CENTER FOR DEMOCRACY AND GOVERNANCE“...promoting the transition to and consolidation of democratic regimes throughout the ...
TO ORDER THIS DOCUMENT FROM THE DEVELOPMENT EXPERIENCE CLEARINGHOUSE:C      Please reference the document title (A Handboo...
ABOUT THE TECHNICAL PUBLICATION SERIESThe USAID Center for Democracy and Governance Technical Publication Series was launc...
ACKNOWLEDGMENTSPhyllis DininioPhyllis Dininio is an anti-corruption specialist with the Center for Democracy and Governanc...
A HANDBOOK ON FIGHTING CORRUPTION                                                                   CONTENTSEXECUTIVE SUMM...
EXECUTIVE SUMMARYThis handbook presents a framework to assist USAID missions develop strategic responses to publiccorrupti...
I. INTRODUCTION                                     measures to design a USAID anti-corruption                            ...
II. COSTS OF CORRUPTION                              shielding firms with connections from                                ...
III. DESIGNING A                                       advantage through personal rather than                             ...
prescribe a model strategy for fighting              has enriched insiders through skewed prices andcorruption. Rather, it...
Firms in Ecuador, Argentina, and Panama are          require public officials to declare their assets andexperimenting wit...
payments to suppliers, double-salaried staff,     agencies. Still others have investigatory and  and retirees drawing remu...
Brazilian President Fernando Collor de Mello,        must be given for each offense. Similarly, ininitiated by the Parliam...
accountable to anti-corruption laws, judiciaries    time in the countrys history, the Fiscalianeed independence from the e...
employees through hiring freezes and attrition,      anti-corruption reforms once they enterretirement packages, dismissal...
procedures for reporting corrupt practices and       business and professional associations can beadvocating for reform. O...
participatory diagnosis of the problems and           government and civil society. Such andevelopment of an action plan, ...
or societal attitudes contribute to corruption?     opposition to anti-corruption reform. That is, theHow do these institu...
C Promoting a free press                              C Promoting civic monitoringC Increasing pressure from international...
As the foregoing makes clear, there is no silver            interventions will vary, use of societal measuresbullet or sin...
IV. USAID ANTI-                                     G/DG is also supporting anti-corruption efforts                       ...
World Banks Economic Development Institute           assistance for an integrated financialon a Central America Regional I...
Management and Budget, Congress, and the               office of government ethics to monitor andpublic. Nevertheless, the...
V. PARTNERS                                         C Organization of American States (OAS)                               ...
National Democratic Institute (NDI)—NDI              http://www.adb.orgassisted the South African and Turkish             ...
BIBLIOGRAPHYAdes, Alberto, and Rafael di Tella. “Competition and Corruption.” Working Paper, Oxford University Institute o...
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
Fighting corruption
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Fighting corruption

  1. 1. CENTER FOR DEMOCRACY AND GOVERNANCE“...promoting the transition to and consolidation of democratic regimes throughout the world.” A HANDBOOK ON FIGHTING CORRUPTION February 1999 Technical Publication Series Center for Democracy and Governance Bureau for Global Programs, Field Support, and Research U.S. Agency for International Development Washington, D.C. 20523-3100
  2. 2. TO ORDER THIS DOCUMENT FROM THE DEVELOPMENT EXPERIENCE CLEARINGHOUSE:C Please reference the document title (A Handbook on Fighting Corruption) and document identification number (PN-ACE-070).C USAID employees, USAID contractors overseas, and USAID sponsored organizations overseas may order documents at no charge.C Universities, research centers, government offices, and other institutions located in developing countries may order up to five titles at no charge.C All other institutions and individuals may purchase documents. Do not send payment. When applicable, reproduction and postage costs will be billed.Fax orders to: (703) 351-4039 Attn: USAID Development Experience Clearinghouse (DEC)E-mail orders to: docorder@dec.cdie.org
  3. 3. ABOUT THE TECHNICAL PUBLICATION SERIESThe USAID Center for Democracy and Governance Technical Publication Series was launched in March1998. The series includes publications intended principally for USAID personnel; however, all personsinterested in the sector may benefit from the series. Authors of individual publications may be USAIDofficials and/or other individuals from the public and private sector. The Center for Democracy andGovernance reserves the right to review and edit all publications for content and format and all are subjectto a broad USAID review process. The series is intended in part to indicate best practices, lessons learned,and guidelines for practitioner consideration. The series also includes publications that are intended tostimulate debate and discussion.A list of other relevant publications and ordering information are included at the back of this document.ABOUT THIS PUBLICATIONThis handbook is intended to help USAID field staff make informed decisions with regard to developing anti-corruption strategies. It outlines a framework for evaluating country-specific causes and appropriateresponses to corruption, and describes anti-corruption work carried out by USAID and other organizations.Comments regarding this handbook and inquiries regarding USAIDs ongoing work in the area of anti-corruption should be directed to:Diana Swain, Team Leader, Governance Phyllis Dininio, GovernanceTel: (202) 712-4234 Tel: (202) 712-0319Fax: (202) 216-3232 Fax: (202) 216-3232dswain@usaid.gov pdininio@usaid.govCenter for Democracy and GovernanceBureau for Global Programs, Field Support, and ResearchU.S. Agency for International DevelopmentWashington, DC 20523-3100ABOUT THE CENTERThe Center for Democracy and Governance is the U.S. Agency for International Development’s focal pointfor democracy and governance programming. The Center’s role is to provide USAID and other developmentpractitioners with the technical and intellectual expertise needed to support democratic development. Itprovides this expertise in the following areas: C Rule of Law C Elections and Political Processes C Civil Society C GovernanceFor further information regarding the Center or the Technical Publication Series, please contact the Centerfor Democracy and Governance Information Unit at (202) 661-5847.The Center would appreciate your comments as to the appropriateness and utility of this handbook. Pleasecontact the Center with any comments or suggestions.
  4. 4. ACKNOWLEDGMENTSPhyllis DininioPhyllis Dininio is an anti-corruption specialist with the Center for Democracy and Governance and is theprimary author of this handbook. She manages a $2 million grant with Transparency International tolaunch anti-corruption programs in nine countries. While writing this handbook, she carried outcorruption assessments and proposed anti-corruption interventions in Bulgaria and Romania. Dr. Dininioinitiated and currently chairs an intra-agency anti-corruption working group. She has designed and ledsessions on fighting corruption for USAID training workshops, and has developed an anti-corruptiontraining module for new USAID democracy officers. She also organized and chaired a panel on the roleof bilateral donors in fighting corruption for the 8th International Anti-Corruption Conference in Peru,and presented USAID anti-corruption activities at a World Bank workshop in Benin and an OECD/UNDPconference in Paris. Prior to joining the Center, she taught classes on democratization at Yale and HarvardUniversities; wrote case studies for the Harvard Business School; analyzed Latin America issues for theCongressional Research Service; and carried out country risk analyses for Baybank Boston. Among herother publications, The Political Economy of East German Privatization is forthcoming from GreenwoodPublishing. Dininio holds a B.A. in economics and sociology from Harvard University, an M.A. inpolitical and economic development from the Fletcher School, and a Ph.D. in political science from YaleUniversity.Sahr John KpundehSahr John Kpundeh is a consultant with experience in governance and anti-corruption issues. He has beena consultant to the Economic Development Institute of the World Bank, the United States Agency forInternational Development, the United Nations Development Programme, and several commercial firms.He is the author of Politics and Corruption in Africa: A Case Study of Sierra Leone (University Press ofAmerica, 1995); co-editor of Corruption and Integrity Improvement Initiatives in Developing Countries(UNDP/OECD, 1998); co-editor of Curbing Corruption: Toward a Model for Building National Integrity(forthcoming, the World Bank); editor of Democratization in Africa: African Views, African Voices(National Academy Press, 1992); and author of several published articles on governance, democracy, andcorruption. From 1991 to 1995, Dr. Kpundeh was a program officer on the Panel on Issues in Democracyand States in Transition at the National Academy of Sciences, Washington, D.C. Kpundeh holds a Ph.D.from Howard University.
  5. 5. A HANDBOOK ON FIGHTING CORRUPTION CONTENTSEXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3II. COSTS OF CORRUPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5III. DESIGNING A RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 A. Causes of Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 B. Inventory of Anti-corruption Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 C. Assessment Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 D. Programming Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16IV. USAID ANTI-CORRUPTION EFFORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 A. USAID/Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 B. Field Missions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 C. Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20V. PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 A. USAID Implementing Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 B. International Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 C. Private and Nongovernmental Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 D. Other United States Government Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 E. Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
  6. 6. EXECUTIVE SUMMARYThis handbook presents a framework to assist USAID missions develop strategic responses to publiccorruption. The framework sets out root causes of corruption, identifies a range of institutional andsocietal reforms to address them, and introduces a methodology for selecting among these measures.In general terms, corruption arises from institutional attributes of the state and societal attitudes towardformal political processes. Institutional attributes that encourage corruption include wide authority of thestate, which offers significant opportunities for corruption; minimal accountability, which reduces thecost of corrupt behavior; and perverse incentives in government employment, which induce self-servingrather than public-serving behavior. Societal attitudes fostering corruption include allegiance to personalloyalties over objective rules, low legitimacy of government, and dominance of a political party or rulingelite over political and economic processes.Possible responses to these underlying causes of corruption include institutional reforms to limitauthority, improve accountability, and realign incentives, as well as societal reforms to change attitudesand mobilize political will for sustained anti-corruption interventions. While the handbook offers detaileddescriptions of different types of institutional and societal reforms, a strategy to fight corruption cannotand need not contain each of the institutional and societal reforms discussed. Strategy choices must bemade after taking into account the nature of the corruption problem and the opportunities and constraintsfor addressing it.Because a strategy must be tailored to fit the particular circumstances of a country, designing a strategyrequires assessing the level, forms, and causes of corruption for the country as a whole and for specificgovernment institutions. In particular, strategy formulation requires taking a hard look at the level ofpolitical will for anti-corruption reform in government and civil society. Opportunities for reform canstem from reformists’ tendencies within the government, a change in government, public outrage overscandals, an opposition movement, an economic crisis, or external pressure. It is also essential to takecareful stock of potential supporters and opponents within the ruling parties, the opposition, the judiciary,and the military, among others. The assessment must consider each partys interests and motivations andhow these might play into an anti-corruption strategy.If there is little or no opening to work in anti-corruption, the strategy should focus on societal measures toincrease awareness of the problem and develop a constituency for reform. However, if openings arepartial or significant, the strategy should combine societal reforms to institutionalize political will withtargeted institutional reforms. The strategy should target institutions (such as the judiciary, police, orcustoms, licensing, procurement, and tax offices) where the problem of corruption is serious, yet theopening to work there is substantial (e.g., where there is a pro-reform minister).Coordination with other multilateral and bilateral organizations and NGOs is critical to USAID’s work.Accordingly, the final section of the handbook describes the work of other organizations involved withanti-corruption initiatives.A Handbook on Fighting Corruption 1
  7. 7. I. INTRODUCTION measures to design a USAID anti-corruption strategy in a specific country. This framework includes a methodology for assessing the natureThis handbook aims to assist USAID missions of the corruption problem and the opportunitiesand their partners develop anti-corruption and constraints for addressing it. The frameworkinitiatives. It draws upon the growing literature links the assessment to a strategy, offeringand practical experience in this field to provide guidelines for prioritizing and sequencing anti-guidance on strategies for fighting corruption. corruption activities in various situations.Although the problem itself is not new,opportunities to work in this area have emerged Section IV of the handbook provides anonly recently. Indeed, corruption is no longer a overview of USAID anti-corruption efforts totaboo topic, but one that policymakers, date. It describes global bureau and regionalbusinesses, civil society organizations, media, bureau initiatives in Washington as well asand donors from all regions are confronting missions initiatives since 1996. This sectionopenly. also lists contracting mechanisms available for obtaining assistance in this area and suggestsA number of factors explain new interest in the indicators for reporting results.issue. Since the end of the Cold War, donorgovernments have placed less emphasis on Section V provides an overview of the activitiesideological grounds for foreign assistance and of other donors and organizations working inmore emphasis on trade and development, both anti-corruption. It directs readers to additionalof which are undermined by corruption. At the information on recent anti-corruption initiativessame time, businesses have faced ever stiffer by international organizations such as the Worldcompetition with the globalization of trade and Bank, the Organization for Economiccapital markets, and have become less willing to Cooperation and Development (OECD), thetolerate the expense and risk associated with International Monetary Fund (IMF), and thecorruption. On the other end of the trade Organization of American States (OAS); privateprocess, countries with high levels of corruption and nongovernmental organizations; and otherhave found themselves less able to attract agencies of the US government.investment in a competitive global market. Overthe same period, transitions to democracy haveenabled citizens to use the vote and new-foundcivil liberties (e.g., freedom of speech, ofassembly, etc.) to confront corruption,prompting leaders and opposition figures toshow strong anti-corruption commitment.This handbook on anti-corruption programmingcontains five sections. Section II lays out thedevelopment problems posed by corruption andarticulates the need for anti-corruptionprogramming. Section III provides a frameworkfor developing responses to these problems. Itidentifies root causes of corruption which callfor both institutional and societal reforms toaddress them. For both categories of reform, thehandbook presents an inventory of anti-corruption measures. The handbook then laysout a framework for selecting among theseA Handbook on Fighting Corruption 3
  8. 8. II. COSTS OF CORRUPTION shielding firms with connections from competition and thereby sustaining inefficient firms.In broad terms, corruption is the abuse of publicoffice for private gain. It encompasses unilateral Corruption also generates economic distortionsabuses by government officials such as in the public sector by diverting publicembezzlement and nepotism, as well as abuses investment away from education and into capitallinking public and private actors such as bribery, projects where bribes and kickbacks are moreextortion, influence peddling, and fraud. plentiful. Officials may increase the technicalCorruption arises in both political and complexity of public sector projects to concealbureaucratic offices and can be petty or grand, such dealings, thus further distorting investment.organized or unorganized. Though corruption Corruption also lowers compliance withoften facilitates criminal activities such as drug construction, environmental, or othertrafficking, money laundering, and prostitution, regulations; reduces the quality of governmentit is not restricted to these activities. For services and infrastructure; and increasespurposes of understanding the problem and budgetary pressures on government.devising remedies, it is important to keep crimeand corruption analytically distinct. These distortions deter investment and reduce economic growth. In quantitative terms, MaurosCorruption poses a serious development analysis of 94 countries suggests that a reductionchallenge. In the political realm, it undermines in corruption of 2.38 points on his 10-point scaledemocracy and good governance by subverting would increase a countrys annual investment byformal processes. Corruption in elections and in 4 percent of gross domestic product (GDP), andlegislative bodies reduces accountability and would increase annual growth of GDP per capitarepresentation in policymaking; corruption in by 0.5 percent (Mauro 1997). The World Bank’sthe judiciary suspends the rule of law; and The State in a Changing World, Worldcorruption in public administration results in the Development Report 1997 further refines thisunequal provision of services. More generally, relationship between corruption and investmentcorruption erodes the institutional capacity of by distinguishing between the level ofgovernment as procedures are disregarded, corruption and the predictability of paymentsresources are siphoned off, and officials are and outcomes. It suggests that investment dropshired or promoted without regard to off most in countries where corruption levels areperformance. At the same time, corruption high but the predictability of payments andundermines the legitimacy of government and outcomes is nonetheless low.such democratic values as trust and tolerance.Corruption also undermines economicdevelopment by generating considerabledistortions and inefficiency. In the privatesector, corruption increases the cost of businessthrough the price of illicit payments themselves,the management cost of negotiating withofficials, and the risk of breached agreements ordetection. Although some claim corruptionreduces costs by cutting red tape, an emergingconsensus holds that the availability of bribesinduces officials to contrive new rules anddelays. Where corruption inflates the cost ofbusiness, it also distorts the playing field,A Handbook on Fighting Corruption 5
  9. 9. III. DESIGNING A advantage through personal rather than formalized channels. In other cases, the low RESPONSE legitimacy of government (because it is repressive, ineffective, discordant with culture,A. Causes of Corruption or imposed by foreign rule) induces disregard for formal rules. Similarly, dominance of aResponding to the development challenges political party or ruling elite over political andposed by corruption requires an understanding economic processes, or exclusion ofof its causes. From an institutional perspective, marginalized or poorly organized groups fromcorruption arises where public officials have the same, creates incentives for thosewide authority, little accountability, and disadvantaged by the system to operate outsideperverse incentives. This means the more it.activities public officials control or regulate, themore opportunities exist for corruption. These considerations suggest anti-corruptionFurthermore, the lower the probability of efforts should also address attitudes towarddetection and punishment, the greater the risk corruption. Most generally, such efforts need tothat corruption will take place. In addition, the raise awareness about the costs of corruption forlower the salaries, the rewards for performance, the countrys political and economicthe security of employment, and the development. This means convincing the publicprofessionalism in public service, the greater the that corruption is an extremely damagingincentives for public officials to pursue self- pattern of interaction for society as a whole, andserving rather than public-serving ends. This that the collective damages over time outweighinstitutional perspective suggests fighting any possible short-term personal benefits. Alongcorruption through the following: with raising awareness, these efforts need to stimulate demand for reform, helping mobilizeC Reducing the role of government in economic citizens and elites to push anti-corruption onto activities (to limit authority) the political agenda. To the extent possible, anti- corruption efforts should also address theC Strengthening transparency, oversight, and underlying structures that create anti-system sanctions (to improve accountability) attitudes, for example, by improving the access of marginalized groups to the political arena.C Redesigning terms of employment in public service (to improve incentives) Responses to corruption, therefore, include institutional reforms to limit authority,While this perspective gives us a parsimonious improve accountability, and change incentives,cut on the problem, it does not take into account as well as societal reforms to change attitudessocially-embedded incentives to participate in or and mobilize political will for sustained anti-withstand corrupt practices. Independent of corruption interventions. Within these two broadopportunities, costs, and professional incentives categories, the list of potential responses iswithin government institutions, general attitudes extensive. What follows is an inventory oftoward formal political processes influence institutional and societal reforms. Clearly,corruption levels. A number of factors can however, it is not possible or even necessary topredispose groups or societies to disregard undertake all these initiatives in an anti-formal rules. In many cultures, particularly in corruption effort. The mix of initiatives, thethe context of poverty or conflict, allegiance to relative emphasis placed on them, and thepersonal loyalties such as ones family or ethnic, sequence in which they should be pursued willreligious, or socioeconomic identity outweighs vary from country to country and from time toallegiance to objective rules. Patronage systems, time. For this reason, the handbook does notin fact, represent a common means of securingA Handbook on Fighting Corruption 7
  10. 10. prescribe a model strategy for fighting has enriched insiders through skewed prices andcorruption. Rather, it presents a framework for conversion of public monopolies to private ones.analyzing the problem and designing a strategyto fit the context. After presenting the inventory Liberalization—Liberalization offers a moreof possible initiatives, the handbook introduces a straightforward means to limit state authority.framework for deciding what needs to be done, Eliminating tariffs, quotas, exchange ratein what sequence, and with what sort of political restrictions, price controls, and permitand economic support. requirements simply strips officials of the power to extract bribes. At the same time, removingB. Inventory of Anti-corruption Measures such controls reduces transaction costs, eliminates bottlenecks, and fosters competition.As discussed above, efforts to fight corruption In recent years, accession requirements to theinclude institutional reforms and societal World Trade Organization (WTO) have pushedreforms. Institutional reforms include measures many countries to liberalize their economies. Forto reduce government authority, increase example, in joining the GATT (the WTOsaccountability, and align official incentives to predecessor) Mexico dropped the percentage ofpublic ends. These measures target government imports subject to licensing from 92 percent toinstitutions and processes in all branches and 22 percent and reduced the average tariff fromlevels of government. Societal reforms, on the 23.5 percent to 12.5 percent. Transitions fromother hand, include measures to change attitudes communism have also entailed substantialtoward formal political processes and to recision of controls. A special presidentialmobilize political will for anti-corruption commission in Ukraine, for example, recentlyreform. reduced the number of licenses required to open a business from 100 to about 55. 1. Institutional Reforms: Limiting Authority Competitive Procurement—CompetitivePrivatization—Privatization offers a clear procurement limits the authority of governmentmeans to limit the authority of government. By officials thereby guarding against corruption.removing the government from economic Competitive procurement removes personalactivities, it eliminates opportunities for discretion from the selection of governmentrecurrent corrupt dealing in sales, employment, suppliers and contractors by prescribing an openprocurement, and financing contracts. However, bidding process and laying out clear proceduresas many privatization programs have revealed, and criteria for selection. Because a corruptthe process of privatizing state-owned procurement process can derail theirenterprises and government services itself is development efforts, donors are makingvulnerable to corruption. To ensure the integrity procurement reform a priority. For example, asof the process, privatization requires special an outcome of the 1997 Global Coalition formeasures of transparency. In addition, successful Africas Policy Forum on Corruption, the Worldprivatization programs require adequate Bank is assisting the governments of Benin,regulatory and commercial legal frameworks to Ethiopia, Malawi, Mali, Tanzania, and Ugandaprotect consumers and investors and to create reform their procurement procedures. Yet,conditions for competition. Without these absent such government leadership, privateframeworks in place, privatizing government firms may foster a competitive process. Throughoperations may only shift rent-seeking from the anti-bribery pacts such as Transparencypublic to the private sector. Indeed, in many International’s "islands of integrity" approach,developing and transitional countries, bidders agree not to pay bribes for a governmentunregulated or poorly administered privatization contract and post sizable bonds that are subject to forfeiture in the event of non-compliance.8 A Handbook on Fighting Corruption
  11. 11. Firms in Ecuador, Argentina, and Panama are require public officials to declare their assets andexperimenting with anti-bribery pacts. incomes and so act as a deterrent to profiting through corruption. Public officials can includeCompetition in Public Service—Competition cabinet ministers, members of parliament, andin public service reduces opportunity for top civil servants. In some countries, lawscorruption by removing the monopoly power of require declarations upon accession to andany one government office. In so doing, it departure from office. Other laws prescribediscourages extortion since customers can take yearly monitoring. Countries includingtheir business to a competing office when Argentina, Brazil, Chile, Nicaragua, Poland,confronted with irregular demands or service. Sierra Leone, Uganda, Tanzania, Sri Lanka, andOverlapping jurisdictions, in the case of motor Russia have recently passed such legislation.vehicle bureaus or passport agencies, or private While in most cases the laws have elicitedand public provision of service, in the case of declarations, public access to them ormail delivery or trash removal, are two ways of verification of their accuracy has often been ainstituting competition in public service. problem. 2. Institutional Reforms: Improving Open Budget Process—Open budget processes Accountability improve accountability by enhancing transparency of government expenditures andImproving accountability entails efforts to income. While the principle applies equally toimprove both the detection and the sanctioning national and local level budgets, the immediacyof corrupt acts. Better detection requires of local government provides an impetus andmeasures to improve transparency and oversight entree for citizens to participate in the processwhile better sanctioning involves establishing that are often missing at the national level. Forcriminal and administrative sanctions, this reason, recent efforts to promote transparentstrengthening judicial processes, and improving budgeting have concentrated on the local level.electoral accountability. A description of such For example, decentralization programs inmeasures follows. Bolivia, Paraguay, and El Salvador have featured improved citizen participation in andFreedom of Information Legislation— oversight of local budget processes.Freedom of information legislation improvesaccountability by enhancing the transparency of Financial Management Systems and Auditgovernment operations. It counteracts official Offices—Modern financial managementsecrets acts and claims of national security that systems improve accountability by enhancingimpede corruption inquiries. Freedom of transparency and oversight in governmentinformation legislation also informs citizens of operations. Originally developed in response tothe procedures for government service, the 1987 financial collapse in New York City,curtailing attempts to subvert the system or to these systems apply high technology to the fightdemand gratuities for information that legally against financial mismanagement andshould be public. The Ugandan government, for corruption. Measures to improve financialexample, now displays in relevant offices the management systems involve design of financialregulations, procedures, and fees for public software, installation of hardware, and trainingservices such as registering a vehicle or starting of accounting and audit staff. Tools for financiala company. management systems include the following:Financial Disclosure—Financial disclosure C High-speed computer comparisons of data thatlaws improve accountability by enhancing the can disclose such abuses as duplicatetransparency of officials finances. The lawsA Handbook on Fighting Corruption 9
  12. 12. payments to suppliers, double-salaried staff, agencies. Still others have investigatory and and retirees drawing remuneration prosecutorial powers (e.g., Perus Tribunal for Public Ethics, Uruguays Defensoría del Pueblo,C Computer-assisted audits allowing selected and Botswanas Directorate on Corruption and sampling of activities subject to abuse Economic Crime). The Directorate on Corruption and Economic Crime (DCEC),C Automatic flash points that call attention to modeled after a similar agency in Hong Kong, repetitive or inappropriate budgetary not only investigates and prosecutes offenders, maneuvers, or to deviations in areas of high but designs strategies to prevent corruption and vulnerability engages in public education. Officially under the presidents jurisdiction, it is operationallyC General ledger controls over valuable independent and can prosecute whomever it resources such as land, buildings, vehicles, wishes. Although hampered by a slow court computers, and electronic equipment system, it boasts a high conviction rate and has collected fines in excess of its operating costs.C Single bank accounts used to consolidate public funds and eliminate "off-budget" Legislative Oversight—Legislative oversight expenditures provides a powerful check on executive authority, enhancing accountability where aMany governments in Latin America are dominant executive branch might otherwiseinstalling financial management systems. For operate with impunity. To be effective, however,example, in 1996 Argentina announced a legislatures require such resources as aprogram to use modern methods of financial technically competent staff, strong committees,management to detect and prevent fraud in budgetary independence, significantdecentralized social security, customs, taxation, bureaucratic oversight powers, and ahealth insurance, and medical assistance constitutional role in approving politicalagencies. appointments. In many countries, legislatures lack such resources and are thus manipulated orInspector General/Ombudsmen/Anti- bribed by strong executives. Programs toCorruption Agency—These government modernize legislatures and workshops to helpoffices improve accountability by overseeing members of parliament understand their role ingovernment operations. In general, they look governance aim to strengthen their oversightinto allegations of mismanagement and review capacity. Requiring that anti-corruption agenciesadministrative systems to ensure they adhere to report to parliament, rather than the executive,anti-corruption procedures. Specific also facilitates legislative oversight. Recently,responsibilities and titles of these offices vary amendments to legislation in Zambia andfrom country to country. For example, review of Uganda have directed the Anti-Corruptioncorruption allegations is undertaken by the Commission and the inspector-general,Inspector General in Uganda, the Anti- respectively, to report to parliament rather thanCorruption Bureau in Tanzania, and the Unit for the head of state.Monitoring Accountability and Transparency inSierra Leone. In many cases these offices Since the late 1970s, restoration or establishmentfunction narrowly as ombudsmen, registering of democracy has produced stronger legislativecitizen complaints and serving as public bodies in many countries. Most notably in Latinadvocacy offices. In other cases, such as with America, newly-restored legislatures have takenBolivias UDECO (Unidad de Defensa Del a leading role in combating executive branchCiudadano contra la Corrupción), they corruption. The most conspicuous example ofcoordinate anti-corruption efforts among this was the congressional impeachment of10 A Handbook on Fighting Corruption
  13. 13. Brazilian President Fernando Collor de Mello, must be given for each offense. Similarly, ininitiated by the Parliamentary Commission of Malawi, the Corrupt Practices Act of 1995Inquiry. More recently, the Brazilian Senate prescribed criminal penalties for soliciting,formed a special committee to investigate offering, and accepting bribes, and authorizedallegations that government officials had been recovery of illicit proceeds from corruption.involved in fraudulent sales of governmentbonds. As another example, the Kuwaiti In some countries, penal codes allowparliament has become quite assertive since its prosecution not only for direct evidence ofreinstatement following the Gulf War. Recently, bribery, but also for possessing wealth andit divulged the royal familys practice of income that cannot be traced to lawful activities.demanding kickbacks for favors and exposed Such laws have been used successfully againstcorrupt procurement procedures in the Ministry drug lords in Colombia and against the brotherof Defense. of former President Carlos Salinas de Gotari in Mexico. A few countries, such as Thailand andHot Lines and Whistle-Blower Protection— Hong Kong, even place the burden of proof onHot lines improve accountability by enlisting co- the accused—a government official can beworkers, businesses, and citizens to report required to show that his or her wealth, andcorrupt acts. The government office responsible perhaps that of immediate relatives, wasfor investigating such acts often operates a hot acquired legally. This issue was a point ofline. For example, in Hong Kong, the disagreement during deliberations over the 1996Independent Commission Against Corruption Inter-American Convention against Corruption.runs a hot line and guarantees that every Many Latin American countries argued thatallegation is investigated. It also protects those requiring the government to prove illicitwho make reports by granting file access to enrichment would be ineffective and that theofficers on a "need to know" basis only. burden of proof should be placed on theHowever, in cases where anonymity cannot be accused. The United States argued that theguaranteed, those who protest corruption often presumption of innocence ought to be aplace themselves at risk. In many countries, constitutional principle. Negotiations ultimatelywhistle blowers are often fired or punished, settled on the latter position.subjected to administrative harassment, andexposed to violence. For this reason, anti- In addition to criminalizing corruption,corruption efforts need legislation to protect governments can establish sanctions for smallerwhistle blowers from official sanctions or even cases of corruption outside the formal legalto reward them. Uganda, in fact, is now system. Authorities can fire public officialsconsidering a recommendation to reward engaged in corrupt deals and render themofficials who provide information leading to the ineligible for pension distributions or futuresuccessful recovery of embezzled public funds. public employment. Authorities can also deny public services to users found offering bribes, orSanctions—Applying sanctions to corrupt acts revoke their eligibility to bid on procurementis an important step toward establishing and privatization contracts, either on aaccountability. In large part, sanctions are permanent basis or for a period of time.centered on legislation to criminalize corruption,which many countries have introduced in recent Judicial Reform—Accountability requires notyears. For example, in Uganda in 1995, the Law just establishing sanctions, but enforcing themReform Commission established that all on an impartial basis. Without enforcement,embezzled monies must be returned to the state; tough laws have no impact on reducingmisappropriated properties or goods must be corruption, and may foster general cynicismforfeited; and mandatory minimum sentences about reform efforts. Yet to hold public officialsA Handbook on Fighting Corruption 11
  14. 14. accountable to anti-corruption laws, judiciaries time in the countrys history, the Fiscalianeed independence from the executive branch as General leveled charges against widespreadwell as institutional capacity. Strengthening corruption in the military.judicial independence involves revisingprocedures for appointing, assigning, Independent of such judicial reforms, politicalremunerating, and removing judges and shifts can also provide openings for judicialprosecutors to insulate them from political assertiveness. The Indian Supreme Court,influence. In some cases, judicial reforms have responding to a public interest lawsuit byestablished an independent prosecutor, in journalists, put pressure on investigators to stopaddition to the public prosecutor, to carry out delaying a trial process. Public opinion pollsinvestigations of senior officials. Strengthening show widespread backing for the courtsthe institutional capacity of the judiciary, activism that now extends to environmental andmeanwhile, involves modernizing court systems consumer protection, public health, campaignto facilitate swift and fair procedures. This can finance, and market reforms. Surveys rate itbe done by augmenting and upgrading staffs, Indias most trusted institution, followed by theimproving legal training, establishing codes of press, with parliament last.conduct for judges, attorneys, clerks andlitigants, and strengthening investigatory Elections—Free and fair elections provide ancapabilities. important mechanism for holding public officials accountable. Citizens can withholdIn recent years, targeted efforts to strengthen votes from incumbents as a sanction againstjudicial independence and capacity have been corruption, and elect opposition candidatesmost extensive in Latin America. A number of denouncing such dealings. In Mexico, Tanzania,countries in the region have undertaken and Bulgaria, for example, voters have electedambitious reforms to improve the skills, opposition candidates running on anti-corruptionprocedures, and infrastructure of the courts, platforms. However, to work as a check onoften with donor assistance. Most notably, officials actions, elections must be accompaniedefforts to strengthen the office of prosecutor by meaningful guarantees of civil liberties tohave gathered force. In Colombia, for example, vote and run for office, as well as by fair votingthe 1991 Penal Process Code grants significant procedures. Campaign finance poses a particularinvestigatory powers to its Fiscalia General challenge for fairness and can be a significant(Attorney General). This official is appointed to source of corruption. For this reason, campaigna four-year term by the Supreme Court and finance reforms that limit or regulate donations,cannot be dismissed or reappointed. Colombias require disclosure of funds, provide freeFiscal General, Alfonso Valdivieso, has television time, and eliminate off-budgetachieved international renown for his government funding sources are an importantprosecution of drug lords and high government component of accountability.officials. Operating with administrative andbudgetary autonomy, the office investigates and 3. Institutional Reforms: Realigningbrings charges before judges, directs and Incentivescoordinates the functions of the Judicial Police,and protects victims, witnesses, and others Institutional reforms to fight corruption alsoinvolved in proceedings. As another example, include incentives to promote ethical behavior inthe Honduran Public Ministry Law of 1993 public service. Such incentives feature activecreated an independent and autonomous Fiscalia human resources management to develop aGeneral. Among its five agencies is the Fiscalia professional, committed work force. As a firstGeneral contra la Corrupción (Attorney step, personnel systems can eliminateGeneral against Corruption), which has unnecessary positions and reduce the number ofconsiderable resources and staff. For the first12 A Handbook on Fighting Corruption
  15. 15. employees through hiring freezes and attrition, anti-corruption reforms once they enterretirement packages, dismissals, and removal of politically difficult terrain.ghost workers from payrolls. Personnel systemscan also tighten job requirements, establish anti- Surveys—Surveys work to change attitudes andnepotism regulations, develop codes of ethics, mobilize political will by defining the problemand provide training where needed. and focusing efforts to address it. Surveys canCompensation systems must then provide a address the issue of corruption directly (e.g.,living wage, but also ensure sufficient corruption perception surveys) or approach itremuneration to attract and retain qualified indirectly in politically sensitive situations (e.g.,personnel. In some cases, salary increases can be service delivery surveys). Corruption perceptionfinanced through reductions in force. In surveys ask individuals or businesses for theiraddition, performance-based incentives can perception or experience of corrupt practices,bolster morale, professionalism, and often generating comparisons across branchesproductivity. Systems can link performance to and levels of government for national surveys,compensation or to such non-monetary rewards or across countries for international surveys. Inas more challenging tasks, influential its annual Corruption Perception Index,assignments, public recognition, and Transparency International draws upon sevenprofessional awards. Regular performance international surveys of business people,assessments become necessary components of political analysts, and the general public to ratean incentive system. approximately 50 countries on perceived levels of corruption. Service delivery surveys, byIn the 1980s, Ghana introduced institutional contrast, ask public service users about theirreforms in tax and customs administration. The satisfaction with specific services, such asgovernment dismissed or retired the most utilities, housing, health, or education. Whilecorrupt officials, improved wages and working they may ask the total cost, waiting time, andconditions, and offered performance incentives negotiating time for service, these surveys dofor individuals and for the National Revenue not ask for an appraisal of the level ofService as a whole. Revenue targets were corruption. They nonetheless provide essentialestablished, and the National Revenue Service information to help design reforms, monitorwas given a bonus of 3.5 percent of tax revenue results, and ultimately make services moreand 2.5 percent of customs revenue. As a result, responsive to citizens’ demands. The Economictax and customs revenue rose from 6.6 percent Development Institute (EDI) of the World Bankto 12.3 percent of GDP between 1984 and 1988. and CIET International have assisted governments conduct service delivery surveys in 4. Societal Reforms: Changing Attitudes Bosnia, Nicaragua, Tanzania, Uganda, Mali, and and Mobilizing Political Will Jordan.In addition to institutional reforms, efforts to Public Relations Campaigns—Public relationsfight corruption include societal reforms to campaigns work to increase understanding aboutchange attitudes toward formal political the harm done by corruption and the ways toprocesses and to mobilize political will for fight it. Using the mass media, communitychange. Societal reforms generate new activities, or school programs, they highlight theinformation about the costs and causes of link between corruption and poorer publiccorruption to stimulate demand for change and services, lower investment, smaller growth rates,provide guidance on what to change. Societal and more inequality. They also emphasizereforms also foster structures to facilitate citizens’ rights to services and demonstrate thatmonitoring and advocacy by civil society. corrupt officials are stealing the publics money.Without the mobilization of civil society, At the same time, these campaigns articulategovernments are unlikely to follow through onA Handbook on Fighting Corruption 13
  16. 16. procedures for reporting corrupt practices and business and professional associations can beadvocating for reform. Once people feel they weighty advocates for government reform and athave a stake in eliminating corruption and the the same time effective champions ofmeans to do something about it, they can professional standards and self-regulation. Fordemand more action from their representatives example, in 1996, the International Chamber ofand strengthen political will. Notable sponsors Commerce adopted rules of conduct thatof public relations campaigns include Poder prohibit extortion and bribery for any purpose.Ciudadano, an Argentine NGO that developed The Chamber is working with nationalimaginative television and radio spots governments to enact or strengthen legislationdenouncing corruption and sponsored an anti- combating extortion and bribery. Similarly, barcorruption poster contest for school children; and accounting associations have establishedand Hong Kongs Independent Commission task forces on corruption and added the topic toAgainst Corruption which has used press meeting agendas. Religious groups, such as thereleases, public information announcements, Islamic community in Indonesia, can also exhortinterviews, documentaries, posters, information their members and political leaders to resistleaflets, meetings, public speaking, and work on corruption.school and university curricula to convey ananti-corruption message to the public. CAOs also have been formed to analyze corruption problems, monitor public officials,Investigative Journalism—Investigative and advocate for government reform. A few, likejournalism fosters anti-corruption attitudes and the 70-plus national chapters of Transparencymobilizes political will for reform. In exposing International, are dedicated entirely to fightingcorrupt acts, investigative reporting elicits corruption, while others have a broader focus. Inpopular indignation about corruption and puts Bulgaria, The Center for the Study ofpressure on the government to change. It is Democracy, for example, focuses more broadlyprecisely this risk of exposure that motivates on economic and legal reform; Alianza Civica ingovernments to censor the press and jail Mexico aims to increase competition and thejournalists. A free press, however, is not accountability of the political system; andnecessarily sufficient in the fight against Groupe Nouvelle Ethique in Benin works tocorruption. In many countries, journalists need change public attitudes toward work, education,training about investigative techniques, and democracy, as well as corruption. NGOs inprofessional standards, and newsroom other sectors, such as environment and health,organization. In Tanzania and Uganda, EDI are also developing their capability to advocateorganized workshops to train investigative transparency and integrity. Consequently, injournalists. These workshops were designed to many countries, broad coalitions of CAOs haveraise the skills and confidence of journalists and formed to fight corruption. Measures toto cultivate the media’s commitment to fight strengthen their efforts include providingcorruption. technical assistance and training on technical, financial, and organizational issues, and buildingCivic Advocacy Organizations—Civil society, an enabling environment to allow for theirwhere it is free to organize and act, can become financial independence.a vital partner in developing and strengtheningethical practices in the public sector. While a Workshops—Workshops offer an effectivegrowing number of civic advocacy organizations venue for changing attitudes about corruption(CAOs) have emerged to fight corruption, a and mobilizing political will for reform.range of other civil society organizations can Workshops strive to increase understanding ofcontribute to the cause without being organized corruption and to generate practical strategiesspecifically for that purpose. Most prominently, for reducing it. To do so, they rely on14 A Handbook on Fighting Corruption
  17. 17. participatory diagnosis of the problems and government and civil society. Such andevelopment of an action plan, usually over the assessment entails a political economy analysiscourse of two to three days. Workshops— of the reform process to identify supporters andranging from national integrity workshops with opponents of anti-corruption reform and theirparticipants from the highest levels of respective interests and resources.government and civil society, to subnationalworkshops that bring together local political, The extent of corruption provides the firsteconomic, and social leaders, to workshops analytical cut of the assessment. The extent oftargeting a particular ministry or agency—can corruption can range from sporadic, occurring intarget many levels and parts of government. isolated intervals with no apparent order, toTransparency International and EDI have helped pervasive, permeating most governmentorganize national integrity workshops in institutions in a country or affecting mostUganda, Tanzania, Malawi, Mauritius, Ukraine, activities within a specific institution. Sporadicand Nicaragua. corruption can pose problems for development, but does not have the same corrosive effect onInternational Pressure—Pressure from foreign political and economic systems as pervasivegovernments and international organizations can corruption. While the detriment caused bymobilize and sustain domestic efforts to fight pervasive corruption makes it a keycorruption. Bilateral diplomacy at the highest development issue, the comparatively lesserlevels or through embassies, exhortations from damage caused by sporadic corruption may notinternational bodies such as the United Nations, merit spending resources that could be investedand strong recommendations or conditionality in other development objectives.from development assistance agencies can pushreluctant reformers to address corruption issues. Determining the form of corruption is the nextFor example, World Bank president James step of the assessment. Is the corruption petty,Wolfensohn has effectively used his position to involving lower-level officials and smallerprod governments into action. International or resources, or is it grand, operating at the highestregional treaties against corruption, such as the levels of government with huge sums of money?OAS Inter-American Convention Against Is the corruption organized vertically, linkingCorruption, can also contribute to increasing subordinates and superiors in a system of pay-official resolve to tackle the issues and initiate offs? Is it organized horizontally, linkingpositive change. separate branches of government or agencies in a corrupt network? Is it not organized at all?C. Assessment Methodology Does the corruption entail unilateral abuses by government officials (e.g., embezzlement andA strategy to fight corruption cannot and need nepotism) or does it link public and privatenot contain each of the institutional and societal actors (e.g., through bribery, extortion, andreforms described. Rather, a strategy should fit fraud)? Similarly, is the corruption linked tothe particular circumstances of a country, taking organized crime or the military, entrenched ininto account the nature of the corruption patterns of patronage, or embedded in eliteproblem as well as the opportunities and networks? Finally, in what governmentconstraints for addressing it. Therefore, institutions is corruption concentrated? Fordesigning a strategy requires an assessment of example, is the chief problem found in thethe extent, forms, and causes of corruption for customs agency, in government procurement, inthe country as a whole and for specific tax collection, or in the police?government institutions. At the same time,strategy formulation requires taking a close look The next level of analysis examines the causesat the political will for anti-corruption reform in of the different forms of corruption. For the country as a whole, what institutional problemsA Handbook on Fighting Corruption 15
  18. 18. or societal attitudes contribute to corruption? opposition to anti-corruption reform. That is, theHow do these institutional and attitudinal assessment needs to identify supporters andproblems vary across institutions and regions opponents of reform among the ruling party, thewithin the country? For example, is the issue of opposition, the bureaucracy, subnationalwide government authority problematic in all governments, the judiciary, the military,areas or just in certain activities? Are there business, labor, civic groups, organized crime,effective mechanisms of accountability or proper donors, and foreign governments. It is alsoincentives in some institutions or levels of important to identify motivations and resourcesgovernment? How do these operate? Are they for supporting or opposing anti-corruptionreplicable? Do anti-system attitudes vary across efforts. Motivations can be political, economic,government institutions—between public or moral in nature, while resources can includeeducation and tax collection, for example—or investment capital, foreign assistance, coercion,between national and subnational governments, votes, policy instruments, and moral authority.or between different regional governments?Why? D. Programming GuidanceFollowing an analysis of the corruption problem, A strategy to fight corruption must respond tothe assessment must examine the opportunities the nature of the problem and the opportunitiesand constraints for addressing it. The central and constraints for addressing it. As suggestedissue for strategy development is the opportunity above, the extent of corruption provides the firstfor reform in a country. While in many decision-point in developing a strategy. Wherecountries, there is limited or no opportunity to corruption is sporadic, USAID missions’address the issue of corruption directly, in resources should probably best be used on otherothers, there may be partial or significant programming areas. However, where corruptionopening for reform. Openings to work in anti- is pervasive, USAID missions should furthercorruption can arise from the following: evaluate anti-corruption program options.C A change in government (e.g., the election of The degree of opening for reform is the second Stoyanov in Bulgaria, the impeachment of factor to consider when crafting a strategy. If Bucaram in Ecuador, the resignation of there is little or no opening for reform, the Suharto in Indonesia, or the death of Abacha strategy should concentrate on societal measures in Nigeria) to increase awareness of the problem and mobilize political will for fighting corruption.C Public outrage around scandals (e.g., the 1973 scandal involving a high-ranking police officer Examples of societal measures useful when there in Hong Kong) is little or no opening for reform:C An opposition movement focusing attention C Supporting critics of corruption on corruption (e.g., Mexicos two opposition parties campaigning against the ruling PRI) C Fostering anti-corruption networksC An economic crisis (e.g., South Koreas C Publicizing procedures and rights financial market collapse) C Conducting service-delivery or corruption-C External pressure (e.g., the IMF and World perception surveys Bank conditionality imposed on Kenya) C Communicating the costs of corruptionBeyond such openings, the assessment needs toascertain the broad level of support for and16 A Handbook on Fighting Corruption
  19. 19. C Promoting a free press C Promoting civic monitoringC Increasing pressure from international C Providing training in investigative journalism organizations, foreign governments, and investors to take the issue seriously C Promoting private sector efforts to prevent corruptionAt the same time, USAID missions may be ableto support less politically sensitive institutional C Advocating international cooperation andmeasures to reduce corruption. Institutional conventionsmeasures to limit the states authority, such aseconomic liberalization, privatization, and For example, significant corruption in theprocurement reform, may fit that criteria as they customs authority and the presence of a reformerare often viewed in more technical, apolitical at its highest level may direct USAID anti-terms. Institutional measures to realign corruption assistance to that institution. Theincentives, such as civil service reform, may also specific reforms in customs may target personnelbe feasible even where there is little or no systems and ethics codes if perverse incentivesopening for anti-corruption reform per se. On are the main problem; transparency andthe other hand, measures to improve oversight if little accountability is the mainaccountability are not likely to be supported by a problem; or elimination and simplification ofgovernment disinterested in or hostile to tariffs if wide authority is the main problem.reducing corruption. More commonly, the reform of any government institution will incorporate some combination ofIf, on the other hand, there is partial or these measures.significant opening for reform, the strategyshould combine societal and institutionalmeasures to combat corruption. Even thoughsupport for fighting corruption exists, societalmeasures are still needed to broaden awarenessand institutionalize political will.Examples of institutional and societal measuresuseful when there is support for reform:C Targeting government institutions where the corruption problem is serious and political will for change exists (often derived from a high- level official who identifies his or her tenure with fighting corruption)C Identifying specific interventions based upon root causes of the problem—wide authority, little accountability, or perverse incentivesC Sponsoring integrity workshopsC Fostering anti-corruption NGOsC Encouraging anti-corruption advocacyA Handbook on Fighting Corruption 17
  20. 20. As the foregoing makes clear, there is no silver interventions will vary, use of societal measuresbullet or singular response to corruption that will to build and maintain awareness and politicalwork in all circumstances. Just as corruption will is key to sustaining the effort. Wherestems from a variety of institutional failings and corruption is pervasive, the fight against it mustsocietal predispositions, responses to corruption be a public as well as a technocratic affair.must vary to address particular causes. CAUSES OF AND RESPONSES TO CORRUPTION Institutional Causes Institutional Responses Wide authority Limit authority E.g., privatization, liberalization, competitive procurement, competition in public services Minimal accountability Improve accountability through: Transparency, e.g., freedom of information legislation, financial disclosure, open budget process, financial management systems Oversight, e.g., audit offices, inspectors general/ombudsmen/anti- corruption agency, legislative oversight, hot lines, and whistle-blower protection Sanctions, e.g., electoral, criminal, and administrative sanctions, judicial reform Perverse incentives Realign incentives, e.g., living wage, performance-based incentives, professionalization, ethics codes, eliminating redundant and ghost workers Societal Causes Societal Responses Anti-system attitudes Raise awareness about costs of corruption and mobilize political will for reform, e.g., through surveys, public relations campaigns, investigative journalism, civic advocacy organizations, workshops, international pressureMoreover, responses must conform to apolitically-constrained reality, adapting to theopportunities and constraints for fightingcorruption at a given time. While the mix of18 A Handbook on Fighting Corruption
  21. 21. IV. USAID ANTI- G/DG is also supporting anti-corruption efforts through a grant with Transparency International CORRUPTION (TI). This grant, initiated in September 1997, EFFORTS provides $2 million for intensive anti-corruption work in nine countries and for regional lessons- learned workshops. The country programs willA. USAID/Washington start with an integrity workshop to help groupsIn response to new opportunities and interest in diagnose corruption problems and developworking against corruption, USAID/Washington action plans to fight them. The grant targetshas taken a number of steps to promote Agency Bulgaria, Ukraine, Bangladesh, Philippines,anti-corruption efforts. In December 1997, Benin, Ghana, Mozambique, Colombia, and therepresentatives from the Global Bureau (G), the Dominican Republic. G/DG is also contractingLatin American and Caribbean Bureau (LAC), with the Center for Institutional Reform and thethe Eastern Europe and New Independent States Informal Sector (IRIS) to document four caseBureau (ENI), the Asia and Near East Bureau studies of successful anti-corruption(ANE), the Africa Bureau (AFR), the Bureau for interventions that will feed into the regionalHumanitarian Response (BHR), the General workshops organized by TI.Counsels Office (GC), and the InspectorGenerals Office (IG) convened an anti- Regional bureaus are also developing anti-corruption working group that meets monthly to corruption initiatives. In 1998, the LAC Bureauexchange information and coordinate work. initiated an assessment of its Regional FinancialGiven the cross-sectoral nature of corruption, Management Improvement Project II, designedboth economic growth and democracy- to improve governmental accountability andgovernance officers participate in the group. A financial management. The bureau plans to issuesubcommittee of the working group is a follow-on contract in 1999. The LAC projectdeveloping policy guidance for Agency anti- hosts a donor consultative group, publishes acorruption activities. monthly newsletter entitled Accountability/Anti- corruption, sponsors regional teleconferencesCoordinated through the working group, several called Respondacon, and provides technicalbureaus are co-sponsoring anti-corruption assistance. In December 1997, the ENI Bureauworkshops with the Organization for Economic established an anti-corruption working group,Cooperation and Development (OECD). The developed an anti-corruption strategy for thegroup aims to broaden discussion of the OECD region, and set aside funds over two years foranti-bribery convention signed in December anti-corruption support. Building on the LAC1997. The LAC bureau co-sponsored a regional model, the bureau will use a contractor toworkshop in Argentina in September 1998; the establish a donor consultative group, supportENI bureau co-sponsored a regional workshop training workshops, assist assessment andin Turkey in October 1998; and the ANE bureau strategy-design exercises, develop a newsletteris co-sponsoring a regional workshop in the and other information linkages, and write reportsPhilippines in July 1999. In addition, the Center and program materials. Similarly, ANE has setfor Democracy and Governance (G/DG), the aside money for an anti-corruption strategy.Center for Economic Growth (G/EG), and ENIare co-sponsoring an international conference on LAC is also consulting with the Organization ofthe role of the private sector in fighting American States (OAS) and the Inter-Americancorruption. The conference will be held in Development Bank on follow-up workshops toWashington, D.C. in February 1999. the Inter-American Convention Against Corruption and the Summit of the Americas. LAC, USAID/Nicaragua, and USAID/Guatemala also collaborated with theA Handbook on Fighting Corruption 19
  22. 22. World Banks Economic Development Institute assistance for an integrated financialon a Central America Regional Integrity management system.Workshop held in September 1998. Theworkshop was designed to yield national action C In 1998 USAID/Russia allocated fundsplans to fight corruption, with a special toward new programs in judicial ethics andemphasis on harmonizing anti-corruption related organization; the establishment of a courtstatutes in the region. ENI is working with the bailiff service; financial disclosure andWorld Bank on anti-corruption workshops and government procurement issues; and theprograms in Georgia and Albania and through development of standardized auditing andthe State Departments Coordinators Office to accounting procedures.coordinate anti-corruption efforts in Ukraine andRussia. C USAID/Georgia and USAID/Albania have funded surveys of corruption perceptions andB. Field Missions are working with the World Bank to develop anti-corruption programs.A number of USAID missions have begundeveloping anti-corruption programs. Through a C USAID/Tanzania has supported audit trainingG/DG grant to TI, missions in Benin, Ghana, in the Office of Controller Auditor GeneralBangladesh, Philippines, Colombia, Dominican and has funded civil society organizations toRepublic, Bulgaria, and Ukraine are helping hold anti-corruption workshops and produceestablish local TI chapters, funding anti- anti-corruption pamphlets for students incorruption surveys, and launching integrity secondary schools.workshops. In addition to their work with TI: C USAID/Madagascar has sponsored a series ofC USAID/Bulgaria is funding a coalition of seminars for the Inspector Generals Office NGOs dedicated to fighting corruption. and the Office of Accounts.C USAID/Ukraine is sponsoring local integrity C USAID/Peru has provided support for the workshops in two oblasts (regional level modernization of the Controller Generals government), to provide training in Office. investigative journalism, and to support advocacy for public hearings and freedom of C USAID/South Africa and USAID/Guatemala information laws. have funded work on ethics legislation.C USAID/Benin is providing assistance to the C Missions in El Salvador, Paraguay, and the Chamber of Accounts of the Supreme Court Central Asian Republics are funding anti- and the Inspector Generals Office of the corruption assessments. Ministry of Finance. C. IndicatorsOther missions have also begun working in thisarea: Performance monitoring is a necessary and integral part of good program management. ForC USAID/Nicaragua recently conducted a U.S. government-funded programs, it fulfils the survey of public perceptions of corruption intent of the 1994 Government Performance and and is carrying out a public education Results Act (the Results Act). To this end, campaign on citizens rights and performance information is combined with responsibilities. It is also supporting local broader trend information within the Agency’s watchdog organizations, and is providing goal areas to report results to the Office of20 A Handbook on Fighting Corruption
  23. 23. Management and Budget, Congress, and the office of government ethics to monitor andpublic. Nevertheless, the primary purpose of implement a code of ethicsperformance indicators is to assist in makingprogrammatic decisions and learning from past C Percent of government budget auditedexperience. according to required standards in the last financial year and/or percent of governmentThe following indicators are suggestive. A more contracts and procurements reviewed by thecomprehensive list of indicators for rule of law, inspector generals officeelections, civil society, and governanceprogramming can be found in G/DG’s C Percent/number of governmentHandbook of Democracy and Governance departments/agencies with audit findingsIndicators (PN-ACC-390). Please refer to this (e.g., that find an error) and/or equivalent fordocument for more details. For ordering inspections of contracts and procurementsinformation, see back inside cover of thispublication. C Percent/number of examples of full investigation of significant breaches of 1. Indicators of Government Performance procedures or ethics at relatively high level being pursued fully and fairly to transparentC Public perceptions of corruption in the outcome, and if necessary, to delivery or provision of selected government enforcement/punishment services, as reported in opinion polls C Effectiveness of legislative oversightC Perceptions of corruption by surveys of business persons or firms attempting to do C Number of NGOs with specialized capacity business with the state to analyze, monitor and publicize government corruptionC Time and real cost to customers of getting a license from a selected licensing agency or a 4. Professionalization of Recruitment and connection to utilities through a government Management utilities company C Percentage of new officers recruited by 2. Indicators of Anti-Corruption Laws and competitive exam conducted in a "fair" Regulations mannerC Establishment of a code of conduct or other C Number or percent of government legally binding statements for elected and financial/accounting systems operating under government officials an integrated financial management system 3. Indicators of Oversight Mechanisms on Maintenance of Ethical StandardsC Maintenance and adequate funding of an independent auditor-generals office or equivalent organization that regularly audits government accounts; an inspector-generals office that regularly monitors government contracting and procurement practices; or anA Handbook on Fighting Corruption 21
  24. 24. V. PARTNERS C Organization of American States (OAS) C Global Coalition for Africa (GCA)A. USAID Implementing Mechanisms C Council of EuropeG/DG supports Transparency International’sprogram to strengthen public support for anti- C Asia-Pacific Economic Cooperation (APEC)corruption programs and enhance transparencyand accountability in government through an on- C Regional Development Banksgoing cooperative agreement. In addition, G/DGhas several mechanisms available to assist C World Trade Organization (WTO)USAID missions in the design, implementation,and evaluation of anti-corruption activities. The C International Chamber of Commerce (ICC)mechanisms are described in detail in TheCenter for Democracy and Governance User’s C. Private and NongovernmentalGuide. Briefly, they include (1) the OrganizationsImplementing Policy Change contract withManagement Systems International which can Transparency International (TI)—Founded inbe tapped to help public and private 1993, TI now has local chapters in over 70organizations manage the development and countries. TI builds national, regional, andimplementation of new policies, including those global coalitions embracing the state, civilrelated to anti-corruption; and (2) Indefinite society, and the private sector to fightQuantities Contracts with Associates in Rural corruption. TI assists in the design andDevelopment, Development Alternatives, and implementation of effective integrity systemsCasals and Associates. The three IQCs, all of and collects, analyzes, and disseminateswhich are for general governance-related information to raise public awareness about theactivities, including anti-corruption work, are damaging impact of corruption. TI hasscheduled to expire March 31, 1999. It is developed a Source Book on Integrity Systemsplanned that they will be replaced by two anti- and an annual corruption perception index, bothcorruption specific IQCs. USAID Global available on their web site.Bureau’s Center for Economic Growth has IQCswith the Center for Institutional Reform and the Soros Foundation—The Soros FoundationInformal Sector (IRIS) and Associates in Rural provides assistance to TI and to local NGOs forDevelopment/Checci, both of which can also be anti-corruption work in Eastern Europe and thetapped for anti-corruption work. New Independent States.B. International Organizations The Asia Foundation (TAF)—TAF has a core regional project in anti-corruption, withInternational organizations actively involved in programs in Korea, Indonesia, Vietnam,the issue of anti-corruption include the Thailand, Bangladesh, and Nepal. It specializesfollowing: in constituency-building and demand- articulation for anti-corruption reform.C Organization for Economic Cooperation and Development (OECD) Institutional Reform and the Informal SectorC The World Bank (IRIS)—IRIS organized a training seminar on anti-corruption in Senegal, documented an anti-C The International Monetary Fund (IMF) corruption mechanism for food aid in Nepal, and researched the effects of weak governance onC United Nations the ability of West African nations to mobilize resources for basic services.
  25. 25. National Democratic Institute (NDI)—NDI http://www.adb.orgassisted the South African and Turkish Asia-Pacific Economic Cooperationparliaments with adopting ethics codes and has http://www.apecsec.org.sgheld symposiums on ethics and transparency in Council of EuropeParaguay and Southern Africa. http://www.coe.fr/index.asp Global Coalition for AfricaInternational Republican Institute (IRI)—IRI http://www.gca-cma.orgheld national conference in Guatemala topromote ethics and accountability in the political The Inter-American Development Bank http://www.iadb.orgprocess. International Chamber of CommerceD. Other U.S. Government Offices http://www.iccwbo.org The International Monetary FundVice President Al Gore and other high level U.S. http://www.imf.orggovernment officials have undertaken bilateral The Organization for Economic Cooperation and Developmentmissions to promote anti-corruption initiatives. http://www.oecd.orgIn addition to USAID, other U.S. governmentoffices have helped a number of foreign Organization of American States http://www.oas.orggovernments establish ethics offices and developethics codes, worked with OECD to develop an Transparency Internationalethics checklist, participated in technical http://www.transparency.orgexchanges with the Chinese government on United Nationsoversight functions, provided technical http://www.un.orgassistance to supreme audit institutions in a U.S. Agency for International Developmentrange of presence countries, broadcast, and/or http://www.usaid.govworked to identify transparency as a theme for The U.S. Department of CommercePresident Bill Clinton’s trip to Africa in 1998. http://www.ita.doc.gov/legalThey include the following: The U.S. Information Agency http://www.usia.gov/topical/econ/bribesC U.S. Office of Government Ethics (OGE) The U.S. Office of Government Ethics http://www.usoge.govC State Department’s Office of Inspector The U.S. State Department (Office of Inspector General) General http://www.state.gov/www/dept/oig/index.html The Vice President’s OfficeC Department of Commerce http://www.whitehouse.gov/WH/EOP/OVP/html/Gore_Home.h tmlC Department of State The World Bank http://www.worldbank.orgC U.S. Information Agency World Trade Organization http://www.wto.orgE. Web SitesAll of the previously mentioned organizationshave updated web sites to facilitate access toinformation on their work.The Asian Development BankA Handbook on Fighting Corruption 23
  26. 26. BIBLIOGRAPHYAdes, Alberto, and Rafael di Tella. “Competition and Corruption.” Working Paper, Oxford University Institute of Economics and Statistics, 1994.Alam, M. "Some Economic Costs of Corruption in LDCs." Journal of Development Studies 27: 89-97 (1991).Alam, M. “A Theory of Limits on Corruption and Some Applications.” Kyklos 48(3): 419-35 (1995).Alatas, S. Corruption: Its Nature, Causes and Functions. Aldershot, 1990.Anduiig, Jens and Kalle Moene. "How Corruption May Corrupt." Journal of Economic Behavior and Organization 13 (1990).Anechiarico, Frank, and James B. Jacobs. The Pursuit of Absolute Integrity. Chicago: University of Chicago Press, 1996.Banfield, Edward. “Corruption as a Feature of Governmental Organizations.” Journal of Law and Economics 3 (1975).Barker, Anthony. The Upturned Stone: Political Scandals in Twenty Democracies and Their Investigation Processes. Essex Papers in Politics and Government. No. 92, Location University of Essex, 1992.Barlow, C.H.M. "Ethical Codes for African Administrations: Nature, Content, Limitations and Required Improvements." In Sadig Rasheed Olowu, ed. Ethics and Accountability in African Public Service. Nairobi, Kenya: ICIPE Science Press, 1993.Beenstock, Michael. “Corruption and Development.” World Development 7:15-24.Berkman, Steve. "Corruption and its Impact on Contract Management.” Mimeograph, World Bank, Washington, D.C., 3 April 1995.Besley, Timothy, and John McLaren. “Taxes and Bribery: The Role of Wage Incentives.” The Economic Journal 103: 119-41 (1993).Building a Global Coalition Against Corruption: Transparency International Report 1995. Berlin: Transparency International, 1995.Caiden, Gerald E. and Jung H. Kim. “A New Anti-Corruption Strategy for Korea." Asian Journal of Political Science 1(1) (June 1993).Callahan, Daniel. "Legislative Codes of Ethics." In New York. Representation and Responsibility: Exploring Legislative Ethics. Bruce Jennings and Daniel Callahan, eds. New York: Plenum Press, 221-34 (1985).Carino, Ledivinia V. ed. Bureaucratic Corruption in Asia: Causes, Consequences and Controls. Berkeley: University of California Press, 1988.Charlick, Robert. “Corruption and Political Transition: A Governance Perspective.” Corruption and Reform 7(3): 177-88 (1993).Chew, D.C.E. “Internal Adjustments to Falling Civil Salary: Insights from Uganda.” World Development 18(7) (July 1990).Chubb, Judith. “The Social Bases of an Urban Political Machine: The Christian Democrat Party in Palermo,” In Shmuel N. Eisenstadt, and Rene Lemarchand, eds., Political Clientelism, Patronage and Development. London: Sage, 1981.Clark, David. “Dirigisme in an Asian City State: Hong Kong’s ICAC.” Paper presented at the Thirteenth World Congress, International Political Science Association, Paris, 1985.Clark, Michael, ed. Corruption: Causes, Consequences and Control. Pinter, 1983.Coronel, Gustavo, “Curbing Corruption in Venezuela.” Journal of Democracy 7(3): 157-63 (1996).24 A Handbook on Fighting Corruption

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