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Global Issues Seminar Series May 4, 2006 Global Economy: Governance and Corruption Vinay Bhargava, Director Internatio PowerPoint Presentation
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Global Issues Seminar Series May 4, 2006 Global Economy: Governance and Corruption Vinay Bhargava, Director International Affairs, The World Bank. Slide 1: Definition. The World Bank defines corruption as: the abuse of public office for private gain.

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slide1

Global Issues Seminar SeriesMay 4, 2006Global Economy: Governance and CorruptionVinay Bhargava, Director International Affairs, The World Bank

slide 1 definition
Slide 1: Definition

The World Bank

defines corruption as:

the abuse of public office

for private gain

slide3
Slide 2: Corruption is present in all countries in the world—pervasiveness variesTI 2005 Corruption Perceptions Index
slide 4 consequences corruption affects the personal lives of citizens and hurts the poor the most
Slide 4: Consequences—corruption affects the personal lives of citizens and hurts the poor the most
slide 8 globalization of the fight against corruption
Slide 8: Globalization of the Fight Against Corruption
  • UN Oil-for Food Scandal
    • Of $100-billion-plus worth of transactions, $1.8 billion diverted as illicit payments
    • More than 2,200 companies were involved
    • Illicit kickbacks came from companies and individuals from 66 countries
    • Illicit surcharges were paid by companies from or registered in around 40 countries
slide 9 a global consensus for fighting corruption
Slide 9: A Global Consensus for Fighting Corruption
  • Millennium Declaration adopted by the UN General Assembly in 2000 commits member to good governance nationally and internationally—reaffirmed in Monterrey Consensus of 2002 and 2005 World Summit
  • NEPAD (2001)—African leaders pledged to fight corruption; G8 matched this with support under G8 Africa Action Plan and at G8 Economic Summit in 2005
  • European Consensus on Development stresses good governance (European Parliament, Council, and Commission)
slide 10 forces shaping evolution of corruption as a global issue
Slide 10: 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 11 demand for controlling corruption

ADVOCACY

Slide 11: Demand for Controlling Corruption
  • International
    • TI: CPI (1995-), Source Book, BPI (1999-), GCR (2001-), GCB
    • WBI (1996-)
    • IFC: Costs of Doing Business and Enterprise Surveys
  • National
    • SWS in Philippines
    • Opinion survey in Norway
slide 13 increasing the supply of ac measures
Slide 13: Increasing the Supply of AC Measures
  • ADB-OECD Anti-Corruption Initiative for Asia-Pacific: 2000, 36 members launched, 25 endorsed (2005); 3 pillars
    • Transparent systems for public service
    • Anti-bribery actions and integrity in business operations
    • Active public involvement

Anticorruption Institutions

  • National Integrity System: judiciary, regulatory agencies, ACAs, Ombudsman, media, civil society, etc.
slide 14 international actions to combat corruption
Slide 14: 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 15 international actions to combat corruption
Slide 15: 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 16 civil society initiatives
Slide 16: 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 17 raising international disclosure standards in corporate sectors
Slide 17: Raising International Disclosure Standards in Corporate Sectors
  • 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)
  • International Organization of Securities Commissions has benchmarks for transparency—members regulate 90% of global securities markets
  • Global Reporting Initiative: GRI Sustainability Reporting Guidelines released in 2000— now over 800 companies from 80 countries file reports
slide 18 raising international disclosure standards in corporate sectors
Slide 18: Raising International Disclosure Standards in Corporate Sectors
  • Publish What You Pay (George Soros, 2002): now a coalition of over 280 NGOs worldwide
  • Wolfsberg Group: 11 major international banks published the Wolfsberg Anti-Money Laundering Principles of Private Banking
  • 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 19 world bank governance and anticorruption strategy pw 4 11 06
Slide 19: World Bank governance and anticorruption strategy (PW 4/11/06)
  • Country approach
    • Expand World Bank’s anticorruption work at the country level to support country-partner reforms
      • Invest in professional expertise
      • Back up teams in the field with governance specialists
    • Develop strategies in high-risk countries to mobilize all World Bank instruments, loans, grants, research, technical assistance, and private-sector investment to strengthen the fight against corruption
    • Increase investments in such key areas as judicial reform, civil service reform, the media, freedom of information, and decentralization of public-service delivery
slide 20 world bank governance and anticorruption strategy pw 4 11 06
Slide 20: World Bank governance and anticorruption strategy (PW 4/11/06)
  • Implement a new system for minimizing the risk of corruption in World Bank–funded projects
    • Deploy anticorruption teams in many Country Offices to work with local institutions like government audit units and anticorruption commissions to protect Bank projects and strengthen public procurement systems
    • Re-design projects to address the incentives and opportunities to fight corruption right from the start
      • Example: communities can determine village investments, control funds, and monitor project results
    • Strategies are published on the Web; Investigations Unit empowered with staff, skills, and resources to detect and follow-up allegations of corruption in Bank-financed projects
slide 21 world bank governance and anticorruption strategy pw 4 11 06
Slide 21: World Bank governance and anticorruption strategy (PW 4/11/06)
  • Expand partnerships with stakeholders
    • Private sector—work with firms and individuals to identify misuse of funds in World Bank–financed private-sector projects
    • Multilateral development banks—heads agreed on a common approach to the problem
      • Common strategy to blacklist firms that engage in corruption on MDB projects (WB publishes list)
      • Share information on these firms
    • Civil society—key to holding governments accountable; can help ensure that aid dollars flow to communities that they are intended to go to
slide 22 role of the world bank in combating corruption
Slide 22: Role of the World Bank in Combating Corruption
  • In February 2005, the Bank released its first annual report on corruption and fraud investigations involving Bank-financed projects as well as internal cases
    • The Bank spends $10 million annuallyon investigations and sanctions—more than all other MDBs combined
    • The INT has over 50 staff and is larger than any other unit in similar organizations
    • Among MDBs, the Bank pioneered in the use of voluntary disclosure
slide 23 role of the world bank in combating corruption
Slide 23: Role of the World Bank in Combating Corruption
  • The Bank actively supports international and inter-agency programs
    • Joined the IMF and the RDBs in reaching a consensus agreement on the broad policies and practices needed to address corruption within the organizations and in member countries
    • Partners with institutions for research such as BEEPS with EBRD
    • WBI research is highly participative; has partnership agreements with nearly 200 organizations from all sectors