by Nick Oatley January 19, 2017
Just a Way of Life?
People often think corruption is ‘just a way of life’, but every society, sector and individual would benefit from standing United Against Corruption. On this International Anti-Corruption Day we recognize that corruption is a major hindrance to stability, security and sustainable development. The scale of the issue is huge. Sixty-eight per cent of countries worldwide (with a total of 6 billion people) have a serious corruption problem. Not one single country, anywhere in the world, is corruption-free.
But what is corruption and what does it mean for those living in society and how can it be tackled?
One definition of corruption is ‘the abuse of entrusted power for private gain’. It can take many forms. Corruption can be grand corruption committed at a high level of government that distort policies or the central functioning of the state, to allow leaders to benefit at the expense of the people. Petty corruption involves the everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies. And political corruption is a manipulation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse their position to sustain their power, status and wealth.
But beyond the definitions and the figures, what does it mean for ordinary citizens trying to live and operate where corruption is rife? What does it mean for businesses operating in corrupt systems?
Many companies perpetuate corrupt practices, paying bribes to rig bids to win public procurement contracts. A commonly cited World Bank estimate from 2005 places the total cost of corruption around $1 trillion annually. Some estimates place the total cost of corruption at more than 5 percent of global GDP each year, which amounts to $2.6 trillion, or 19 times larger than the $134.8 billion spent globally on official development assistance (ODA) in 2013. The Center for Strategic and International Studies produced a report using World Bank data in February 2014 that estimated private sector corruption alone accounted for $515 billion or more annually. It is estimated that the financial burden on the private sector organizations is around 10% or more in terms of added costs of doing business in many parts of the world. The result is that economic growth is impeded, competition distorted and serious legal and reputational risks for businesses are incurred. The WEF estimates that moving a business from a country with low corruption to one with medium or high corruption constitutes a 20 percent tax increase for that business.
Whilst corruption has serious impacts on businesses, the most damaging effects of corruption is on citizens. Corruption has a disproportionate impact on poor communities and is corrosive on the very fabric of society perpetuating inequality, supporting illegal trade practices which impact on human lives (e.g., human trafficking) and creating insecurity by fueling the activities of terrorist groups.
For ordinary citizens, in the worst cases, it can cost lives. Short of this, it costs people their freedom, health or their savings. Corruption can affect peoples’ democratic rights like getting access to justice in a corrupt system or getting fair treatment by the police without having to pay a bribe. Corruption can also affect the quality of peoples’ lives as corruption diverts national investment to high-profile projects such as dams, power plants, pipelines and refineries where money can be siphoned off by those in power, leaving more urgent infrastructure projects such as schools, hospitals and roads neglected.
A distinctive approach to fighting corruption at the local level
PartnersGlobal is committed to combatting corruption. We are currently implementing several initiatives with our local partners in West Africa, including Partners West Africa — Nigeria which have achieved some success in improving access to justice and promoting greater transparency. But perhaps the most effective work of Partners in this area was developed in Central and Eastern Europe. Whilst most efforts to combat corruption have tended to focus on centralized, top-down control of corruption, by creating or strengthening anticorruption legislation, empowering the institutions of law and order, enlarging the judicial and investigative systems, and encouraging the capacity of civil society to play ‘watch-dog’ roles, FPDL (Partners Foundation for Local Development) developed a highly successful methodology that adopts a different approach. The approach they developed relies on securing the active participation of the leaders of local government and their staff to work together to find solutions rooted in an analysis of factors that permit and encourage a culture of corrupt actions. The approach was informed and inspired by the highly successful intervention of four-time Mayor of La Paz Bolivia, Ronald MacLean Abaroa, who worked with one of the giants of academic anticorruption research, Robert Klitgaard, to turn around a culture of corruption in public services in La Paz during the 1980s and early 1990s.
Working off a model of the causes of corruption as represented in the formula: C = M + D — A, or, ‘corruption equals monopoly plus discretion minus accountability’, Abaroa worked with his staff to look for ways to break the monopolies operated by the local government, limit and clarify discretion, and increase transparency and accountability, all the while taking account of the costs, both direct and indirect, of these ways. He also addressed the pay and working conditions of staff and worked with Unions to get their support for the changes he introduced. In the context of Bolivia’s worst economic crisis ever, within the first two years of his administration, the approach successfully restored and improved the municipal government services, multiplied city revenues, increased investments in public works tenfold while regaining the city’s international creditworthiness.
FPDL teamed up with Abaroa and Klitgaard to develop a transferable methodology that has now been successfully implemented in more than 10 Central and South Eastern European countries in 27 local governments. As part of this effort, the Partners team trained a cadres of 150 anti-corruption practitioners and developed a network of ‘change agents’ from more than 50 countries and 4 continents, involved in the public administration reform in their countries. The approach has been internationally recognized by a UN Public Service Award (2011). What this approach demonstrates is that even where corruption is endemic and seemingly intractable, it is possible to create islands of integrity in a sea of corruption, leading to the improvement of public services and the quality of peoples’ lives.
PartnersGlobal is now actively expanding this program to Sub Saharan Africa and Latin America, and creating a new Certificate Program for Anti-Corruption Practitioners to implement the Islands of Integrity Approach directly within their local contexts. For more information on how to collaborate with us on this initiative please contact either Julia Roig, President of PartnersGlobal [email protected] or Nick Oatley, COO of PartnersGlobal at [email protected].