Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 120 - 139)



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.


  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?


  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!


  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.


  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.


  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.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 5 April 2001