Select Committee on International Development Minutes of Evidence

Examination of Witness (Questions 270 - 279)




  270. Can I first of all welcome you most wholeheartedly to this Committee, Mr Malloch Brown. I think you are the only British person to head a United Nations organisation at the present time and we are particularly proud to have you here to talk to us. We are however getting ourselves into quite a lot of problems concerned with corruption and how to tackle it, so your evidence this morning is doubly welcome, (a) because of your position as Head of UNDP and you can answer questions about UNDP's relationships and policy, and (b) on this very difficult question of corruption which undoubtedly is another way of robbing the poor and how do we stop it because it is not easy? I understand you would like to make a short opening statement as an introduction and you are very welcome to do so.

  (Mr Malloch Brown) Thank you very much, Chairman, and it is very nice to see old friends and to have this opportunity to speak to you all. You were kind enough to say I was the only British person heading a UN agency. It is probably worth observing now that there is no sense of pride on my part because it was in order to secure a greater degree of ownership with your Committee to our endeavours at UNDP. UNDP as the senior UN agency has until now always been headed by an American and the Europeans felt that this was our collective turn given the decline in American resources to the organisation. As a consequence it ends up through those circumstances that it is the most senior job that we have ever had in the UN. We have had much more distinguished Britons in the UN, Sir Brian Urquhart and many others you know, but I think it is worth observing that because the circumstances of this remarkable Secretary-General, Kofi Annan, who, for the first time, perhaps like Dag Hammarskjold amassed enough personal authority in the position to be able to make his own appointments and to avoid a lot of the intergovernmental lobbying which characterised so many of these appointments in the past. It almost went unnoticed that by coincidence there was a Briton in this position. I was asked if I would say a word about UNDP to put it into context and our work on corruption. I know you have met with DFID and a number of other British government departments and offices as well as my close friend and former boss, Jim Wolfensohn of the World Bank, so perhaps the way to frame UNDP is how we fit vis-a-vis those other players. UNDP's roots lie in its creation as the development agency of developing countries, very much a putting together of the different UN technical co-operation activities some 30 years ago to create an institution which would have a very strong sense of developing country ownership vested in it. It is something we are terribly anxious to conserve and emphasise always because, as we construct a modern system of development co-operation in a post Cold War world where a lot of those ideological suspicions are gone, we nevertheless are dealing with an environment where developing countries are very suspicious of the forces known as globalisation and are anxious to have a friend in their corner. We are very anxious always to insist that in that way UNDP is their development agency. That in a way makes it all the more remarkable that over the last year or so we have moved through a period of intense debate with both constituencies, donors and developing countries, to confirm that our principal interventions are, first, co-ordination of partnership (which I will come back to in a moment) on behalf of the whole UN system and its relations with outside partners, but second, good governance. When I first raised this there was a lot of hand-wringing amongst developing country ambassadors in New York who felt that this was a shift away from our poverty alleviation focus and something of a betrayal, that it suggested we were going the fashionable route of other donors and discarding that developing country sense of priorities. What was remarkable as we fought that debate through was the confirmation from the field itself that where developing countries at the country level were making their own choices as to how to use us, by an overwhelming majority they were using us for governance-related activities. To take really knotty difficult examples, in Pakistan our principal work is on decentralisation and trying to help the Government move towards municipal elections as a first step towards a broader return of democracy. In Nigeria, where I was until Sunday, we are leading for President Obasanjo the good governance programme where we are both making inputs of our own and seeking to co-ordinate the other donors including DFID. In Egypt, one of the countries most sceptical about the UNDP positioning itself as the good governance agency, we again are working on human rights, strengthening of parliaments, decentralisation, the modernisation of the system of government by reinforcing it with some IT delivery systems, and as a result we consider that over half our work today is in the area of good governance and papers some of you have seen demonstrate that there are more than 40 parliaments where we are working to strengthen parliaments; there are more than 40 countries where we are working on election systems; there are more than 60 where we are working on human rights, and an equal range of numbers where we are working on different decentralisation projects. Corruption very much falls at the heart of what we see ourselves doing today but you have to remember that developing country character of what we seek to do, that we really work on being trusted by developing countries, being their partner, pretty much working on the agenda in a way they feel comfortable with it. In that way, although we may not be as rich as the World Bank, we may not have as much of a positive influence over British corporate behaviour that British Government departments can have, we have a particular asset of our own which is that we are the Trojan horse on this issue, that developing countries allow us to get much deeper into their government systems, to promote reform than perhaps others can do. We do it very much in partnership. DFID is a frequent partner in Indonesia, Nigeria (as I mentioned) and many other countries, but so are others who have testified before you, like Transparency International, with whom we have a partnership agreement. We are doing a little bit of work with the Westminster Democracy Forum. We are doing a lot with the International Bar Association, with the National Democratic Institute, with the Swedish based IDEA, the Institute for Democracy and Electoral Assistance. We do not consider what we can do with some of our own activities. It is very much using the franchise we enjoy as trusted adviser to bring in expertise and partners to deepen our bench strength in these areas. I should not stop without saying a last word on our co-ordination role. UNDP, and hence in a way the seniority of the function, is not just the biggest part of the UN's development apparatus but, as administrator of UNDP, I also chair the UN Development Group which comprises UNICEF, UNFPA and all the other bits of the UN development equation. At the country level my resident representatives serve also as resident co-ordinator of the UN country team. It is our job to try and bring coherence around a common strategy of all UN inputs at the country level. This is done in a very collegial way. You have met Carol Bellamy, the magnificent head of UNICEF, and there is Catherine Bertini and the others: Gro Harlem Brundtland who heads WHO, so you can imagine that I would not even aspire to be primus inter pares in my exercise of chairman functions. It is very much a matter of trying to move everybody along in a gentle way in the same direction. It is clearly a critical part of our function because what you as donors ask of us is: is there a coherence, is there a common UN strategy at the country level? That is a second very important part of what we do. Let me leave it there.

  271. Thank you very much. Was it not Ralph Bunch who was the founding Administrator of the UNDP?
  (Mr Malloch Brown) No, it was not Ralph Bunch. It was Paul Hoffman and hence he brought the title with him because, having been an administrator of the Marshall Plan, when he was made the first Administrator of UNDP he brought the title to the dismay of his successors who find this a very difficult title to explain. The only time it served me well was when I met with the famous senator Jesse Helms and was terrified of what he would make of the young Brit running what he thought was an American enterprise. It all ended very well. I do not think he had taken in very much of what I had tried to tell him we were doing but he ended by saying, "So you are an administrator, young man. That means you are a chartered accountant. The organisation is in good hands."

  272. Are you a chartered accountant?
  (Mr Malloch Brown) No, and my friends think that the one thing I should never have qualified for is an administrator of anything.

  273. This is a big change for UNDP, to be spending 50 per cent of its money on governance plus corruption, is it not?
  (Mr Malloch Brown) Yes.

  274. When we have been overseas we have been to see the UNDP man of business because he is co-ordinating the UN activity, as you said, and he (or she) has always been the person who is the greatest apologist for the local domestic government, including (in my experience anyway) finding themselves at loggerheads with World Bank assessments and Asian Development Bank assessments and so on, whereas you find the UNDP saying, "No, they are all lovely people and we should be supporting them in every possible way, and corruption is something we do not take an interest in". Can you tell us what is UNDP's comparative advantage in this fight against corruption and have you hardened the hearts of your representatives in these countries? What sort of anti-corruption work is UNDP actually engaged in? What in your experience has had its greatest impact? Which sectors within developing countries have been specifically targeted and what examples are there from these sectors to show that corruption can be tackled successfully?
  (Mr Malloch Brown) Let me say on the apologist point that I look at this, and you will take this in the double meaning that is intended, that all those years of being apologists was capital in the bank in terms of developed trust with developing countries which we must now put on the line. I feel very profoundly, coming from a refugee and human rights background in part, that if indeed the trust we have developed rests on excusing the bad behaviour of governments it is not a trust worth having. Where I do think we need to press our case for change is often the private case. One of our most constructive partnerships in the governance area is with Mary Robinson on human rights where we have what we call, perhaps not altogether appropriately, a "bad cop/good cop" relationship in that Mary points the finger and says, "Your human rights record just will not do", and we then have 60 countries under a joint project. We come in behind that accusation to help countries improve their human rights record to meet Mary's criteria with all of her technical support to us in doing this. We are her local country presence. The kind of things we do in that area are first, mainstream human rights legislation into domestic law; second, in many African countries we are creating offices of national human rights ombudsmen; third, in the Arab countries we are at the moment pressing, in co-operation with Mary, the particular issue of women's rights. I have just appointed the first ever assistant administrator for the Arab states who is a woman, a former Deputy Prime Minister of Jordan, and she and I were recently in Cairo where she gave an astonishing statement in front of the leadership of Egypt about women's rights, which is the very special role that UNDP could play. If a World Bank Vice President had come in and done that we would have been slung out of the room. Even, frankly, if I had done it it would have been testing the tolerance of it, but for this woman, a very eminent Jordanian economist, to make the case was very acceptable. We really can be that challenged but we do not go out to press to do it. We let Mary do that. I think it is showing real results. More generally, my instruction to my resident representative colleagues has been extremely clear on this governance issue, that even if our advice is rebuffed we will go on pressing the advice and going back in to those presidential palaces as regularly as they will receive us to make the case that the quality of governance creates the critical seed bed for sustainable development. If I can move to the specific services in the corruption area, obviously we believe our work in strengthening parliaments is critical. President Obasanjo, interestingly, this weekend, despite his own fights with the Parliament in Senate, particularly in Nigeria, specifically asked me to do more in that area in Nigeria than we are currently doing because he recognises that a well informed, well supported legislative branch that can hold an executive to account with suitably forensic questions across the floor is critical.

  275. We have just been talking about asking President Obasanjo if he would give us evidence about the condition that he found Nigeria in on taking over as the new democratically elected President. Do you think that would be a fruitful thing to do for us, to get evidence from him? Would he give it?
  (Mr Malloch Brown) Oh, I think he would. He has a Truth and Reconciliation Commission which is currently going in Nigeria. The various generals are all accusing each other of having diverted fortunes and I would congratulate Clare Short for her new White Paper where, as I understand it, Britain finally bites this bullet of repatriation of illicit profits from regimes such as the Abacha regime. What you would have to confront with Nigeria is that it is a perverse inversion of the normal development crisis of Africa in that everywhere else the management problems are rooted in the sheer poverty of the place. Nigeria since the 1970s has seen $300 billion of oil revenue wasted at a time when the per capita incomes have dropped from $1,000 to $300. It is an extreme kleptocracy case. However much generals line their pockets it is hard to walk away with $300 billion. It is the combination of kleptocracy with a corruption of the process of public administration itself, with just ineffective systems in delivering basic services to people in the country. I think you need to look at it within that broader issue. You would enjoy it a lot and you would learn a lot as a Committee from it.

  Chairman: Can I ask one thing about UNDP itself, your projects and programmes? How are they themselves protected from corruption? Andrew Rowe had a point he wanted to make on this issue.

Mr Rowe

  276. When organisations go to countries like this and want a telephone installed, and they discover that it takes three months, the temptation to accelerate the process must be very great. That is a trivial example but it is the kind of thing that must confront you. How do you deal with that?
  (Mr Malloch Brown) I have been Administrator for about 17 months and in that time I have signed termination letters to about 16 staff members for corrupt activities. It might surprise you that I volunteer that information, but I go on to say that the majority, 14, of those cases were local staff cheating on medical expenses, sums usually of not more than $100. I and my predecessor had arrived at the conclusion that to restore the old integrity of the international civil servant concept nothing less than the absolute highest ethical standard was possible and so internally we are a bit like that poor Swedish minister who once put her trip to the baby store on her government credit card and lost her job for it, and we all looked at it and thought, "This is over the top". I have just felt that the moment you allow any compromise with this murky environment in which these countries operate—we have 136 offices, one in every African country, so we are in some of the most difficult operating environments. We have tried to send to our staff a signal of absolute integrity as the starting point. We also are at slightly less risk than, say, the World Bank because the World Bank is managing a massive lending portfolio a year, in a heavy year anything up to $30 billion, which is a honey pot, not just for small time thieves in developing countries but also for large time international consulting firms. Jim Wolfensohn has done a wonderful job of creating a black list of consulting firms who have cheated on World Bank contracts and is trying to clean up that large scale corruption which for example surrounded the Bank financing the power projects in Pakistan and some other issues of that kind. We, because we are essentially using individual consultants or non-profit partners, the International Bar Association and the other ones I have mentioned, have less exposure and, because the monies are less, less risk of corruption in our actual project portfolio.

  277. But the temptation must be great. I remember the Commonwealth Development Corporation telling us that they had a reputation for being clean and had been for many years, but they said they would not actually rule out the possibility that a local manager, faced with the spare part which would keep the sugar refinery running locked in some customs shed, paying the hurry money to get it out because three months' production lost would damage everything. In that kind of environment it must be very difficult.
  (Mr Malloch Brown) It is. I am afraid my answer would be a bit like that Commonwealth Development Corporation leadership. Both the protection but also the vulnerability for us is that, unlike, say, a DFID or a World Bank, we have a much higher proportion of national staff. Many of them are very well connected in the countries where they are operating. That is both a strength and a weakness. It means that we can often use their network of connections to get things done without resorting to the kind of activities you have described, but it does leave us always with the risk that at the margin there is some kind of compromise with local standards. I wish I could tell you absolutely that we have not bribed someone to put a phone in.


  278. Are there any examples of projects which you have sponsored that have not been funded because of concerns about corruption?
  (Mr Malloch Brown) Yes. Let me say that in Nigeria, for example, as a result of much discussion with our Board during the years of Abacha, we changed from a normal development approach where we tried to rely on what we call national execution, which is the Government executing projects with our helping them do it as the way of building local ownership of projects. In Nigeria we went to a direct execution model where we opened offices in every state to provide direct community development activities because, while they were not strategic and were not going to build better governance, at least it gave us the assurance that our money was reaching the poor of Nigeria. Today in Myanmar, for a combination of concerns about corruption and broader concerns about the political legitimacy of the Government, we similarly do a community-based development approach which bypasses government. We are doing the same in Iraq where we have a very large project to rehabilitate the power system of northern Iraq which we do entirely outside government channels. We will resort to direct execution as very much a second best but where our concerns about corruption or political concerns about legitimacy of government mean that it is that or suspending the programme.

  279. Where are you having the greatest impact against corruption?
  (Mr Malloch Brown) First, as an absolute pre-condition to be effective against corruption you have to have a leadership who believes in the fight against corruption. That might seem self-evident but it is not. We have created an environment now where bilateral donors, the World Bank and the EU in the new ACP agreement have all essentially conditioned assistance on good governance. That creates a huge incentive to pay lip service to good governance issues without always having the kind of political commitment to it that is necessary. It starts with that. Of the countries where we believe those conditions are met and we are doing quite well let me give you one example which is one with which some of you may be directly familiar, and certainly Clare Short recently visited, which is Indonesia, where we have a partnership led by ourselves and the World Bank but which DFID and a number of others are partners in as well, where the woman who ran the Westminster Forum—I forget her name—is now our project manager for it.

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