Global Issues Seminar Series

November 14, 2006

Governance and Corruption

Vinay Bhargava, Director International Affairs, The World Bank

Slide# 1: Governance & Corruption – Not the Same

The manner in which the statestateacquires and exercises its authority to provide public goods & services

Use of publicpublic office for privateprivate gain

GovernanceGovernance

CorruptionCorruption

Corruption is an outcome – a consequence of the failure of accountability relationships in the governance system

Corruption is an outcome – a consequence of the failure of accountability relationships in the governance system

Sldie#2: Key Dimensions of Governance

Core GovernancePublic financial management

Multi-donor PEFA initiative (including Switzerland)

Administrative & civil service reform

Governance in SectorsTransparency

Participation

Competition in service provision

Sector-level corruption issues

Demand for Governance

State oversight institutions (parliament, judiciary, SAI)

Transparency & participation (FOI, asset declaration)

Civil Society advocacy

Competitive private sector

Local GovernanceCommunity-driven development

Local government transparency

Downward accountability

Private Sector Development

Competitive investment climate

Two faces of the private sector

Coalition building

Slide 3: Corruption is present in all countries in the world—

pervasiveness varies

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Slide 4: Consequences—corruption lowers incentives for

investment

Slide 5: Consequences—corruption affects the personal lives of citizens and hurts the

poor the most

Slide 6: Consequences—corruption undermines trust in institutions

Coalitions with civil society, private

sector, parliamentarians,

and others to combat entrenched corruption networks

MDB collaboration in high-risk

settings to avoid ‘mixed-signals’;

coordinated donor action to support

demand-side initiatives

Slide 7: Global Collective Action Against Corruption

Global Conventions (OECD, UNCAC) need to

be enforced to curb transnational corruption &

facilitate asset recovery

Slide 8: Globalization of the Fight Against Corruption UN Oil-for-Food Scandal

•More than 2,200 companies involved

•Humanitarian kickbacks from 66 countries

•Oil surcharges paid by companies form around 40 countries.

Slide 9: Forces Shaping Evolution of Corruption as a Global Issue

Demand: Policies to increase transparency in public, corporate, and international finance arenas; research supplying credible information

Supply: Anticorruption measures —national and international

Institutions: Speed at which national and international governance institutions mature

Integrated financial systems—harder to monitor; increases risks of corrupt behavior

Slide 10: International Actions to Combat Corruption

Ensuring that loans and grants to developing countries are used effectively

Bolstering donor support for reform Reducing the incentives for multinational

businesses to pay bribes Promoting international programs to control

organized crime and the flow of illicit funds Improving the institutional framework for

resolving international disputes

Slide 11: International Actions to Combat Corruption

UNCAC: 133 signed; 30 ratifications to enter into force reached on Sept. 15, 2005—preventive measures, criminalization and law enforcement, international cooperation, asset recovery

OECD Convention Against Bribery: all 30 OECD members and 6 non-members have complied with making it a punishable offense to bribe an official in a host country; as of 2005, only 4 have prosecuted more than 1 case; uses a 2-step peer review system

FATF: national and international policies vs money laundering and terrorist financing; 30 countries + HK, EC, and Gulf states are members

Slide 12: Civil Society Initiatives Transparency International

EITI: 8 countries implementing; 14 more have endorsed; IFIs, donors, mining and oil companies, NGOs included

Global Witness: investigative org to break link between natural resource exploitation and the funding of conflict and corruption—led to demise of Khmer Rouge, now active in Asia and Africa

Global Organisation of Parliamentarians Against Corruption (GOPAC): 400 parliamentarians from 70 countries fighting corruption

Slide 13: Business Sector Initiatives

International Accounting Standards: 10 countries in 1974 to over 70 countries to date

International Chamber of Commerce: published Rules of Conduct to Combat Extortion and Bribery in 1977 (revised in 1999)

Publish What You Pay (George Soros, 2002): now a coalition of over 280 NGOs worldwide

Partnership Against Corruption Initiative: WEF in 2004 Global Compact: 10th principle against corruption added in

2004—hundreds of companies have committed to the compact which urges them to lobby for ratification and implementation of the UNCAC and collaborate with other anticorruption efforts

Slide 14: Key Elements of World Bank Strategy

Project Level

Combating corruption in Bank

operations

Country Level

CAS-centered Approach,

deepening support to countries to

strengthen governance

Global Level

Working with development

partners, sharing experience & addressing

transnational issues

THANKS

AND NOW YOUR QUESTIONS