Fighting Corruption: Parliament’s Role
Rick Stapenhurst World Bank Institute September 17, Canberra 2008
1
What is Corruption? Short Definition “The abuse of public office for private gain”
2
1
Process of Fighting Corruption Successful anti-corruption strategies need:
Political leadership
Coalition Building
Rigorous Data
3
4
2
Difficulty in Starting a Business % of respondents that report strong difficulty 60% 50% 40% 30% 20%
Korea
Russia
Indonesia
Brazil
China
Hungary
Thailand
Philippines
Chile
Malaysia
Taiwan
Hong Kong
0%
Singapore
10%
5
Even more important (than Regulatory Interventions) in understanding Bribery and Corruption is the degree of Regulatory Discretion.
High Corruption
T.I. Corruption Index and Regulatory Discretion NGA MEX
T.I. Corruption Index
CHN
COL
VNM
RUS
ARG IDN
IND TUR BRA
VEN THA
PHL
KOR MYS
ZAF TWN CZE BEL
ITA
POL
HUN
GRC
CHL ES P JPN PRT
FRA
CRI
HKG GBR
US A AUT IS R DEU
IRL
CHE NOR
S GP FIN
LUX AUS NLD S WE CAN NZL DNK
r=0.76
Low Corruption LOW
HIGH
Regulatory Discretion (GCS97)
6
3
The absence of good Rule of Law institutions is a key factor associated with corruption.
S&P-DRI Corruption Index and Rule of Law
HIGH
IRQ
S&P-DRI Corruption Index
ZAR TZA
C MR
CO L
KEN
PAN
ZMB ZWE NGA ZAF EGY UGA
PAK
AGO
BO L BGD LKA
IRN MMR
VNM
RUS BRA TUR
IND
DZA
SYR
GHA
PHL
PER
LBY
CIV
THA
EC U
IDN
JO R
BHR HKG
CHN
MAR BGR RO M BWA O MN SAU ARG
VEN MEX
SVK
TUN
URY
HUN
ARE KWT
TWN GRC ESP
CRI
r=0.82
CZE
PO L
MYS KO R Q AT CHL
ISR
BEL AUS PRT JPN NZL AUT ITA FRA CHE IRL SGP GBR USA C AN NLD SWE DEU DNK NO R
FIN
LOW
HIGH
LOW
Rule of Law (ICRG, average 1990s)
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Key message of the new empirircal research: even more important than political rights are civil liberties in understanding corruption.
Bribery and Civil Liberties
HIGH BRIBERY
CMR IDN NGA
Bribery (GCS97+)
AGO VNM
GTM
MOZ KEN EGY TZA ETH
CHN
UGA CIV
JOR TUR
SGP
BRA
ARG KOR
CRI ITA
ISL
HUN SVK MUS
TWN
CZE
NAM ZAF
r=0.67
GRC POL
MEX
LSO
SWZ
HND VEN
UKR
ZWE BFA MWI GHA MYS ZMB MAR PER
TUN
LOW BRIBERY
THA NIC PHL RUS COL IND
ESP ISR
PRT BEL NLD CHE CHL JPN NZL AUT DEU AUS IRL CAN USA LUX GBR DNK FIN SWE NOR
LOW
FRA
HIGH
Civil Liberties (Freedom House)
8
4
Corruption and Freedom of the Press 2.5 High
DNK NZL CHE SWE FIN CAN NLD ISL CYP GBR NOR LUX DEU AUS IRL AUT USA HKG FRA ESP ISR PRT CHL SVN GRC FJI ITA JPN TWN EST MYS QAT KWT HUN CRI ! BHS BWA TTO MLT OMN POL URY NAM MUS CZE ZAF CUB LSO MAR KOR JOR BRAGUY SVK LTU SWZ ARE SLE SUR BRNTUN GMB CIV JAM LKA MNG THA GNB PER MWI BHR GHA PHL IND SEN TGO ARG EGY LVA CHN BGD MEX ZWE VNM BIH TUR SLV ROM BFA MDG LBN UGA BOL ETH MDA PAN HRV MLI COL MKD PRK HTI RUS MOZCOG BGR SAU TCD ZMB BLR KENGEO VEN PAK KGZGTM BEN ARM SYR NIC ECU DOM PNG IRNIDN GIN AGO YEM DZA NGA KAZ UKR LBY TZA HND PRY UZB ALB AZELBR YUG SDN GAB SOM MMR CMR IRG TJK TKM ZAR r = .68 NER
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SGP
Control of Graft
1.5 1 0.5 0 -0.5 -1 -1.5 -2 Low
r = 0.68
-2.5 0
0.2
0.4
0.6
0.8
1
Low
High
Freedom of the Press (Freedom House)
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The “Bribe Fee List”: Unofficial Payments by Enterprises for Licenses and Services Russia "Unofficial fee": type of license/"favor"
Ukraine
Average "unofficial" fee required for “favor”
Enterprise registration Each visit by fire/health inspector
$ 288 $ 67
$ 176 $ 42
Tax inspector (each regular visit) Each phone line installation Lease in state space (sq. meter per month) Each export registration/consignment
$ 250 $ 1,071 $ 26 $ 643
$ 87 $ 894 $ 7 $ 123
Each import registration/consignment
$ 133
$ 278
8%
4%
23%
4%
Domestic currency loan from bank (preferential terms) Hard currency loan (preferential terms)
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5
A Multi-pronged Strategy for Combating Corruption Core Systems: •Accountability Institutions •Civil Service Reform •Public Expenditure Management and Procurement •Legal and Judicial Reform
Policy Reforms: •Privatization •Deregulation •Tax simplification
Corruption
Political System: •Campaign finance •Public Service Boards •Roles and Responsibilities Public Oversight: •Public Involvement •“Power of data”/Surveys •Civil society/Media •Parliamentary Oversight •Parliamentary Safeguards11
Individual Departments: •Focus on Key Revenue, Expenditure and Regulatory Agencies
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ECA and Associates
Combat Corruption by Changing Policies and Institutions Policies
Institutions
Corruption 12
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Think of the Problem on Four Levels Corruption and the Political Process Core Systems of Government
Agency Specific Corruption
Link with Parliament and Civil Society 13
Think of the Problem on Four Levels Corruption and the Political Process Core Systems of Government
Agency Specific Corruption
Link with Parliament and Civil Society 14
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Corruption and the Philippine Political System Vibrant democracy with approximately 353,000 government positions up for election Elections are often expensive:
– P3 billion for presidency – P100 million for congress – P5 to 10 billion to support a slate of national and local candidates 15
Corruption and the Philippine Political System Elections are often expensive: It doesn’t stop there...
– Weddings, funerals, natural disasters, etc. – Strong cultural norms of kinship and reciprocity
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As a Result...
Political system generates tremendous demands for money and patronage
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The Supply of Money: Where Does It Come From? Embezzlement (estimated $150 million to support Marcos reelection in 1986) Access to off-budget revenue sources such as Philippine Amusement and Gaming Corporation Allowances Special legislative projects
(analogous to “Peoples Program”) 18
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Corruption and the Political System
These problems are fundamental, and their resolution will require: – Campaign finance reform – Strengthen Public Service Boards – Redefine roles for politicians and civil servants – Changes in political culture
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Think of the Problem on Four Levels Corruption and the Political Process Core Systems of Government
Agency Specific Corruption
Link with Parliament and Civil Society 20
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Need for Strong, Independent Accountability Institutions Parliament, Auditor General, Anticorruption Agency, Ombudsman, Civil Service Commission Independent in their:
– Budget – Staffing – Work program – Reporting relationships 21
Hong Kong Independent Commission Against Corruption (ICAC) Established in 1974 Currently has 1,336 staff, 72% in Operations Three main functions:
– Operations – Corruption Prevention – Community Relations 22
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ICAC Full powers of arrest, supplemented with search and seizure Prosecution under Department of Justice Work scrutinized by four independent committees comprised of leading citizens
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Philippine Ombudsman Established in 1987 Constitutionally independent, with power to investigate and prosecute Staff of around 200
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12
Number of Corruption Cases Successfully Prosecuted (per 10,000 civil servants) 8.24
9 8 7 6 5 4 3 0.25
2 1 0 Hong Kong
Philippines 25
Why the Difference?
ICAC practices more robust triage up front, moves forward selectively and wins – ICAC investigates only about 50% of the allegations it receives – Moves forward with sanctions in about 10% of the cases – Wins 4 out of 5 cases it prosecutes
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Why the Difference?
Ombudsman practices limited triage up front, moves forward broadly and loses – Recently implemented initial screening procedures – Moves forward with sanctions in about 28% of the cases – At best wins about 12% of cases it prosecutes, – Sanctions often arbitrary; significant numbers overturned on appeal
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Anticorruption Effort is Fragmented Administratively
Ombudsman Commission on Audit (COA) Department of Justice National Bureau of Investigation (NBI) Civil Service Commission Presidential Commission Against Graft and Corruption (PCAGC) Presidential Commission for Good Governance (PCGG) 28
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Think of the Problem on Four Levels Corruption and the Political Process Core Agency Accountability Specific Institutions Corruption Link with Parliament and Civil Society 29
Much Corruption is Agency Specific Perversion of the unique tasks and missions of a given organization Concentrated in Key Departments (Top 10 account for 95% of complaints) Typically involves agencies with significant revenue and/or expenditure assignments, or enforcing rules in key areas (“wet” versus “dry”)
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Top 10 Agencies
Dept Public Works and Highways Dept of Env. and Natural Resources Dept of Education Bureau of Customs National Irrigation Admin.
Bureau of Internal Revenue Dept of Health Dept of Interior and Local Government National Power Corp Bureau of Immigration 31
Think of the Problem on Four Levels Corruption and the Political Process Core Agency Accountability Specific Institutions Corruption Link with Parliament and Civil Society 32
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Who Should take the lead in a National Governance/Anticorruption Program? Broad Coalition
48%
A-C Agency
18%
Civil Society Alone
8%
Executive Alone
7%
Enforcement Agencies
4%
Legislative
4%
Int'l Experts
4%
NGOs Alone
3%
A-C: Anti-Corruption
Percentage of Respondents
4%
Not Worth It 0%
10%
20%
30%
40%
33 50%
Public Involvement
Surveys – Technical, but public
Civil Society, NGOs Media
– Investigative reporting – Press freedom, access to information – Media accountability 34
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Parliamentary Oversight Office of the Auditor General Ombudsman Public Accounts Committee (Uganda)
– Chaired by member of opposition – Public hearings – Focus on strategic not administrative issues
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Conclusion : Political Will
Strong Political Will
Uncordinated A-C Strategy
Cordinated A-C Strategy
South Korea Rwanda (?)
Hong Kong Singapore Uganda (formerly)
Weak Political Will
Philippines Kenya
Thailand Uganda (now)
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Parliaments: Misgoverned or Honest Institutions? 100%
80%
20/27 35/35
42/42
47/50
30/30
70% 39/50
60% 50%
31/43
14/20
16/21 29/36
19/23
6/35
40% 30% 20% 6/22
6/32
10% 0%
G eo rg ia (1 Ca 99 m 8) bo d Si i a er ( 20 ra 00 Le ) on e( H 2 00 on 3) du ra s( 20 Ro 01 m ) an ia ( 20 Pa 00 ra ) gu ay (1 9 99 La ) tv ia (1 9 Bo 99 ) liv ia (1 9 9 G 9) ui ne a (2 00 Sl ov 4) ak ia (2 00 Ec 1) ua do r (1 99 9) Pe ru G ( 20 ua 01 te ) m al a ( C 20 ol 04 om ) bi a (2 00 1)
% who believe that Parliament is corrupt
90%
Relatively good
Rank of Parliament within country, by Public Servants
Relatively bad
Source: WBI diagnostics and survey data; various countries; 1998-2004. Paraguay figure comes from the first governance diagnostic 1999. http://www.worldbank.org/wbi/governance/ 37 Note: The chart shows percentage of respondents reporting that Parliament is dishonest institution. The number at the top of each bar reflects the ranking of Parliament relative to other government institutions.
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