Examination of Witness (Questions 270
- 279)
TUESDAY 12 DECEMBER 2000
MR MARK
MALLOCH BROWN
Chairman
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.
Chairman
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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