Eliminating Corruption to Enable Development

Corruption ranges from bribery to collusion to straightforward theft, but as envelopes of cash evolve into more sophisticated mechanisms, efforts to prevent corruption and build transparency must keep up. “We see new forms of corruption that emerge. There’s undue influence through lobbying, there’s the revolving door, there’s all kinds of conflicts of interest that arise,” said Daniel Freund, Policy Officer EU Integrity at Transparency International (TI).

TI is based in Berlin with 107 local chapters worldwide. They collaborate with individuals, organisations and governments to “stop the abuse of power, bribery and secret deals.” Eliminating corruption is so important, Freund said, because “Corruption hinders economic development. It can result in people not being able to exercise their fundamental rights, and so it’s often the root cause of other problems.” He highlighted religious extremism and environmental pollution as two issues that can often identify corruption as a root cause. 

Within the European Union (EU), projects supported by TI expose activities that are vulnerable to corruption. A new EU directive on money laundering provides a mechanism for tracking sources of funds. Say a flat in the posh London neighbourhood of Chelsea is purchased using some sort of shell corporation to cover up money laundered by a corrupt government, public officials or law enforcement can now follow the trail of money transfers back to its source. “These registers will allow in the future to track down these people and to identify where stolen assets are hidden in the EU,” said Freund.

TI’s Brussels office serves as a watchdog for the EU, but successful EU projects can also be reapplied in the field. As Freund explains in the video below, the integrity pacts pilot project uses civil society organisations to monitor EU projects in the member states for corruption. If successful this is something that could foreseeably be extended to other countries to monitor how development aid is spent.

There is also progress to be celebrated on an international front. We spoke with the Executive Director of Transparency Maldives (TM), Mariyam Shiuna, during the European Development Days 2015 (EDDs) in June. 

Shiuna told Capacity4dev about a local success story in the Maldives: in January 2014, after a five year lobbying campaign organised by TM, the country enacted a right to information law. This represented a significant step forward for a country that was plagued with corruption allegations for thirty years under the rule of a dictatorship. 

We asked Shiuna to identify best practices that have contributed to TM’s success. She highlighted knowledge sharing among the global chapters of TI and collaboration with other organisations as key components of their work. “Obviously if there is a coalition of NGOs, a group of people that advocate for anti-corruption, their voice is louder,” Shiuna said.

She also emphasised the need for stakeholders to have realistic expectations: “We are required to come up with these incredible indicators of success which are really unattainable over short periods of time, especially when it comes to fighting something like corruption, which takes many years. It takes generational change to tackle corruption.” 

Reflecting TM’s focus on collaboration was Heather Marquette, a research centre director at the University of Birmingham; she also sees corruption as a “collective issue” requiring collective action. 

Speaking with Capacity4Dev during the EDDs, Marquette warned that developing indicators to measure corruption may not be possible. “Corruption is far too complex, it takes into account many different activities at many different levels, and so the continued search for one simple story through an indicator isn’t possible,” she said. She sees a more realistic solution for measuring corruption as one that encompasses multiple indicators into overall baskets, rather than considering each indicator individually and out of context. 

Marquette also pointed out the role of “indirect measures” in tackling corruption. She provided the example of a performance-based program for local governors in Afghanistan. “It gave very clear instructions in terms of how governors are supposed to administer their offices,” she said. “I thought that was a really good example of something that had potentially really important impact but wasn’t designed as an anti-corruption program - that kind of came in through the backdoor.”

As traditional paths for corruption continue to be slowly eliminated, there is still a need for international cooperation to finish cleaning up. “In an ideal world [laundered money] would go back to that country, it would go back to the citizens,” said Freund, but the reality is very different. 

In June a World Bank report suggested that companies owned by the former Tunisian president Zine El Abidine Ben Ali and his family avoided an estimated 1.2 Billion USD in import duties.

Freund explained that the new government has been fighting to get back the corrupt money that was channelled out of the country, but it’s extremely difficult to trace. 

The new EU directive includes the creation of a register – a central database – of beneficial ownership information, which will help to trace money back to its source. However, “in many cases you don’t have these registers of beneficial ownership yet so you just don’t know where [the money] is. And unfortunately in many cases as well current legislation is not really well adapted to, for example, force banks to trace that money and to give it back.”

The long-term goal is still to return this money to citizens, but without international cooperation and motivation for banks to assist with this, it won’t be possible. 

“We need particularly the countries where those banks [are located] we need Switzerland, we need Singapore, we need now the United Arab Emirates, Dubai, to collaborate in this effort and to allow us to get the money back. Unfortunately some of those countries are not always super cooperative and thus the fight is a difficult one and still ongoing,” concluded Freund.

This collaborative piece was drafted by Emma Brown with input from DEVCO Unit B1 and with support from the capacity4dev.eu Coordination Team.Teaser image copyright of TI Maldives.