Examination of Witnesses (Questions 120
- 139)
TUESDAY 14 NOVEMBER 2000
MR LAURENCE
COCKCROFT, MR
GRAHAM RODMELL,
MR MANZOOR
HASAN AND
MR JOHN
BRAY
Ann Clwyd
120. Is it sometimes difficult to tell the difference
between corruption and the so-called informal economy in a country?
(Mr Cockcroft) No, I do not think so, because the
informal economy operators are themselves the subject of corruption.
In other words, if you are operating a pavement business in Nairobi
you are subject to harassment from city council officials which
you yourself are not inviting.
Mr Worthington
121. It is often said that this kind of corruption
is linked with poverty, and that if the officials are not paid
enough they will automatically—if they are policemen or
civil servants etc—turn to using personal power (as in the
case of the telephone companies) in order to get enough to live
on, and if one put up their wages the corruption would fall. Do
you have any evidence of that? Do you agree?
(Mr Cockcroft) I think it is clear that there is a
very difficult dividing line between the need for lower officials
to survive on, frequently, a very low income and the factor of
greed, which may come in once one has achieved a certain level.
I think it is not possible and, arguably, not useful to define
exactly where that dividing line comes. It is clear that very
many civil servants in many poor countries are grossly underpaid,
to the extent that it is unreasonable to expect them to survive
on their salary. That is why we are seeing at least 50,000 civil
servants being fired in Kenya at the moment, but it is rather
less clear what the implications of that are for a government
budget over a period of time or that those who survive are necessarily
going to be paid that much more. So this is a dilemma which I
think has not been solved.
122. Do you have any examples of a country or
regime which has drawn a line and said "Public officials
are now going to be paid in a reasonable way. Corruption will
not now be allowed."?
(Mr Cockcroft) Singapore is the classic case, is it
not? Lee Kuan Yew certainly took a very specific decision in the
late-60s that he would pay permanent secretaries about $100,000
a year at the time, and that civil service pay would correspondingly
be raised to a useful international level. He himself is on record
as saying, on a number of occasions, that he regarded that as
having been the key to the anti-corruption drive in Singapore—adding
that although he had the highest income of any head of state whilst
he was head of state, he has the lowest level of personal wealth.
Chairman
123. We have a system rather like that in Britain,
do we not, of underpaying people and then those people actually
getting their money from tips, like waiters in restaurants and
hairdressers, and others. Are we dealing with something that is
a custom and practice or are we dealing with something that is
truly corrupt?
(Mr Cockcroft) I think we are dealing with a situation
in which the resources available to the recurrent budget are very
small, not least because resources have been diverted to corrupt
uses. Therefore, the money available to pay wages is relatively
low and, consequently, those wages are not livable-upon. If one
wants to look at the policy implications of this (and, maybe,
you would like to come back to it), of course, it is for this
reason that many donors have agreed to pay per diems in relation
to particular donor-funded projects. That is a very tricky issue,
and opinion is divided on the rights and wrongs of that, but the
reason why it occurs is to meet exactly this point: that it is
impossible for many junior civil servants like agricultural extension
officers to operate unless they are paid a per diem, and most
of those per diems, in practice, in many of the countries we are
all thinking about, actually are sourced from donor funds and
donor projects.
Mr Worthington
124. Can I switch to the link between politics
and corruption? Each of us has seen emerging democracies, or people
struggling with democracy, in poorer countries, and it is fascinating
to go and see an election and see the manifestos. All the manifestos
are the same; they are all promising goodness, health, education—there
is no ideology whatsoever there. What strikes me in many of the
countries is that unless there is ideology you are going to have
a corrupt system, because otherwise you are saying to people "Vote
for me and I will help you" or "I will help people who
are like us in the same ethnic grouping" and so on and so
forth. In country after country you see enormous costs in the
election to stand as a candidate; people being paid to do things
that would be voluntarily done here—like standing at the
polling station or being given bread on election day and so on.
How do you tackle the issue of making a political system non-corrupt,
so that the reason why you vote for somebody is not that they
will do something personally for you?
(Mr Cockcroft) I think that one has to recognise that
the development of multipartyism and the move away from a one-party
state over the last 15 years has created a dilemma in many countries
where that was a relatively straightforward problem in the past.
So that this, as it were, is to some extent a new problem, and
since political processes are always going to unfold in a particular
domestic context it is going to be some time before there is a
real reaction against this. I think one can see, from the case
of India, that at the moment the, as it were, dissolution of the
dominance of the Congress Party has led to the arrival in many
states of regional parties which are, indeed, as you have described
them. I think, however, there are some other factors in this situation
which include international funding of different groups. This
is a very tricky area, but the fact of the matter is that development
of multiparty politics has led to a trend for individual parties
to attract funding from, for example, foundations in the United
States and, to some extent, in Germany (in a small way) which
has influenced their capacity to fight a government. Another key
source of funding are Islamic sources in relation to particular
individual parties. For example, problems in Zanzibar, which were
widely reported in the British press during the last two weeks,
certainly have some of their origins in the fact that the opposition
party was funded very substantially from the Gulf. So one has
to be very cautious about this. In TI we have recently organised
a seminar of international experts in this field, including Lord
Neill, which has been attempting to produce some kind of ground
rules for international funding. This relates, perhaps, not most
directly to your question but more particularly to corporate funding
of parties and making them come to the conclusion—amongst
several others—that any donations from international companies
across borders should be declared and should always be in line
with local political party funding regulations.
125. I think that is a very interesting area,
because I get the impression of a crisis in democracy in many
countries where you are not saying to people, on traditional grounds
or ideological grounds, "Vote for us". I am thinking
of Uganda at the moment, and meeting the MPs there, where they
are saying "People say `Why should I vote for you?'",
and at the petty level they are expected to pay for the costs
of funerals, or school fees or basic costs of everyday living.
So only a rich person could get involved. Then at the other level,
as you are indicating, you are getting the development of a democracy
which is by ethnic bloc or by religious background and so on.
We are not free of it, are we, in the sense that if you look at
the American elections, it is the same sort of pattern. Can you
take what you were saying a little bit further and say how you
think it is going to be possible to develop a non-corrupt kind
of democracy?
(Mr Cockcroft) I think it will come not through international
pressure but will come as a result of political forces playing
themselves out within individual countries. If you take the election
which has just been completed in Tanzania, there have been quite
a lot of accusations of bribery at the local level, and individual
MPs who put themselves up in primaries have actually been accused,
in several cases, of paying the CCM members who were, as it were,
eligible to vote. I am using that example because it is a relatively
stable country with a tradition of running many elections over
what is now 40 years. It seems to me, in that kind of context,
one can reasonably expect that over a period of time, as a result
of internal debate, there will be a reaction against this, just
as in our own country in the 1840s there was a reaction against
widespread bribery of electors; there will be a similar protest
in those countries that are relatively stable.
126. Finally, one of the points which it seems
to me is crucial to not having corruption is that you should never
have overlapping elites—whether it is the military, the
judiciary or politicians; they should be separate people and with
the traditional separation of powers. Having an independent judiciary
is absolutely crucial. Would you go along with that?
(Mr Cockcroft) I think it would be very difficult
to contradict that position, but the independence of the judiciary
is something which, perhaps, can be assisted in various ways by
donor funding and donor strategy. I think there are some instances
in that in which one can see the possibility of bolstering particular
institutions that play a key role.
Ms Kingham
127. I would like to bring you back, for a moment,
to the issues of civil service pay and conditions. You have mentioned
that that may be one factor in building an anti-corrupt society.
How does this fit with the World Bank and the IMF policy of trying
to cut back on the civil service payments and funding from the
states within their own Structural Adjustment Programme? Have
you had discussions with the World Bank and the IMF and looked
at whether this is a compatible view?
(Mr Cockcroft) As for discussions, I think the answer
is no, but as for review I think the answer is that this is an
extremely difficult area, for the reasons we touched on five minutes
ago. It is interesting to note that Guyana recently fell out with
the IMF on the basis that the implications of accepting the IMF's
programme would be that it was impossible to raise the salaries
of civil servants, and they rejected the latest IMF package on
those grounds. I think there is a good case for the IMF and the
World Bank revisiting that issue. Maybe this is something which
is going to come out of the dialogue surrounding the poverty alleviation
framework in relation to debt relief programmes, because there
has to be a kind of balance there. I think it is true that in
many cases civil services are bloated and too large. On the other
hand, it is also very important to have an effective civil service
with "reasonable" (however you define that) pay. I think
maybe it is true that the World Bank and the IMF have neglected
this issue and have not focused on it as strongly as it could
be. The Guyanese case appears to illustrate that. Chairman, Mr
Hasan was very anxious to add something on party political funding
to Mr Worthington. Could he possibly do that?
Chairman
128. Yes, please, Mr Hasan.
(Mr Hasan) Thank you very much. I referred to a paper
in my submission called Confrontation Politics, and I just
wanted to add to what has been said. For a country like Bangladesh
we have not had parliamentary democracy for a very long time;
it is really since 1990 that we have had this. We are still going
through a process where the two major political parties are fighting
each other and the opposition is not coming to the Parliament.
I think this is a process that we are going through. Nevertheless,
we are trying to address some of these issues by creating kind
of unique arrangements. For example, we have this caretaker Government
which comes into operation just three months before the election.
The Government will go out of office, the caretaker regime, made
up of civil society representatives, comes in and oversees the
whole process so that there is no accusation of vote-rigging and
other malpractices. The other aspect I would like to refer to,
in terms of making Parliament more effective and getting the confrontation
out of politics, is the role of the Parliamentary committees.
In Bangladesh the committees function far more effectively than
the main chamber, and we have got all the political parties coming
to the committees and working in a quite effective manner, looking
at issues, which no one would have imagined that they would be
able to do just four or five years back. For example, questioning
military procurement, questioning large projects. The media is
picking up on it and there is this debate which is taking place,
and civil society is getting involved in the whole process—organisations
like ourselves and others. I think there is that kind of very
encouraging development taking place, certainly when it comes
to Bangladesh, and getting people involved rather than just making
it a one-day event.
Mr Worthington
129. You seem to have to choose between two
dynasties.
(Mr Hasan) Yes, I am afraid so. It is not just us,
probably the whole of South Asia is suffering from this. The sooner
we can get rid of that the better.
Mr Rowe: So unlike the Kennedys and the
Bushes!
Chairman
130. In the case of Guyana, Mr Cockcroft, the
problem is actually exacerbated by the fact that there is an election
due, I think, in February/March and the Government is obliged
to give way to a very serious union strike and give very large
increases in salaries—is that not true -thus, breaking the
IMF agreement? It seems to me that politics is playing its role
in the Guyanese question. The only other way to reduce your salary
bill is to fire the civil servants involved, and certainly the
Guyanese Government has got an over-bloated bureaucracy. All those
factors are part of the scene in Guyana, would you not agree?
(Mr Cockcroft) Yes, I think it is an extremely difficult
question. I think if one looks at it, as it were, just to emphasise
the difficulty, the question of how 50,000 civil servants (which
is the current number in Kenya that are being relieved of their
jobs) are actually going to survive—people who have spent,
maybe, 20 years behind a desk and are now told that they should
start a small-scale enterprise, selling what to whom and with
what finance remains to be seen—is a very, very genuinely
difficult economic and political problem. So, certainly from a
TI perspective, we do not want to pretend that this is an easy
question.
131. They are largely a different race from
that of the Government, are they not?
(Mr Cockcroft) That may well be true.
Chairman: I think that is true.
Ann Clwyd
132. I was not in Bangladesh but I found the
paper of the meeting very, very interesting because it seems very
clear from the evidence you gave to the Committee that everybody
knew that corruption was pretty endemic in Bangladesh: the newspapers
knew, the politicians knew, the police knew, but of 60 per cent
of the cases reported in newspapers there was no follow-up at
all. How do you move from the knowledge that corruption is there
to tackling the corruption? Is there an example of a developing
country where corruption has been reversed because of this knowledge?
(Mr Hasan) From our point of view you are absolutely
right. We have recently done a piece of research where we have
looked at newspapers, and I think the report is there as part
of our document. As you said, we have definitely a very, very
active, vibrant printed media and they are exposing a lot of these
corrupt practices. It is very transparent corruption which we
experience in Bangladesh. What we are trying to do, for example,
is work with journalists and provide them with training so that
they can address some of these issues. For example, the follow-up
does not take place and they do miss out on some very vital information.
There is that training that has to be done. I know that the World
Bank is doing that and a number of other organisations are working
with journalists. The journalists themselves are very keen. Some
of the journalists are taking a huge amount of risk. Recently
we had an incident where a journalist was killed because he was
tackling this issue of corruption, a very senior journalist. They
are taking an enormous amount of risk. We are addressing some
of these issues but it will have to be more than just journalists,
it will have to be citizens themselves getting involved in trying
to address this issue. We have started a pilot project in one
part of Bangladesh where we are encouraging citizens to come together
to act as a watchdog body to see how their local service institutions
are functioning. This is something that not just ourselves but
other organisations involved with governance issues are trying
to do, encourage citizens' participation. I will not be able to
say that this has had any impact in Bangladesh but certainly it
is something that is taking place, it has started. We feel that
this has to be an important part of the total strategy in order
to address this whole issue of corruption.
133. How likely is it that citizens are going
to get involved if, according to your survey, 92 per cent of citizens
surveyed said that the police were the most corrupt organisation
in Bangladesh and 89 per cent claimed that the lower level judiciary
was extremely corrupt?
(Mr Hasan) That is a reason why they are getting involved
in the sense that they feel—
134. Who do they report it to? If you believe
the police are corrupt, the law is corrupt, who do you report
it to?
(Mr Hasan) What they are trying to do is to create
pressure through the media. The media is playing a very, very
important role. It is not just the printed media but the electronic
media because it has now been privatised and there are a lot of
private channels opening up and a lot of discussions are taking
place. That is one way. The other is taking issues to Members
of Parliament and to local government representatives, they are
elected. They are getting involved in this process. This is what
people think about institutions, it does not mean that everyone
involved with the judiciary, the lower judiciary particularly,
and the police are corrupt. We still find individuals within these
institutions who are prepared to take the risk and join hands
with citizens' groups and the media in order to address this issue.
It is not a monolithic picture in that sense. We find individuals
who are sympathetic and who are prepared to join hands and deal
with this. If you look at just the figures it may give a very
monolithic impression that the whole institution is corrupt but
if you look into the institutions you will be able to find individuals
who are prepared to take the risk and do something about it. It
is really a matter of identifying individuals and building a coalition.
(Mr Cockcroft) Could I perhaps reinforce that, Chairman.
You went on from your initial point to raise the question of whether
or not one can see examples of countries that have significantly
moved forward. I would like to give you two answers to that. The
first one, which you may consider rather superficial, is simply
that in the TI Annual Corruption Perception Index countries do
change their position. For example, Cameroon, which was bottom
for two years running, was this year fourth from the bottom, much
to the delight of some people in Cameroon but not to others. A
more pertinent answer is that in practice, building on what Mr
Hasan has said, one can see individual changes, individual sectors,
so TI has put a lot of emphasis on working in relation to particular
projects and particular services. A concrete example would be
in Argentina where we have a chapter that has grown out of a human
rights organisation. That compared, in a very public way, the
cost of school meals in ten different provinces and showed that
the ratio varied by a factor of as much as one to three. As a
result of that, that differential very much narrowed and the cost
of school meals became much closer to, as it were, the national
average in each of the ten provinces concerned. That is an example
of how one can achieve movement. Maybe highly relevant to that
is the TI work on the Anti-Bribery Pact in relation to particular
projects. You may want to come back to that later, I do not want
to digress on to that. I think we have demonstrated that in relation
to certain projects it is possible to get, as it were, a clean
tendering process at least in relation to selective areas.
Chairman
135. Can I ask you about your index. We have
had an example that you have given us of petty corruption, I think
we would describe it as, in the school meals provision in Argentina
and that is one factor presumably in your table, in your league,
in placing countries in their place in that league, but what about
the grand corruption that takes place with aid and with foreign
direct investment, the need to pay officials to get licences,
to get permissions, etc., or special tax arrangements? Does that
play a part? What proportions do those two different types of
corruption take when you assemble your league table?
(Mr Cockcroft) I would like to stress there are the
two indices. The one you are referring to is the Corruption Perception
Index which ranks countries as distinct from the Bribe Payers'
Index. The Corruption Perception Index is not really compiled
in the way you are suggesting, it is actually a poll of polls.
It is an averaging of polls conducted principally of business
people, but not entirely, published by organisations like the
Economist Intelligence Unit and the World Competitiveness Report.
This is an average of those polls adjusted in an appropriate statistical
format. For any country to be listed in the Corruption Perception
Index there must be at least three polls in relation to the year
in question. If there are only two polls or one then that country
drops out of the list. There are a number of cases where countries
are no longer recorded and other countries have come in because
suddenly there are three or more polls. In the report that we
issue in great detail every year, first of all each of these surveys
is listed and the number of surveys in relation to each country
from which the average is derived is shown and the standard deviation
is shown. We do not claim that this is any more than an average
of other people's perceptions of corruption. I think what one
can specifically say is that the result tends to corroborate people's
broader perceptions and individual events do make an impact. For
example, the Republic of Ireland, which stood rather well in the
index in the mid-1990s, slipped significantly in the late 1990s,
probably as a result of the hearings in Dublin Castle.
136. Yes. So your table does not differentiate
then in terms of corruption which deters international investment,
both private investment and, indeed, public, if you can call the
international financial institutions public? It does not differentiate
or, indeed, quantify corruption at one petty corruption level
or at international business level?
(Mr Cockcroft) No, it does not, because people's perceptions
of an individual country are very much influenced both by petty
corruption, for example are they harassed at the airport and required
to pay a fee, and then when they meet the Permanent Secretary
of the Ministry of Roads are they asked indirectly to pay a much
larger fee? These two things undoubtedly add up to a broader picture
but we make no attempt to quantify that. Obviously that has been
the subject of debate within TI and at every Annual General Meeting
it becomes a very hectic debate. There is now a more serious academic
effort, sponsored by the World Bank, to see if more serious quantification
of the nature of corruption can be developed, but that is quite
a challenge actually.
Chairman: I am going to ask Barbara Follett
to lead us on questions to do with pressure for governance programmes.
Barbara Follett
137. Is there any point in the conditionalities
that are now being applied by bilateral and multilateral donors
to governance in order to try to reduce corruption? In other words,
do you think they are in any way effective or are they just window-dressing?
(Mr Cockcroft) There is tremendous pressure and governance
is, indeed, a key part of conditionality. It has varying degrees
of effectiveness. It is not as effective as one would like to
see but it would be equally foolish to say that it is completely
ineffective. To give an example, if I may again cite Cameroon
which happened to be bottom of our Perceptions of Corruption Index
two years ago, the World Bank has been working extremely assiduously
with the Government, notably with the Prime Minister rather than
the President, to put into place a series of anti-corruption measures.
What does this mean? It means, for example, that whereas in the
past a significant percentage, some would say more than half,
of oil revenues had been paid into a special presidential account,
the results of which were never audited, published or available
to the public in any form, and in fact were secret, this system
has now been abolished and all oil revenues are being paid into
the public budget. That represents progress. Secondly, tendering
procedures have been adjusted, I would not say completely cleaned
up. There is certainly a lot of pressure now that tendering procedures
should be conducted much more, as it were, thoroughly. Because
Cameroon is now one of the countries scheduled for debt relief
under the HIPC Initiative, there is a civil society monitoring
organisation which is drawing up the conditions for the disbursement
through the Poverty Alleviation Programme. If I can move on from
that, let us take the case of Malawi. There has been a very successful
drive in which, I think I am right in saying, DFID has been a
key player in building up the Anti-Corruption Bureau in Malawi
alongside significant aid flows from DFID. That Anti-Corruption
Bureau is doing a pretty good job one can safely say and is, in
fact, bringing a prosecution against a minister at the present
time. That is an example of how these things can develop. Whether
or not conditionality can really induce changes in the kinds of
petty corruption we were talking about earlier I would say is
a pretty moot point. From a TI perspective, our concern is that
conditionalities are fine but our interest is in getting civil
society, particularly our national chapters, as it were, to be
an equally important, if not more important, source of change.
In other words, it is really a short-term solution for donors
to be trying to impose conditionality, the key thing is that civil
society within each country, and as Mr Hasan has said such forces
certainly exist everywhere, should be encouraged and enabled to
fight the anti-corruption fight domestically.
138. That was a rather hopeful answer and I
am glad to hear it. It leads me into my next question. What useful
schemes can donors fund to fight corruption?
(Mr Cockcroft) I think that some of the elements are
those I have already described, but let us take the Auditor-General's
office, that is the key area in which support is very important.
In practice in many developing countries the Auditor-General's
report is three, four, five years late, so although public accounts
committees exist in many Parliaments, the fact of the matter is
they do not have information to work on that is in any sense up
to date. Secondly, and I am in danger of repeating myself but
it is a very important area, Anti-Corruption Bureaux are important.
Their empowerment and the fact that they are responsible not to
the Presidency but to Parliament, or have some other guarantee
of independence, is very important. Tendering procedures are extremely
important but generally have been subverted in the aid process
very widely in ways that we touch on in our longer report. Enabling
civil society, as it were, to fight a reasonable fight is a very
necessary objective because it is extremely difficult if you have
no resources and you are unable to establish a presence to conduct
an anti-corruption campaign or anything of that kind. In terms
of what can be done, one can then have very tangible projects.
Chairman, you may not wish me to go into this now but we do wish
to mention at some stage the Anti-Bribery Pact in relation to
particular tender procedures.
Chairman
139. Whilst we are on it you should go into
that.
(Mr Cockcroft) For some time TI has been championing
the concept of an Anti-Bribery Pact in relation to individual
projects. The concept is that where you have a large project,
or possibly a privatisation process, in order to pre-qualify the
companies interested should, ahead of the tendering procedure,
sign a document which states that they will not pay a bribe in
relation to that particular project. The consequence of that is
you have a group of companies, let us say six, for a road construction
project who have agreed ahead of the award of the contract that
no bribe will be paid. So the selection takes place on the basis
of those who have pre-qualified along those lines. The further
intention is that this process will be monitored by civil society
groups, which might include a TI chapter or might not. Thirdly,
there will be a mechanism for redress. In other words, if after
a year one of the other companies concludes that some corrupt
payment has been made by the winning bidder then that will be
open to challenge. Each party agrees ahead of the award to accept
that this process may unfold. This has now been applied in a number
of cases. It is currently being applied in relation to the extension
of the Metro System in Buenos Aires. It was applied in Panama
in relation to the privatisation of telecommunications. It is
being applied in Colombia in relation to a multi-donor-funded
very large scale road project. It is being applied, for example,
in Bhaktapur in Nepal which has agreed to apply this system to
the award of local contracts within that particular community.
There are several other examples. Our perception within TI now
is that this process is gaining some ground. It may seem rather
tortuous and cumbersome but actually it is working in a number
of cases. There is a rather extraordinary point which is that
the World Bank does not like this, and in order for a World Bank
funding to take place there has to be a requirement that the national
legislative system sets up this procedure. That may sound extremely
arcane, the reason is that the World Bank lawyers have claimed
that this process infringes on the rights of companies in their
member states to bid freely on contracts.
Barbara Follett: That is extraordinary.
|
