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Anti corruption presentatioon 28-10-07
1. Yusuf Mansur
The Envision Consulting Group
Amman, Jordan
October 28 2007
Private Sector Anti-Corruption Measures in
Jordan
United Nations Development Program
2. - Introduction
- The Jordanian Economy and Reforms
- Corruption and Development
- Anti-Corruption Processes and Policies: The Case of Jordan
- Analysis of Anti-Corruption Efforts in Jordan
- The Private Sector’s Perceptions of Anti-Corruption Processes
- Anti-Corruption Survey 2007
- The Benefits of Adopting Anti-Corruption Processes by the Private Sector
- Case Studies of Examples in Jordan, the Middle East, and Globally on the
Use of Anti-Corruption Policies and Processes in the Private Sector
- Recommendations for the Private Sector in Jordan
Table of Contents
3. Jordan was one of the first signatories of the United Nations
Convention Against Corruption on the 9th of December 2003
In the Transparency International Report (2007), Jordan ranked
53 in the Corruption Perceptions Index (CPI) out of 179
A setback from a rank of 40 out of 163 countries in 2006
Introduction
Principle 10 of the Global Compact Network:
“Businesses should work against corruption
in all its forms, including extortion and
bribery.”
4. Reform programs were initially implemented as a result of an economic crisis suffered
during 1988-1989
Six economic adjustment programs (1989-2004) followed under the tutelage of the IMF
and the World Bank
The Jordanian Economy and Reforms
Reforms in the public sector enabled the government to reschedule the
external debt, enact a new public debt law, stop borrowing from commercial
creditor
Simplified procedures, modernized investment promotion legislation,
established a one-stop-shop for investors, which helped reduce the
registration period
Signed a multitude of liberalizing agreements including the EU- Jordan
Assoc. Agreement in 1997 and joined the WTO in 2000
Fully liberalized the interest rate structure, shifted towards indirect monetary
controls
Privatization of public enterprises led the region in volume and frequency
5. Reform focused on the demand side of the economy
The Jordanian Economy and Reforms
During 2004-2006, the Jordanian economy experienced strong
GDP growth rates of 8.4%, 7.2%, and 6.3%
However, the ranking of Jordan in major international indices of
economic performance demonstrate decreased competitiveness
6. The majority of economic reforms were focused on macroeconomic
frameworks, rather than microeconomic adjustments to directly enhance the
productivity of labor, capital and entrepreneurship
Competitiveness means enhancing the productivity of the economic factors
of production
JV2020 Phase I and the JV2020 Phase II, which was developed in
2006, remain outside the realm of policy creation and implementation
The Jordan National Agenda, was formulated in 2005 as an attempt to draft
a national charter for economic development and avoid the sporadic
changes in policies by every new ministerial cabinet
The Jordanian Economy and Reforms
7. Corruption and Development
Development: “The bottom line of economic development today
is about building prosperity—a high and rising standard of living.
Productivity and productivity growth are the fundamental
drivers of prosperity and innovation is the key driver of
productivity.”
David A. Sampson, Assistant Secretary for
Economic Development, U.S. Department of Commerce
Development: “Long-term process of building a number of
interdependent microeconomic capabilities and incentives to
support more advanced forms of competition.”
Michael Porter
Harvard University
8. Several economists supplied support for the view that governments that are
controlled by checks and balances create faster growth.
Corruption and Development
Economic
Development
Sustainable
Economic Growth
Equitable Growth
Accountability
Transparency
Democracy
9. The literature on economic growth has emphasized the effects of
good institutions on economic growth. Corrupt, undemocratic
economies are the antithesis of development.
“Democracy has complex demands, which certainly include voting and
respect for election results, but it also requires the protection of liberties
and freedoms, respect for legal entitlements, and the guaranteeing of free
discussion and uncensored distribution of news and fair comment.”
Amartya Sen, “Democracy as a Universal Value,”
Journal of Democracy 10.3 (1999)
Corruption and Development
10. Corruption and Development
Such a view does not preclude the emergence of “authoritarian
economic development models,” as Carl Gershman, the president
of the US National Endowment for Democracy coined it
High growth rates could emerge under such regimes due to surges in the
price of natural endowments such as oil, or the availability of cheap labor
in a demanding global economy
Authoritarian regimes produce inconsistencies within them that can bring
down the economies in the long run
For accountability to be properly practiced, the economy must benefit
from transparency, the antagonist of corruption. However, transparency
can not truly and effectively emerge without democracy
11. Anti-Corruption Processes and Policies: The Case of
Jordan
Public Sector Anti-Corruption Initiatives
Anti-Corruption Agencies
- The Higher Committee to Fight Corruption, established 2000
- The Anti Corruption Commission, established 2007
12. Anti-Corruption Processes and Policies: The Case of
Jordan
Public Sector Anti-Corruption Initiatives:
Oversight Institutions
− The Audit Bureau, established 1952
− The Administrative Control and Inspection Bureau, established 1992
− The General Supplies Department, Ministry of Finance, established 1920
13. Anti-Corruption Processes and Policies: The Case of
Jordan
Public Sector Anti-Corruption Initiatives:
Legislation
- Article 172 of the Penal Code of 1970 Penalizes Active Corruption
- The Anti Corruption Law of 2006, lead to the establishment of The
Anti Corruption Commission in 2007
- The Asset Disclosure Law passed in 2006
- Anti-Money-Laundering Law (Law No. 46 of the Year 2007)
14. - Increasing Political Accountability
- Civil Society Participation --citizen groups, NGOs, trade unions, business
associations, think tanks, academia, religious organizations and media
- Competitive Private Sector to ensure that powerful elites influence decision and
policy making at this state in a fair, competitive, honest and transparent manner.
- Institution of Restraints on Power
- Public Sector Management
Source: World Bank. 2000. Anticorruption in Transition.
A Contribution to the Policy Debate.
Washington, D.C.,
http://go.worldbank.org/7TGAWXYCX0
Analysis of Anti Corruption Efforts in Jordan
Five Pillars of Evaluation: The WB Matrix
15. Analysis of Anti Corruption Efforts in Jordan
Increasing political accountability
Recommendations:
Encourage the introduction of rival political parties and their
introduction into the executive branch of government
Further regulation and monitoring is required
Encourage greater systematic reporting of all public events to
enable the public greater knowledge of the workings of
government
Need to guarantee freedom of expression
16. Analysis of Anti Corruption Efforts in Jordan
Civil Society Participation --Citizen groups, NGOs, trade
unions, business associations, think tanks, academia, religious
organizations and media
Recommendations:
More involvement of civil society;
Improvement by government and businesses is needed of civil society
Need to ensure that the press is free to expose corruption in an objective
and responsible manner. The level of professionalism and responsibility
should be left to the courts to decide, not the discretionary powers of the
executive
Ease the process of civil society creation;
Reduce bureaucratic steps; remove constraints on the establishment of
civil society, and allow it greater freedom in receiving donor funding
Reduce restraints while maintaining consistent and transparent
benchmarks that adhere with international best practice for gauging the
performance of all civil society bodies
17. Analysis of Anti Corruption Efforts in Jordan
Competitive Private Sector to ensure that powerful elites
influence decision and policy making in a
fair, competitive, honest and transparent manner
Recommendations:
Continue with deregulation and halt the drive fore the advent of
price controls
Curtail the introduction of fees and taxes to maintain not only an
outwardly but also internally open economy
The Competition Directorate should become an independent
regulatory commission with enhanced capacity and oversight to
monitor effectively all sectors stipulated in the law
Ensure the independence of regulatory bodies including the
judiciary
18. Analysis of Anti Corruption Efforts in Jordan
Competitive Private Sector to ensure that powerful elites
influence decision and policy making in a
fair, competitive, honest and transparent manner
(cont’d )
Ease company registration and reduce barriers to entry into the
formal economy
Reduce the time and cost of dispute settlement and enhance
awareness of insider trading and wasta as corrupt practices
punishable by law
Enhance and empower business associations to take active role in
policy setting
Encourage multi national corporations operating in Jordan to
disclose corporate social responsibility that is consistent with
international best practice. This will also serve to spread the
practice among the private sector in Jordan
19. Analysis of Anti Corruption Efforts in Jordan
Public Sector Management
Recommendations:
Improve pay of highly skilled civil servants to enable proper
selection and competition with the private sector for talent
Introduce laws to counter nepotism and favoritism and ensure
competitive-transparent hiring processes
Decrease size of the public sector to enable better pay for those
that remain
Efforts to enhance management of the budget have been underway
for years; they need to be speeded up.
Need to decrease tax bands, lower taxes to encourage payment,
improve tax monitoring and payment.
20. Analysis of Anti Corruption Efforts in Jordan
Public Sector Management (Cont’d)
Enhance the capacity of the regulatory structure and enable its real
independence
Greater decentralization and accountability is required
21. Results of the 2007 Anti-Corruption Survey
Are you aware of any transparency enhancing mechanisms in Jordan?
53% said No, 27% said Yes, and 20% said that they had no specific details
about these mechanisms.
Has your company attempted to implement any anticorruption
mechanisms?
73%, No; 27% complained to the authorities, they had not received any
response.
Last year, the government established an Anti-Corruption Commission to
fight corruption in the public sector. In your opinion, how successful has it
been so far? And do you foresee considerable success in the near future?
In general, the opinion of all the respondents about the Anti-Corruption
Commission was that so far they have not seen or heard any type of publicity or
announcement of how it is going to work, nor heard about any results since its
implementation.
22. Can you provide us with cases of your business facing corruptive practices?
What was your response?
53% said that they knew or witnessed some cases and provided examples. The rest
either did not know or had no examples
In your opinion, what is the most common form of corruption in Jordan?
Results of the 2007 Anti-Corruption Survey
The forms of corruption most mentioned by respondents were:
- Tenders given to influential people or their acquaintances 60%
- Public officials using inside information to benefit themselves or their relatives
60%
- Officials giving jobs to family members 47%
- Private sector giving bribes to have processes approved 40%
- Giving bribes to politicians to receive rights and privileges 27%
23. In your view, which of the following professional sectors is most susceptible to
corruption?
Government and public officials 100%, Politicians 40%, Private businesses
33%, Police, lawyers and judges 27%
How true is the following statement: Is having to pay bribes to obtain a service
or have a problem solved a widespread problem in Jordan?
The statement is somewhat true 60% , the problem is present but not widely spread
7%, Not true at all 20% , Not sure 13%
How often do you hear complaints about corruption?
Always 27%, Frequently 60%, Sometimes 7%, Hardly Ever 7%
Results of the 2007 Anti-Corruption Survey
24. Results of the 2007 Anti-Corruption Survey
Some suggestions provided by survey participants for anti-corruption measures
are:
Establish a computerized accountability and audit database to record and track
transactions of government officials
Apply international standards
Inform and educate the public about anti-corruption laws and regulations
Re-educate the population and show the public at large that bribery and wasta are not
part of their lives
Establish an effective complaint system and apply the Anti Corruption Law
Raise salaries of public officers in order to help stem corruptive practices that stem from
economic need
Identify the main corrupt practices that occur or are likely to occur and address them in a
transparent manner
25. The Costs of Corrupt Practices by the Private Sector.
- Lowers productivity and discourages innovation
- Increases costs of doing business (serves as a tax on business)
- Lowers private sector employment levels
- Reduces competition and efficiency
- Misallocates resources
- Lowers investment levels
- Fosters misguided and unresponsive policies and regulations
- Unclear, complex, and frequently changing laws and regulation
- Lack of transparency and accountability
- Lowers public revenue for essential goods and services
- Lower economic growth levels
- Undermines the rule of law
- Hinders democratic, market oriented reforms
- Increases political instability
- Exacerbates poverty and inequality
- Contributes to high crime levels
Source: Center for International Enterprise,
“Combating Corruption: Private Sector Perspectives and Solutions”, 2004
26. Table 4: Jordan’s Participants in the UNGC
Date JoinedCountrySectorTypeParticipant
July 2007JordanTransportation &
Storage
CompanyARAMEX PJSC
January 2007JordanNot ApplicableCityCity of Salt
July 2007JordanPaper & Forest
Product
CompanyNuqul Group
December 2006JordanProfessional,
Scientific and
Technical
Services
SMERAZORView
Advisors
December 2006JordanProfessional,
Scientific and
Technical
Services
SMESchema
June 2007JordanMedia,
Communications
& Entertainment
SMETactix Strategic
Consulting
September 2007JordanIT, Software and
web Solutions
Company
CompanyPrimus
27. Recommendations for the Private Sector in Jordan:
- Jordanian businesses should follow the basic edicts of
Corporate Governance
- Encourage collective action in combating corruption,
“the power of numbers”
- Work the matrix, businesses should not do it alone!
- Incriminate acts of corruption that are considered
accepted practices such as wasta and insider
information
28. Recommendations for the Private Sector in Jordan:
- Empower the media to provoke community action
- Lobby for greater access to information and
transparency
- Become mentors of others, “Big Brother”