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Less corruption = more viable investment |
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Investors need fairness, predictability and the rule of law. When faced with corruption, many react by turning away. But in the most corrupt countries (not by coincidence amongst the poorest countries), investor awareness and engagement are most needed. During the EBRD 2005 Annual Meeting, a Business Forum session titled Less corruption: more viable investments was chaired by Paul Hofheinz. A former Wall Street Journal journalist, he is now President of The Lisbon Council, an advocacy group and policy network committed to raising European competitiveness, encouraging economic growth, and promoting structural reform. "There are many types of corruption: bribery, fraud, theft of state assets, cronyism," he observed. "We are all affected by corruption which is not always about the money but also about public safety." He gave as an example public buildings in Armenia that collapsed during earthquakes in part because corrupt building inspectors had been bribed to approve inferior construction. Four distinguished panellists shared their experiences and to reflect on the cost of corruption. Small bribes can mean disaster Miklos Marschall, Europe and Central Asia Regional Director of Transparency International (TI), a global NGO fighting corruption, recalled a telling story on how even small bribes can lead to colossal economic disasters. In an unnamed country, he noted how small scale bribery in procurement and loans to farmers had led to the importation of farm machinery totally inappropriate for local conditions. Loans were not repayable, farms were sold, families lost their property and livelihood; a small bribe had led to social dislocation, incalculable social costs and economic losses in the millions. Mr Marschall credits TI with "putting corruption on the international agenda; it is a testimony to what civil society can accomplish." He observed that anti-corruption measures cannot be isolated from macroeconomic measures and comprehensive tax reform. He is a proponent of integrity pacts (voluntary commitments made by companies not to accept bribes). Reforming the judiciary Monica Luisa Macovei, Minister of Justice for the Government of Romania and former President of the Association for the Defence of Human Rights at the Helsinki Committee, was forthcoming about her personal difficulties in entering public administration after working in the world of NGOs. She talked about efforts to implement radical reform of the judiciary, make it impartial yet active in the fight against corruption. "We haven't had big corruption cases in court. All in all, it's not easy and the time is running out before EU accession in 2007," she said. Under Ms Macovei's lead, the government has adopted a taxation law and is eliminating immunities against criminal prosecution for governmental officials. "We have new legal requirements for governmental officials and judges requiring disclosure of assets and income." Admitting that judicial reform is very difficult and actively resisted, Ms Macovei promised to persevere. Veselin Šukovic, Executive Secretary of the Regional Secretariat Liaison Office of the Stability Pact for South Eastern Europe Anticorruption Initiative, co-ordinates anti-corruption efforts for all former Yugoslav republics. He is experienced in creating the legal framework in the fields of anti-corruption, anti-money laundering and conflicts of interest, as well as in dealing with public administration issues and activities in the fight against corruption and organised crime. He presented the role of the Stability Pact's Secretariat office in Sarajevo as "a resource centre trying to create a regional anti-corruption front with four pragmatic areas: legal framework; increasing public awareness; sharing the experiences of fighting corruption; and finding out what individual countries need in order to establish their own anti-corruption networks." Publishing what you pay Gavin Hayman, Head of Strategy for Global Witness' oil, mining and gas revenue transparency campaign, has investigated misappropriation and mismanagement of revenues from natural resources around the world since 2001. While addressing the issue of the cost of corruption and theft of state assets, he presented the Publish What You Pay campaign, supported by 280 NGOs worldwide. The campaign encourages companies to declare their payments to governments, and for governments to publish royalties from extraction of natural resources. He is also involved in the Extractive Industry Transparency Initiative which brings together companies, governments and civil society to improve disclosure and oversight of corporate payments to governments. (EBRD President Jean Lemierre recently announced that, going forward, the Bank will follow the EITI principles in any new extractive industries projects it finances.) Mr Hayman’s distressing tales of massive kickbacks given to opaque and unaccountable governments in Africa and central Asia were ample food for thought. The panellists underscored the role that business can play by participating in anti-corruption efforts and supporting global initiatives, resulting in solid business outcomes and fewer risks. They also emphasised that the promise of EU accession is both a roadmap and stimulus to fighting corruption – an incentive to eliminate "opaque, non-transparent dealings". Written by Aleksandra Motriuk. Photography: Richard Bate, Jon Page, Steven Still. 1 June 2005 |
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