Corruption & Development

1. Corruption & Development Regional CoP Workshop – Asia and the Pacific RegionBangkok, Thailand, 13-15 October, 2008United Nations Development Programmewww.undp.org/governance

2. Objectives of this Session • To provide an overview of AC interventions in the context of UNCAC as a development framework. • Discuss UNCAC as a development Framework • Identify linkages between corruption and development. • Discuss costs of corruption to development and entry points. • Finally, to assist in designing anti-corruption interventions.

3. UNCAC 2003 Historical Development: Corruption 2003 AU Convention 1997 OECD Convention 1996 OAS Convention 1999 CoE Conventions 1997 EU Convention A crime/ Legislation Moral issue • Corruption as old as humanity/ civilization (e.g., India) Moral and criminal issues InternationalizationGlobal instruments Since Origins

4. Defining corruption • UNDP defined corruption as: the misuse of public power, office or authority for private benefit – through bribery, extortion, influence peddling, nepotism, fraud, speed money or embezzlement • Robert Klitgaard’s Formula: C (Corruption) = M (Monopoly) + D (Discretion) – A (Accountability) • Corruption = Monopoly + Discretion – Accountability + (Integrity + Transparency • Misuse of public office for personal gain

5. Definition of Corruption (Contd.) Doesn’t define corruption, but components of corruption such as bribery. Most national statutes do not define Corruption • UNCAC does not have an article dedicated to corruption & Dev • Dev. aspect captured in preamble paragraphs: Extends to private sector (e.g., the Article 12)

6. UNCAC Defines the Relationship • UNCAC links corruption to sustainable development, national stability, human security, democracy and the rule of law • Recognizes that corruption jeopardizes sustainable development. • Basic tenets of Democratic Governance Principles of proper management of public property, fairness, responsibility and equality before the law permeate through the UNCAC. • UNCAC recalls the Joburg Declaration on sustainable Dev. esp. para 19-corruption a threat to sustainable development of people. • UNCAC calls for a multi-disciplinary approach • UNCAC provides recommendations & guidelines

7. Components of Corruption THE MOST COMMON FORMS OF CORRUPTION Bribery: Fraud: Speed money Inside trading: Money laundering: Extortion: Kickbacks: Peddling in influence: Cronyism/Clientelism: Nepotism: Patronage: Embezzlement: Abuse of public property

8. Aims and Structure of Convention 1. Prevent and Combat Corruption More Efficiently and Effectively 2. International Cooperation & Technical Assistance including Asset Recovery 3. Integrity, Accountability and Proper Management of Public Affairs and Property

9. Implementation Preventive Measures Technical Assistance Criminalization Law Enforcement Asset Recovery International Cooperation UNCAC Comprehensive

10. Koffi Annan Nobel Peace Prize Acceptance speech • “Beneath the surface of States and Nations, ideas and language, lies the fate of individual human beings in need. Answering their needs will be the United Nations Missions for the Century to come.” • “The true measure of the success for the United Nations is not how much we promise but how much we deliver for those who need us most”

11. Lost Development is the Face • International norms and standards on AC (particularly, UNCAC) continue to evolve • UNDP need to refocus its energies and priorities in anti-corruption, within its area of comparative advantages KemalDervis:“A national system of democratic governancethat is supportive of inclusive growth, harmonized with international standards and normsdeveloped within a legitimate and cooperative multilateral framework, constitutes the crucial software of development.”--Statement to staff post HLPNovember 2006

12. Cost of Corruption • Looting of State resources affect development • More than US$1 trillion (US $1,000 billion) are paid in bribes every year, just over 3% of world income in 2002 (WBI estimate). • More than 70% of SMEs in transition economies perceive corruption as an impediment to their business (BEEPS, 2000). • US$148 billion leaves the continent every year because of corruption (African Union estimates • Corruption can raise up to 20% of costs of producing goods

13. Impact of Corruption in Contracts Source: Cockcroft, Laurence, “Business and Corruption: The Human Rights Dimension”, Transparency International (UK), March 2006.

14. Economic Implications of Corruption? • Raises transactions costs of business • Creates uncertainty in an economy, through discretion and continues change in rules and regulations • Poor quality work through hiring of non-performers • Flight of business and capital • Creates underground economy • Undercuts government’s effort to collect revenue • Reduces government’s ability to provide essential social services • Creates budget on a few companies

15. Economic Implications of Corruption • Increases costs of bureaucracy through wasted time in negotiating contracts • Leads to looting of state resources by a few powerful and connected people • Leads to lowering of standards (manufacturing, drugs, construction, etc) • Undermines human rights, rule of law and leads an unstable and failed state

16. UNDP Focus Areas Source: UNDP Strategic Plan 2008-11: Focus Areas

17. International principles Gender equality | Anticorruption | Human rights Inclusive participation Civic engagement (Political parties/civil society/citizen’s audits) Elections Communication channels (Independent media, E-gov, access to information) Responsive institutions National, regional and local governance capacity Parliaments and assemblies Justice & rule of law Enabling mechanisms Knowledge networks | Capacity development and learning | Resource management/ partnerships | | DG Outcome Areas Regional bureau/SURF governance advisers Country offices focal points for governance Members of the DG knowledge network

18. UNDP total expenditure, 2007

19. Corruption and Development UNDP Experience • UNDP Implements AC within its Mandate. • The first generation of UNDP AC Support focused on the Accountability, Transparency and Integrity (ATI) programmes • 1999, UNDP flagship manual Fighting Corruption to Improve Governance, a pioneerproduct in anti-corruption and development • Other development Partners have embrace anti-corruption since the 1990s • Development of International norms and standards (UNCAC and regional instruments)

20. UNDP entry points • Mandates to reduce poverty • Promote sustainable Dev. • Promote sustainable Dev • Corruption is a threat and risk • Presence of Global Framework

21. UNDP’s Global Responses • Development of international norms and standards culminating in UNCAC • UNCAC now has 125 ratifications increasing demand for AC interventions at country level • Need for UNDP to refocus its AC intervention in the context of UNCAC • Challenges of limited policy guidelines and capacity at country level • Hence Global Thematic Programme on Anti-Corruption for Development Effectiveness (PACDE)

22. 4 years (2008 – 2011) to strengthen the capacity of programme countries to reduce corruption. Programme implemented at three levels: global, regional, and country levels Emphasis on internal capacity development Cuts across practices and service areas Has main activities through Regional Centres Develops methodolgies for maistreams anti-corruption development activities Main Features of the PACDE

23. Thank You!Further information www.undp.org/governance phil.matsheza@undp.org Tel:1-212-906-5043