Peter Eigen
It is with very real pleasure that I accepted the invitation of our hosts to speak at this, the opening of Global Forum II, at a time when all the players in the battle against corruption face tremendous challenges.
In facing those challenges, it is imperative that we never forget the victims of corruption, from the plundering and misuse of rich oil resources by Sani Abacha to the wilful abuse of a siege economy by Slobodan Milosevic.
How can we not act when the proceeds of Abacha’s money‐laundering remain in the vaults of banks in Britain and Switzerland? This is a challenge we must address in The Hague this week. Another is to ensure that the launch of the Euro does not descend into a carnival of money‐laundering.
To defeat the scourge of money‐laundering, we must act together, and I speak from the standpoint of an NGO [nongovernmental organization], Transparency International, which began with two simple beliefs.
First, that corruption – and the struggle against it – was an issue that stands above the divides of party politics, and so one on which all who are concerned for their country’s future and the well‐being of their people can and should come together.
Second, that the way to progress was through dialogue and involvement rather than the more traditional NGO approach of exposure and confrontation, that we had to raise awareness and build a coalition of all three sectors – government, civil society and the private sector – both at the national and international level.
Today, this coalition approach has taken hold all over the world.
Yet at the outset we were viewed with suspicion from many sides. Despite the fact that many of our founders are from the south, critics in the south accused us of a “developed world agenda”, of blaming corruption on the south. Critics in the north liked to imagine that – despite our name, Transparency – we had a hidden agenda and were captives of entrenched interests of one kind or another. Some governments were distinctly nervous at the thought of an NGO coming anywhere near the institutions of which they were members. Within the NGO community, it was said that we were siding with those we should be criticising in the streets. The then leadership of the World Bank wanted nothing whatsoever to do with us. Ours has been a delicate tightrope‐walking act.
Our partnership with the government of the Netherlands and the Organising Committee of Global Forum II is further evidence of the way we can all work together effectively and creatively. And I hope to see this partnership given even more coherence in two years’ time when the Global Forum and the International Anti‐Corruption Conference will be held jointly in Seoul, as I very much hope they will be, rather than being split between different venues, The Hague and Prague (in October), as they are this year.
Looking at your agenda, it is important for all to recognise that there is even more at stake than fighting corruption alone. For the set of instruments we develop and use to combat corruption – accountability, transparency and the involvement of the private sector and civil society – are precisely the instruments that:
So there is very much more at stake here this week than the essential tasks of containing the petty corruption of junior civil servants and pocket‐lining by senior decision‐makers. Because corruption is such a broad and cross‐cutting issue, confronting corruption is about building a better, fairer and more just world.
And this is why it involves everyone. It is why a strategy built solely on enforcing law and order – important though this is – will never yield the results we all aspire to. No one, I suggest, wants a civil service cowered by fear and nervous about taking initiatives. Civil servants, too, need to feel that they are a part of the creative process.
Back in March, the chief notary of the Russian Federation, Anatoly Tikhenko, was gunned down near his house in Moscow in what was described by Moscow radio station Ekho Moskvy as a “paid killing”, a reaction to his efforts to bring increased transparency and accountability to the corruption‐ridden notary business. PricewaterhouseCoopers reckons that Russia loses US$10 billion a year in potential foreign investments because of corruption, inadequate accounting procedures, weaknesses in its legal system and lack of reliable financial information. And yet, as recently as March 2, Russia’s Interior Minister Vladimir Rushailo denied allegations that 70 per cent of all Russian officials were corrupt with the response that “you should not confuse corruption with bribe taking”. Only those with links to organised criminal gangs, he argued, should be regarded as corrupt.
Our movement is not, I repeat not, anti‐governments. We do not argue that the problem of corruption rests solely with public servants. Far from it. The private sector, too, shares responsibility by using bribery in its interactions with officials; the public at large is part of the problem, willing to pay bribes or acquiescing in conduct it should not accept. The ethics of the public service reflect in large measure those of society as a whole. So that this is not a struggle of “us” against “them”: rather it is a struggle of all of us together to build stronger ethics among society at large.
Nor is countering corruption only a priority for developing countries and for countries in transition. There is a need for continuous improvement in every society as, in a rapidly changing world, events either prove the fallibility of institutions or call into question the reliability of institutional arrangements that may have functioned in the past. Among the country reports TI has prepared for this gathering are two on countries in the north – the Netherlands and Canada – and each points to shortcomings in need of attention.
Responding to the challenge, and working with civil society, the private sector and the governments of Tanzania and Uganda, we developed the concept of the National Integrity System. Available here today is a new, expanded edition of the TI Source Book, which describes this in detail. It is entitled “Confronting Corruption: The Elements of a National Integrity System”, and I commend it to each and every one of you.
The approach is an holistic way of looking at the institutions and practices that collectively assure a society of its basic integrity. By looking at these institutions – the executive, the legislature, the judiciary, the watchdog agencies, the mass media, the private sector and civil society – we have a framework within which to study the pluses and minuses in accountability and transparency. It enables us all to diagnose weaknesses and to address them in context and in a co‐ordinated way. It provides, if you like, a road map for those who are serious about addressing their country’s deficiencies.
This is why TI, with the encouragement and support of the Organising Committee and the countries concerned, has prepared some 19 “country studies” in which the national integrity system has been audited in countries as diverse as Canada and Colombia. Responding to the challenge, the government of Trinidad and Tobago even conducted an audit of its own system. Along with the civil society audits, this too is available here this week.
Let’s take the Netherlands where most of the elements of Transparency International’s National Integrity System are in place. Even here the country study identifies Dutch blind spots, such as “a broad reluctance concerning managing conflict‐of‐interest situations and monitoring assets, income, liabilities and business interests of politicians and civil servants as well as political parties”. The Netherlands also lacks an adequate system of financial disclosure, and in the private sector there is very limited public involvement to secure integrity. “Business corruption gets no political or judicial attention.”
The whole exercise comes together in an overview that draws out the common threads across the country studies, charting successes and shortcomings and setting an agenda for us all to address – all, north, south, east and west.
Why, you may ask, should an NGO like TI undertake such a mission? The answer is that we believe it is incumbent on modern NGOs to join in the search for solutions. Not to be content with identifying problems and calling for remedies, but entering the more challenging area of creative dialogue and doing what we can to assist the search for appropriate responses.
But corruption has no respect for national boundaries. In an increasingly globalised world, corruption seriously distorts economic activity and denies people at large the benefits of their efforts. The scourge of corruption has to be confronted through increased cross‐border co‐operation.
This is why the OECD [Organisation for Economic Co‐operation and Development] Convention outlawing the bribing of foreign public officials to win or retain business is so important. Developing countries never stood a chance of confronting corruption until the exporting countries agreed – albeit for their own reasons – to co‐operate to criminalise such conduct and to end the obscenity of granting tax deductions for bribes.
It is why there have to be faster and more effective ways of returning to their rightful owners the contents of national coffers looted by former leaders. And why there is concern that money frozen in European and US bank accounts still lingers there while limitation periods run.
It is why it is unacceptable for countries to grant “safe havens” to their citizens when they are accused of perpetrating serious acts of corruption elsewhere, the more so where that citizen has held a position of high responsibility. And why there is concern that countries that insist on immunity from extradition do not accept the obligation to prosecute such cases in their own courts.
I sincerely hope that the election of the Bush administration does not signal a sea‐change in the US stance towards international co‐operation against corruption and does not herald a new “unilateral” approach. The recent statement by Paul O’Neill, the US Treasury Secretary, that he has “had cause to re‐evaluate the United States’ participation in the OECD working group that targets ‘harmful tax practices’ ” has raised alarm bells. I urge the US Government to consult promptly with the other OECD member‐states, because US withdrawal from the effort to develop programmes to prevent the misuse of off‐shore financial centers would represent a serious blow to effective international co‐operation against corruption and money laundering.
Strong multilateral action is required to prevent corrupt officials from hiding their ill‐gotten gains in unregulated off‐shore accounts. Billions of laundered funds are at stake. Around US$1 trillion of criminal proceeds are laundered through banks worldwide each year, and about half of that is moved through American banks.
More effective international information‐sharing regimes and improved mutual legal assistance procedures are required to return that money to its rightful owners in Africa and elsewhere. I would like to remind the Bush Administration that unilateral US efforts to combat corruption through the Foreign Corrupt Practices Act hurt US interests and did not improve the practices of its competitors. It was only when fighting corruption was internationalised in the mid‐nineties that progress began to be made. And this was when it was realised that a principal objective was to help developing countries in their efforts to stem the devastation caused – and still being caused – by bribes from the industrial world. It is this concern – for the poor and the marginalised – that is central to the TI coalition.
International money‐laundering arrangements are critical, as long as the proceeds of “grand corruption” are spirited away to safe havens. And why there is such concern when French parliamentarians contemplate lifting their anti‐money‐laundering laws for a period of six months’ “grace” during the imminent conversion to the Euro – something that could well trigger the largest money‐laundering exercise in the history of the human race.
It is clear that the rush to move dirty money from the Balkans and the CIS [Commonwealth of Independent States] from Deutschmarks to US dollars has already begun – and many economists argue that the flood to the dollar of this underworld money accounts for the Euro’s continued weakness. The current burst of economic activity in unlikely places across Europe points to a headlong rush to turn dirty money into bricks and mortar – a phenomenon that governments must surely monitor and investigate.
Clearly the proposed United Nations Convention can go some way towards extending the scope and effectiveness of international co‐operation. But UN Conventions are less ideal for progressing an anti‐corruption campaign. They tend to take years to produce and then only reflect the lowest common denominator. Thereafter they are not monitored and can simply lie in limbo.
This week we hope you will try to ensure that any UN Convention against corruption is limited to areas in which it can be really effective, and is negotiated without delay. Above all, it should not be used as a pretext by governments for failing to take remedial action in the meantime – or to oppose regional initiatives in this field.
The UN Convention could be used as an excuse for inaction. We look to Ministers when they meet on Thursday to recognise this danger and to lock and bolt the door against those who might exploit it.
There has been enough talking about corruption. The need today is for action. This is a government forum. In October, in Prague, the wider anti‐corruption movement will come together. And it is not by your rhetoric but by your deeds that your work this week will be judged.