasil actually measured the occurrences of several issues (violence, economy, human rights, energy, corruption etc.) during the four last months of the 2002 campaign, by daily monitoring and measuring the space dedicated to them in a great number of Brazilian newspapers. This “campaign issues thermometer” was daily updated in the Internet. Corruption was not mentioned even once. Although we didn’t measure it, radio and TV was the same. Transparencia Brasil did submit to the candidates an anti-corruption commitment listing eight measures against corruption (not simply a pledge not to commit acts of dishonesty, which means nothing and is far too easy to sign). Both Mr. da Silva and Mr. Jose Serra, its opponent in the second round of the election, signed it – and promptly buried the stuff. That was all.

Let’s go on along the piece. It is declared, without any justification whatsoever, that “corruption has emerged as one of the gravest threats to the hard-won democratic gains of the last 20 years”. This is quite daring. What about economic inequality within societies and between countries? Anyway, in the specific case of Brazil, one of the marks of the present crisis is exactly the opposite – any balanced observer of the Brazilian scene would tell Mr. Rohter (who has been the NYT correspondent in Rio de Janeiro for quite some time now) that, irrespective of the crises’ political implications and fallout, one thing can be clearly stated, namely, that the institutions are holding tight and anticipating that no matter what happens, they will not be at risk.

In fact, the development of the crisis itself is a demonstration of the fundamental soundness of the Brazilian institutions. Brazil is not Bolivia or Sierra Leone, readers would perhaps be advised to consider. Reporters of course hear whoever they want to hear. When reporting on far away places, it is far too easy to present anybody’s views as “authoritative”, thus impressing on the readers the notion that since it was published, and in the front page of the NYT to boot, then perforce it must carry special wisdom.

In this case, they heard Mr. Edgar Villanueva, a Peruvian congressman, quoting him to the effect that “What has happened in Latin America is we have not been able to get good people into power. The person in power always maintains ties to his small power base, and they forget the people, they forget their promises.” Now, I have no information on Mr Villanueva, and it is impossible to ascertain whether or not he said other things not published in the piece, that would cast his opinions under a less trivial light, but really! Structural defects of a country’s institutions and managerial weaknesses leading to waste and corruption are not a matter of personal inclinations and forgetfulness. Corruption is not confronted by “getting good people in office”, but by actually performing reforms.

The reason why in Mexico nothing happens is similar to the reason why things didn’t experience progress in Brazil during Mr. Lula da Silva government – the demagogical notion that corruption is tackled by propaganda devices inspired by self-referred protests of honesty. Corruption is not a matter of specific persons saying thing and “forgetting” those things and is not a matter of personal honesty. Corruption is a matter of objective failures in a country’s institutions and administrative practices – as the World Bank, for instance, quite explicitly and correctly points out.

The main problem with the piece on Latin American corruption published by the NYT is missing the whole point and falling into the usual routine of depicting Latin America as a bunch of countries not differentiated among themselves and whose politics is a sort of carnival populated by freaks. This is not good reporting by a far cry.

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Business Ethics & Public Interest: Speech by Frank Vogl

    IV Global Forum on Fighting Corruption, Brasilia, Brazil, June 8, 2005

The opening sentence of a lead article on the front page of the Sunday Business section of The New York Times on May 29 read as follows: “Rooting out conflicts of interest on Wall Street has become a full-time job for securities regulators in recent years.” Our topic today could not be more timely. Our focus on this grand stage of anti-corruption at the Global Forum is business behavior and, in particular, the conflicts of interest that are so evident, but so hard to contain.

Across the world we see business enmeshed in myriad activities where conflicts are at the fore. These may relate to business efforts to influence partners and consumers, customs officials, grantors of official permits, politicians, political parties, and governments. We find countless examples where executives have faced conflicts between their own narrow self-interest and the larger interests of the companies that employ them. We have every reason to be worried about business ethics and the endless conflicted entanglements of corporations. This is especially the case in fragile environments where economic growth is precarious, where infrastructure is inadequate and where widespread poverty is a tragic fact of life – namely in the developing countries.

Today, I am going to propose courses of action that challenge the conventional strategies of official bilateral and multilateral aid agencies and many of the governments of the developing countries, and indeed quite a number of non-governmental organizations.

At the outset permit me to thank the organizing committee for inviting me to this conference and I would particularly like to acknowledge Claudio Weber Abramo and his colleagues at Transparencia Brasil. As I prepared this presentation I was pleased to note that we are meeting here on the 10 th anniversary of the launch of the first Transparency International Corruption Perception’s Index, which has played a critical role in raising public awareness around the world to the unacceptably high levels of perceived corruption in a considerable number of countries. Finally, let me draw your attention to the work by Daniel Kaufman, Aaart Kray and Massimo Mastruzzi of the World Bank Institute, who with their new report “Governance Matters IV: Governance Indicators for 1996-2204,” have provided us all with an encyclopedic base of information to comprehend corruption’s complexity across the world.

Please follow this link to read the full speech...

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Ethics, Corruption, and Globalization: Speech by Frank Vogl

Keynote Address at the Goodwill Delegates Assembly, June 22, 2003

We live in an ever more challenging world where the contribution you make is vital and where the opportunity you have to expand your contribution, here at home and abroad, is formidable. Today, I shall argue that critical to your future success is the strengthening and the maintenance of an ethical culture in your organizations. This demands management approaches that I will seek to briefly describe consisting of commitment, accountability, integrity programs, monitoring and communicating.

Ladies and gentlemen it is a pleasure to be here. Goodwill has pioneered one of the most remarkable stories of successful philanthropy in the world. You have done immense good. You are constantly building on a long and rich tradition. You have brought to the non-profit sector a business professionalism that makes you a role model, not just here at home, but overseas as well.

We live in a world where more than one billion people barely survive on just one dollar a day. It is a world that has too much corruption and too little charity. It is a global village where it may be more comfortable and easier to focus on problems closest at hand and on the unfortunate in our neighborhoods, but today more than ever, developments in one corner of the village impact the lives of all in the village. Goodwill has a tremendous role to play in the global village, which can yield benefits to you and this great organization, while providing enormous gains for humanity.

Success around the world for all organizations depends on the degree to which they can build trust and strengthen confidence in their integrity among the public, partners, regulators and customers. For American organizations the challenge now is greater than ever.

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