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Strengthening World Bank Group Engagement on Governance & Anticorruption
 

Strengthening World Bank Group Engagement on Governance & Anticorruption

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  • This presentation should be viewed as a resource, to help guide consultation teams. We strongly encourage consultation teams to adapt the presentation to country context, so that it is useful both in advancing the country dialogue on governance and in collecting feedback on the Bank’s strategy. Out of the 19 slides, there are only five core slides, to communicate the essence of the strategy, as it currently stands 6: 3 levels of strategy 9: actions at the country level 12: actions at the project level 15: actions at the global level 18: questions on which the Exec Board specifically asked for feedback There is a great deal of flexibility in shaping the presentation so that it is appropriate given the country setting.
  • CORE SLIDE Key messages: the strategy is not only about anticorruption in Bank projects it is about helping countries strengthen governance to enable development as well as transnational issues, such as asset recovery and the role of multinationals from developed countries in corruption
  • CORE SLIDE Key messages: to clarify that there are many entry points for governance reform, and the choice depends on country context while there are many examples of good work in all these areas, the Bank has historically focused within governance primarily on public management The Bank wants to scale up work in the other four areas, as appropriate and in partnership with other donors: these are the frontiers building multistakeholder constituencies for reform are a critical aspect of managing the reform process
  • Uganda’s struggle to get its substantial education spending to the intended targets was for many years a frustrating exercise, until 1998, when the government made an important decision…. As the new education budget was announced for 1999, details were given to the press about how much money was to go to each school district. Suddenly, when the public was armed with information, the results improved dramatically.
  • Dramatic improvements across nine city agencies between 1994 and 2003. Improvement even in city council, electricity, telephones across three report cards. Other services, hospitals, police, land, buses see huge improvements between 1999 and 2003. BATF tell similar story.
  • Definitions: Aggregate indicators are an index composed of expert assessments and surveys on key dimensions of governance: corruption, rule of law, voice; Actionable indicators measure progress in implementing reforms: deviations in actual from planned expenditures; number of steps to register a business Outcome indicators measure results: MDGs Key messages: Bank is committed to using a results framework, although much more needs to be done in developing actionable and outcome indicators Monitoring needs to happen at country level
  • CORE SLIDE Key messages: preventing corruption by limiting opportunities and incentives for corruption is more cost-efficient and effective than enforcement actions, but … both are critical
  • Key messages: corruption is a transnational problem, and must be addressed through global collective action donor countries bear responsibility for ensuring that businesses originating in their countries do not undermine governments in aid recipient countries by engaging in corruption
  • CORE SLIDE Key messages: donor coordination is vital, especially in more challenging settings, so that donors do not undermine progress in governance at the country level; the MBD harmonization is presently focusing on harmonizing investigative procedures to facilitate cross-debarment, but this is not enough; venues such as the OECD-DAC GovNet, where bilateral and multilateral donors come together to share practice and coordinate approaches, are critical global conventions, such as the OECD Anti-bribery Convention and the UN Convention Against Corruption, are important, but to have impact they also need to be implemented; the OECD ABC is largely unimplemented and UNCAC is too new to assess; the Bank is very open to helping countries that request assistance in implementing UNCAC the regional dimension of the multi-partner, multi-country collaboration strategy is also of high importance, such as working closely with New Partnership for Africa's Development (NEPAD), the African Union, the UN Economic Commission for Africa (UNECA), regional bodies under the FATF, the Asia-Pacific Economic Cooperation Forum (APEC), and the Organization of American States (OAS), (in particular, in their regional peer review and related anticorruption and good governance mechanisms and initiatives). multi-stakeholder coalitions in support of reform are critical for battling entrenched networks of corruption – leaders in government, civil society, and private sector need to be connected up and empowered For a list of global and regional conventions, see: http://www.transparency.org/global_priorities/international_conventions. International anti-corruption conventions and selected instruments include the following: At the global and inter-regional level: i) UN Convention against Corruption (UNCAC); ii) United Nations Convention against Transnational Organized Crime (UNTOC); iii) OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions (OECD Convention); iv) Revised Recommendation of the Council of the OECD on Combating Bribery in International Business Transactions. In Africa: i) AU Convention on Preventing and Combating Corruption (AU Convention); ii) SADC Protocol against Corruption (SADC Protocol); iii) ECOWAS Protocol on the Fight against Corruption (ECOWAS Protocol); in the Americas: i) The Inter-American Convention against Corruption (OAS Convention); in Asia: i) ADB-OECD Action Plan for Asia-Pacific (Action Plan); and in Europe: i) Council of Europe Criminal Law Convention; ii) Council of Europe Civil Law Convention; iii) Resolution (99) 5 of the Committee of Ministers of the Council of Europe: Agreement Establishing the Group of States against Corruption; iv) Resolution (97) 24 of the Committee of Ministers of the Council of Europe: Twenty Guiding Principles for the Fight against Corruption; v) European Union Convention on the Protection of the Communities' Financial Interests and the Fight against Corruption and two Protocols; and vi) European Union Convention on the Fight against Corruption involving officials of the European Communities or officials of Member States.
  • Global Problem of Money Laundering: IMF Estimates: between 2% y 5% of Gross World Product, At least USD $600,000,000
  • CORE SLIDE Key messages: donor coordination is vital, especially in more challenging settings, so that donors do not undermine progress in governance at the country level; the MBD harmonization is presently focusing on harmonizing investigative procedures to facilitate cross-debarment, but this is not enough; venues such as the OECD-DAC GovNet, where bilateral and multilateral donors come together to share practice and coordinate approaches, are critical global conventions, such as the OECD Anti-bribery Convention and the UN Convention Against Corruption, are important, but to have impact they also need to be implemented; the OECD ABC is largely unimplemented and UNCAC is too new to assess; the Bank is very open to helping countries that request assistance in implementing UNCAC the regional dimension of the multi-partner, multi-country collaboration strategy is also of high importance, such as working closely with New Partnership for Africa's Development (NEPAD), the African Union, the UN Economic Commission for Africa (UNECA), regional bodies under the FATF, the Asia-Pacific Economic Cooperation Forum (APEC), and the Organization of American States (OAS), (in particular, in their regional peer review and related anticorruption and good governance mechanisms and initiatives). multi-stakeholder coalitions in support of reform are critical for battling entrenched networks of corruption – leaders in government, civil society, and private sector need to be connected up and empowered For a list of global and regional conventions, see: http://www.transparency.org/global_priorities/international_conventions. International anti-corruption conventions and selected instruments include the following: At the global and inter-regional level: i) UN Convention against Corruption (UNCAC); ii) United Nations Convention against Transnational Organized Crime (UNTOC); iii) OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions (OECD Convention); iv) Revised Recommendation of the Council of the OECD on Combating Bribery in International Business Transactions. In Africa: i) AU Convention on Preventing and Combating Corruption (AU Convention); ii) SADC Protocol against Corruption (SADC Protocol); iii) ECOWAS Protocol on the Fight against Corruption (ECOWAS Protocol); in the Americas: i) The Inter-American Convention against Corruption (OAS Convention); in Asia: i) ADB-OECD Action Plan for Asia-Pacific (Action Plan); and in Europe: i) Council of Europe Criminal Law Convention; ii) Council of Europe Civil Law Convention; iii) Resolution (99) 5 of the Committee of Ministers of the Council of Europe: Agreement Establishing the Group of States against Corruption; iv) Resolution (97) 24 of the Committee of Ministers of the Council of Europe: Twenty Guiding Principles for the Fight against Corruption; v) European Union Convention on the Protection of the Communities' Financial Interests and the Fight against Corruption and two Protocols; and vi) European Union Convention on the Fight against Corruption involving officials of the European Communities or officials of Member States.

Strengthening World Bank Group Engagement on Governance & Anticorruption Strengthening World Bank Group Engagement on Governance & Anticorruption Presentation Transcript

  • Sanjay Pradhan Director, Public Sector Governance Poverty Reduction & Economic Management The World Bank Strengthening World Bank Group Engagement on Governance & Anticorruption
  • Outline
    • A. Context
    • B. The World Bank’s Governance & Anticorruption Strategy
      • Country Level
      • Project Level
      • Global Level
  • Context
    • In 1996, corruption was a taboo “c-word” – since then, the World Bank’s governance and anticorruption work has evolved rapidly
    • In recent years, stakeholders in recipient & donor countries are demanding better governance & corruption control – scaling up of aid also requires strengthening governance
    • Last month, the World Bank’s governance & anticorruption (GAC) strategy was unanimously endorsed by the Board
    • The strategy represents an unprecedented global consensus – a product of in-depth consultations
  • Global GAC Consultations AFR Burkina Faso, Botswana, Cameroon, Kenya, Mauritania, Mozambique, Republic of Congo, Rwanda, Senegal, Tanzania, Uganda LAC Argentina, Bolivia, Dominican Republic, El Salvador, Guatemala, Mexico, IACC EAP Australia, Cambodia, China, Japan, Indonesia, Lao PDR, Mongolia, New Zealand, Philippines, Thailand, Vietnam MNA Egypt, Jordan (planned), Morocco, Tunisia (planned), Yemen ECA Albania, Bulgaria, Georgia, Moldova, Russia Europe Brussels, the Hague, London, Madrid, OECD, Paris, Rome, Stockholm North America Ottawa, Washington DC (IMF, MDBs, US Government, CSOs, private sector, unions) SAR Bangladesh, India, Nepal Consultations were held in 35 developing countries, 12 donor countries, and four global events, reaching more than 3,200 stakeholders worldwide.
  • Governance is the door to anticorruption The manner in which the state acquires and exercises its authority to provide public goods & services Use of public office for private gain Governance Corruption
    • Corruption is an outcome – a consequence of weak or bad governance
    • Governance reform – strengthening capacity & accountability – helps combat corruption by addressing its underlying causes
  • Inequality Corruption is a regressive tax: Poor & small firms pay more in bribes
    • WBI diagnostics. % of gross monthly revenue paid in bribes, as reported by managers 2001.
    Exclusion Corruption restricts access of poor households to public services WBI diagnostics. Discouraged Poor Users Due to Bribes, 2001. Corruption is a Central Development Issue Service delivery Bribery is associated with bad quality of service WBI diagnostics. Citizens’ Responses, Ecuador 2000. Growth Negative impact on competitiveness
  • Tackling Corruption is Possible Although Political Drivers Prove Resilient 0% 5% 10% 15% 20% Influence Laws Utilities Env. Insp. Occ. Health & Safety Insp. Fire and Blg Insp. Courts Customs Bus. Licenses Taxes Gov. Contracts Average percent of firms indicating type of bribery is frequent * Anticorruption in Transition III: Who is Succeeding … and Why? World Bank, 2006 Transition Countries: decrease between 2002 and 2005 Transition Countries: increase between 2002 & 2005 Transition Countries: level in 2005 Comparator Countries: level in 2005/2004 Europe & Central Asia, 2002-2005 Notes: Transition countries include 26 former socialist countries in ECA; comparator countries are Germany, Ireland, Portugal, Spain and Turkey
  • Outline
    • A. Context
    • B. The World Bank’s Strategy
      • Country Level
      • Project Level
      • Global Level
  • Consistent Approach: While there is no ‘one-size-fits-all’, the World Bank will apply a consistent approach across countries & continue to allocate more aid to better governed environments (PBA) Seven Guiding Principles Governance & Anticorruption for Poverty Reduction: Poor governance and corruption undermine the World Bank’s mission of poverty reduction Country Leadership & Ownership: The World Bank is committed to supporting a country’s own governance & anticorruption priorities Staying Engaged: The World Bank will seek creative ways to provide support, even in poorly-governed countries—“don’t make the poor pay twice” Multi-Stakeholder Engagement: The World Bank will scale up good practice in engaging with civil society, media, parliaments, judiciary, private sector in its operational work Strengthening Country Systems: Better national institutions are the long term solution to mitigating fiduciary risk for all public money Working Together: The World Bank will work with donors & other actors at the country & global levels to ensure a harmonized approach—“the World Bank should not act in isolation” 7 Guiding Principles
  • Project Level Combating corruption in World Bank Group operations Country Level Deepening support to countries to strengthen governance Global Level Working with development partners, sharing experience & addressing transnational issues Key Elements of World Bank’s Strategy
  • Helping Countries to Improve Governance Through Various ‘Entry-Points’ Public Management Public financial management & procurement, monitored by PEFA Administrative & civil service reform Governance in Sectors Transparency & participation Competition in service provision Sector-level corruption issues (EITI, forestry) Civil Society, Media & Oversight Institutions State oversight institutions (parliament, judiciary, SAI) Transparency & participation (FOI, asset declaration, user participation & oversight) Civil society & media Local Governance Community-driven development Local government transparency Downward accountability Private Sector Competitive investment climate Responsible private sector Coalition building across stakeholders
  • Strengthening Demand for Public Financial Accountability Participatory Budgeting, Puerto Alegra (Brazil) Civil Society Oversight; transparent, competitive procurement (Slovakia) Strengthening Supreme Audit Institutions (Hungary) Public Expenditure Tracking & Information Campaigns (Ghana, Madagascar, Mozambique, Peru, Senegal, Tanzania, Zambia ) Procurement oversight by CSOs (Philippines) Strengthening Public Accounts Committees of Parliament (India) Transparent, competitive e-procurement (Latin America) Strengthening Public Accounts Committees of Parliament (Kenya, Ghana, Zambia -- AFR) Accountability, Transparency & Integrity Project (Tanzania) Key Issue: Instrument to Support Demand-side Interventions
  • Empowering Local Communities with Information Can Reduce “Leakages” 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 1990 1991 1993 1994 1995 Equiv. US$ per student Intended grant Actual grant received by primary school (means) 1999 Source: Uganda Public Expenditure Tracking Surveys Tracking Education Dollars in Uganda Public info campaign
  • Tackling Corruption in Key Sectors Manufacturing Registration Selection Procurement Distribution Prescription & Disbursement Random inspections Monitoring based on transparent & uniform standards Tracking systems User surveys Media coverage of drug selection committee meetings Transparency Reference: Jillian Clare Cohen, Assistant Professor, Faculty of Pharmacy and Director, Comparative Program on Health & Society, University of Toronto Tracing Vulnerabilities in Value-Chain : Pharmaceuticals
  • Civil Society Monitoring Service Provision: Bangalore Source: Public Affairs Center, India 5 6 4 9 25 1 14 41 47 42 67 34 34 16 32 32 73 94 73 92 73 78 85 96 77 n/a n/a 0 10 20 30 40 50 60 70 80 90 100 City council Electricity Water supply Telephones Public hospitals Police Land authority Public buses Transport authority Agencies Percent Satisfied 1994 1999 2003
  • “ BIR [Tax Collector] Officials Amass Unexplained Wealth” By Tess Bacalla , Philippine Center for Investigative Journalism CAR MODEL BENEFICIAL OWNER REGISTERED OWNER Nissan Patrol Edwin Abella BIR Reg'l Director, Quezon City Sulpicio S. Bulanon Jr. 1817 Jordan Plains Subd., Quezon City (listed address of Abella in his SALs) Suzuki Grand Vitara Ditto Merrick Abella (son of Abella) 24 Xavierville, Loyola Heights, Q uezon City Nissan Cefiro Ditto Elizabeth S. Buendia 152 Road 8, Quezon City BMW Lucien E. Sayuno BIR Reg'l Director, Makati City Limtra Dev. Corp. Zone 4, Dasmariñas, Cavite BMW Ditto Marie Rachel D. Mene ses c/o Metrocor and Holdings, G&F, Makati City Honda Accord Danilo A. Duncano BIR Reg'l Director, Quezon City Daniel Anthony P. Duncano 2618 JP Rizal, New Capital Estate, Quezon City Mitsubishi L200 Corazon P. Pangcog Asst. Reg'l Director, Valenzuela City Alberto P. Pangcog (husband) B2 L23 Lagro Subd., Quezon City Honda CR - V Ditto Alberto P. Pangcog 9 Ricardo St., Carmel 1 Subd., Quezon City Owner: Regional Director in the Bureau of Internal Revenue forced to resign; currently facing corruption charges; other officials suspended, also facing charges Media, Transparency & Combating Corruption
  • Making the Private Sector an Ally in the Fight Against Corruption
    • The two faces of the private sector
      • Competitive, productivity-focused firms thrive on a level-playing field
      • Corrupt, rent-seeking firms thrive in the shadows
    • How to support competitive, responsible private sector?
      • Create sound business environments, benchmarked internationally ( Doing Business Indicators )
      • Showcase examples & evidence that ‘avoiding corruption is good for business’ ( Celtel’s Mohammed Ibrahim )
      • Support initiatives to promote business ethics and voluntary codes of conduct ( ICC Code of Conduct, TI’s Business Principles, WEF PACI, UN Global Compact ) – and create external verification mechanisms
      • Build coalitions of businesses and other stakeholders for anticorruption ( Indonesia Business Link, Makati Business Club, Global Integrity Alliance )
      • Enforce global/regional laws & regulations ( OECD Convention, UNCAC )
  • Monitoring for Results
    • Use aggregate governance indicators (e.g, CPIA, KKZ, TI CPI) to indicate of extent and mix of governance problems
    • Use actionable & outcome indicators (e.g, PEFA, Global Integrity Index) to monitor progress in implementing priority governance and anticorruption reforms
    • Support participatory mechanisms for monitoring and mutual accountability ( private sector, civil society )
    • Frontier challenge :
    • Improve menu of actionable and
    • outcome indicators
  • Outline
    • A. Context
    • B. The World Bank’s Strategy
      • Country Level
      • Project Level
      • Global Level
  • Combating Corruption in World Bank Operations
    • Prevention
      • Prepare project anticorruption action plans
      • Increase disclosure and transparency
      • Greater oversight and participation from civil society organizations
    • Enforcement
      • Independent review of INT to strengthen investigation of corruption in projects
      • Continue to publicly sanction corrupt firms (330 firms & individuals debarred)
      • Implement the Voluntary Disclosure Program ( VDP )
  • Outline
    • A. Context
    • B. The World Bank’s Strategy
      • Country Level
      • Project Level
      • Global Level
  • Corruption is Not Just a Developing Country Problem Source: “Are Foreign Investors and Multinationals Engaging in Corrupt Practices in Transition Economies?” by Kaufmann, Hellman, Jones, in Transition , May-June 2000. Note: Survey Question was “How often nowadays do firms like yours need to make extra, unofficial payments to public officials to gain government contracts?” Firms responding “sometimes” or “more frequently” were classified as paying kickbacks. These figures are subject to significant margins of error and thus should be regarded as approximate. Percentage of firms that pay public procurement kickbacks by country of origin of foreign direct investment (2000)
  • Global Collective Action Against Corruption Global & Regional Conventions (UNCAC, OECD, AU, OAS, Asia-Pacific Action Plan) need to be enforced to curb transnational corruption & facilitate asset recovery
  • One Key Priority: Recovery of Stolen Assets Ferdinand Marcos (President of the Philippines 1972-1986) USD 5-10 billion Sani Abacha (President of Nigeria 1993-1998) USD 2-5 billion Mobuto Sese Seko (President of Zaire 1965-1997) USD 5 billion Mohamed Suharto (President of Indonesia 1967-1998) USD 14-35 billion *Source: Transparency International Global Corruption Report 2004. All sums are estimates of alleged embezzlement in US dollars.
    • Work with countries and development partners to:
    • Implement the UN Convention Against Corruption and the OECD’s Tax Haven Initiative
    • Play a global advocacy role
    • Provide technical assistance to countries requesting assistance
    • Work to assure that restituted assets are put toward poverty-reduction (e.g., Nigeria)
    • Countries need help in tracing, freezing & recovering stolen assets
    • Transparency International estimates for stolen assets include:*
    The Problem The World Bank’s Role
  • Coalitions with civil society, private sector, parliamentarians, and others (e.g., GOPAC, PACI, Global Integrity Alliance) to combat entrenched corruption networks Donor Collaboration MDB harmonization in high-risk settings to avoid ‘mixed-signals’; coordinated donor action to support demand-side initiatives Global Collective Action Against Corruption Global & Regional Conventions (UNCAC, OECD, AU, OAS, Asia-Pacific Action Plan) need to be enforced to curb transnational corruption & facilitate asset recovery
  • Media Private Sector Municipal Government Military State (Bureaucracy) Political Parties Civil Society International Legislative Branch Judiciary Entrenched Corruption Networks: The Case on Montesinos in Peru Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of Government Case Program, Case C14-04-1722.0, based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000 Vladimiro Montesinos Alberto Fujimori 1
  • Thank You The World Bank 1818 H Street, NW Washington, D.C. 20433 USA “ Working for a World Free of Poverty” For additional information, see: http://www.worldbank.org
  • Moving Forward: What Will the World Bank do Differently? Scale up multistakeholder engagement – with civil society, media, parliaments, judiciary, local communities in policy making & service delivery Systematically scale up engagement with the private sector & industrialized countries to tackle the supply side of corruption , through international conventions such as UN and OECD Conventions & Asset Recovery Scale up governance work where it matters most for development – to help build capable & accountable states Work with donors and other international actors to ensure a harmonized approach & collective action based on respective mandates & comparative advantage Systematically integrate governance in sectoral projects & programs -- in extractive industries, infrastructure, forestry, health, education