SECTION 4: TACKLING CORRUPTION IN DEVELOPING
40. It is the governments in developing countries
who must take the lead responsibility for addressing corruption
in their countries. They should be supported in developing policy
and building institutions, by the international development agencies.
Donors should be seeking to build the capacity of the state, civil
society and the private sector to address corruption.
Anglo American said "Whilst over the last decade, there has
been a welcome increase in the emphasis given to good governance
by the aid donor community there is a great deal more which could
and should be done to combat corruption in emerging markets".
There are lessons to be learnt from our own history, especially
with regard to efforts to clean up the civil service, about the
kind of remedies that are needed in developing countries.
Of course, it only makes sense to do this if developed countries
are reducing their own contribution to international corruption
and working to constrain money laundering. The following discussion
must be seen in that context.
41. In this Section of the Report we will examine
DFID's anti-corruption strategy, look at commonly employed anti-corruption
measures, consider the sustainability of the work, and examine
how DFID works with governments from developing countries, and
with NGOs, civil society and other donors.
DFID's Anti-corruption Strategy
42. DFID spends about £90 million a year of
its bilateral programme (in total about £1.3 billion) on
better governance. There is no way to identify within this what
is spent specifically on corruption. Such a figure may be meaningless
in the context of anti-corruption work that is mainstreamed through
other programmes. Within the spend specifically on governance,
some of the projects are directly relevant to corruption but not
all. Some of the most valuable anticorruption work is actually
about providing the right expertise, in the right place at the
right time and is relatively inexpensive.
43. Civil society groups and other donors hold DFID's
work in this area in high regard. Its contribution on governance
is widely acknowledged as being important and useful. A number
of witnesses spoke of the positive contribution DFID is making.
Transparency International said they were "extremely impressed
by what DFID is doing in attempting to deal with the corruption
Laurence Cockcroft, Transparency International (UK), said "I
think it is important to note that DFID is doing a lot and a lot
of that is well thought out and quite imaginative".
We were also impressed by the high regard that other donors, whom
we met on our visit to Vietnam and Cambodia, had for the work
DFID was undertaking.
44. On measuring the success of the DFID anti-corruption
strategy, Clare Short said "The success or failure overall
is the success of the development effort in a country. More effective
government systems deliver more health care, more education, better
management of banks, better economic growth".
International Development Targets are a very blunt instruments
for measuring the success or failure of anti-corruption strategies.
While we do not argue that ultimately the success or failure of
strategies will be shown in the International Development Targets,
there is scope for the development of more specific targets and
measures relating to particular projects and programmes.
45. DFID should consider publishing an anti-corruption
strategy that demonstrates how the excellent work that is being
done will be mainstreamed. The strategy should consider the split
between central and regional funding, set out criteria for allocating
funds and describe how DFID will handle requests for assistance
from countries. DFID should ensure that in mainstreaming anti-corruption
activities through all of its programmes these are built into
programme design and not bolted on at the last minute.
46. DFID has indicated its willingness to help governments
committed to tackling corruption and DFID country strategy papers
already include an assessment of the scale and nature of corruption,
as well as an assessment of a government's willingness to tackle
Tackling corruption often requires action and reform across a
broad sweep of policies and institutions including civil service
reform, transparency in government accounting, strengthening the
independence of the judiciary, improving the effectiveness and
resourcing of law enforcement agencies, supporting the development
of civil society groups and fostering a free press.
47. DFID should encourage developing countries
to develop comprehensive anti-corruption strategies. It should
support developing countries engaged in developing such strategies,
encouraging them to make a full assessment of corruption. DFID
should promote a participatory approach to the development of
anti-corruption strategies in developing counties. DFID could
support the use of social audits, and participatory poverty assessments
in determining the scale and nature of corruption, and should
encourage the active participation of civil society and the private
sector in the development of any strategy to tackle corruption.
It should also encourage developing countries to insist that donors
coordinate their activity to provide effective backing for the
implementation of the strategy.
Anticorruption Strategies Currently in Use
48. Improving governance and building better institutions
is a theme running through much of the work described in this
Report. This is because the focus of much of the current development
activity has been around the creation of "government systems
which more effectively deliver services, provide appropriate regulation
and impartial law enforcement".
DFID recognises three main elements
in strategies for tackling corruption effectively:
- curbing the discretionary powers of politicians
and officials and thereby reducing their opportunities for corruption;
- reinforcing the positive incentives for higher
standards of integrity and professionalism in politics, government
and the private sector and eliminating the incentives for corrupt
behaviour such as poor pay;
- increasing the constraints on corrupt behaviour
by holding corrupt individuals and institutions to account, by
strengthening public and political pressure for such action and
by strengthening anti-corruption laws and the state institutions
responsible for investigating and prosecuting cases of corruption.
49. Redesigning and re-engineering systems, procedures
and institutions is the principal way to limit the scope for officials
and ministers to engage in corrupt practice. DFID has recognised
that policy and institutional reforms can be useful in limiting
both the discretion in decision-making of officials and ministers
and more simply the number of facetoface interactions
where previously bribes could be sought.
We have seen from the evidence presented by CIET that victims
of corruption often have to see a number of people before getting
a service, simply to increase the number of opportunities to extract
more money. David Phillips, Crown Agents, said that designing
out corruption had been one of their main strategies in reforming
the customs service in Mozambique. This involved not only strategies
to ensure the operating procedures, systems, internal audit, external
audit, and facilities for whistle blowing were all in place but
also to limit discretionary powers and face-to-face interactions.
The process of designing out corruption should apply not only
to corruption and public sector reform programmes but should also
be mainstreamed into all the sectors where DFID is active including
health and education. An analysis of how corruption might affect
a project or programme and consideration of the steps necessary
to limit corruption should be part of every design process. Bids
for funding where there is no evidence that these matters have
been considered should be deferred until either evidence is provided
or these issues are fully considered.
50. Measures to combat corruption are covered extensively
in a number of excellent resources available via the Internet
and in a large number of printed publications. We do not intend
needlessly to repeat the material here and the following is not
an exhaustive analysis of all possible methods for tackling corruption.
It simply examines a few that have been drawn to our attention
during the inquiry.
POVERTY REDUCTION STRATEGIES
51. The preparation of a full poverty reduction strategy
(PRS) is led by governments with the active participation of the
private sector and civil society.
It provides an opportunity to consider the kind of long term view
that must be built into any anti-corruption strategy. We were
encouraged to find during our visit to Vietnam and Cambodia that
corruption was addressed in the interim poverty reduction strategies
of both countries. It is vital that vehicles such as the Poverty
Reduction Strategies are used to address corruption. DFID should
work with the IMF and the World Bank to ensure that the guidance
on the development of a full Poverty Reduction Strategy makes
clear that the PRS must include an assessment of corruption and
must set out action being taken to tackle the problem. Parliament,
civil society and the private sector should all be involved in
developing this part of the PRS and should be engaged in monitoring
any anti-corruption strategy that emerges from the PRS planning
process. This work should begin immediately while there is still
scope for corruption to be drawn into some of the interim PRS
that are currently being developed.
52. DFID indicated that it was working to strengthen
anticorruption laws and establish independent anticorruption
commissions in a number of countries. It noted that to be successful
these bodies needed "...real political commitment, administrative
autonomy, independence from the police, adequate financial resources,
power to investigate and prosecute, power to recruit directly,
relevant laws and a functioning judicial system".
The willingness of a government to dismiss and prosecute corrupt
government ministers and senior officials is seen as a key test
of a government's commitment to tackling corruption.
Anti-corruption commissions have a part to play in educating state
institutions on anti-corruption techniques, detecting and investigating
instances of corruption and prosecuting corrupt officials and
Laurence Cockcroft suggested that reform of the judiciary and
technical support to offices, such as the AuditorGeneral's,
were reasonably practical measures that donors could support.
There was experience to show that strengthening oversight and
sanctions through Auditors-General or independent bodies such
as anti-corruption commissions could reduce corruption. We have
already seen that corruption often affects all aspects of the
criminal justice system and cleaning up the law enforcement must
be a priority if anti-corruption commissions are going to be able
to work effectively.
Laurence Cockcroft, Transparency International(UK), said the independence
of the judiciary was something that donors could address.
53. Transparency International argued that backing
from the highest levels of government was necessary if anti-corruption
commissions and bureaux were to make progress. There are a number
of examples of bad practice such as Kenya where the Kenya Anti-corruption
Authority was found to be unconstitutional, Zimbabwe where the
Anti Corruption Act specifically excludes investigation of the
president or South Africa where operational independence is limited
by a need to get presidential approval before investigations can
begin. Equally there are examples of good practice such as Hong
Kong which demonstrated what could be achieved when the interest
of the public was stimulated and harnessed.
Transparency International felt that such bodies should have the
power to freeze assets, to seize travel documents and, importantly,
to protect whistleblowers. Concerns regarding the criminal justice
systems in many developing countries have been discussed earlier
in this Report and it is important for any anti-corruption commission
that there is a non-corrupt and independent criminal justice system
to support its operation.
54. DFID needs to ensure that its own preconditions
are met before anti-corruption commissions and bureaux are funded.
Where such conditions do not exist anti-corruption and governance
assistance should be directed to creating the necessary conditions
"within the context of a programme for strengthening judicial
integrity and accountability".
TACKLING CORRUPTION IN POLITICS
55. Corruption carries heavy economic and social
costs but as well as undermining development corruption also distorts
democratic processes and rational decisionmaking.
Corruption in politics is commonplace in countries with endemic
corruption. DFID said "Much corruption in poorer countries
(and some developed countries) has its origins in politics. Vote
buying is commonplace, either directly or through projects apparently
funded by the local politician".
This poses a real threat to development and democracy. Mark Malloch
Brown noted that there was a fundamental difference between the
approach of the World Bank, who saw poverty as an economic issue,
and the UNDP who saw it as a political one. He explained that
it was "the poor's lack of any political rights and power,
particularly the right to vote, which leads them to be excluded".
He felt that the promotion of democracy was one of the critical
ways of overcoming corruption at the level of the poor themselves.
But vote buying and corruption in politics have the ability to
distort and undermine democracy. Mark Malloch Brown concluded
that "...even British democracy would come under threat if
government was not responding to the desires of people. That link
is critical and we are at a dangerous moment in the development
of democracy because we do have countries which follow the form,
not the substance, of democracy and then fall under the weight
of their failure to deliver basic services to the poor and because
they have allowed their democratic legitimacy to be undermined
56. Corruption has a direct impact on the relationship
between individuals and the state. A failure to address corruption
may impact on the legitimacy of a government. Corruption can become
an issue that gives rise to political instability and revolution
where the relationship between the state and individuals breaks
down as taxpayers and citizens begin to feel unfairly treated
when they pay for services and benefits in both taxes and in bribes.
There is concern about the issue of contributions to political
parties in developing countries by foreign companies. Clare Short
said that this was something that we had only just begun to deal
with in the UK.
It was one of the issues that had been left out of the negotiations
on the OECD Convention on the Bribery of Foreign Public Officials.
Roger Wilson, DFID, confirmed that this was something that the
OECD was currently looking at.
DFID should examine the scope for work that supports the development
of democracy to contribute to wider anti-corruption and better
governance strategies. In his memorandum to the Committee,
John Williams, Chair of the House of Commons Standing Committee
on Public Accounts in Canada, said parliamentarians had a responsibility
to ensure that governments were open, transparent, honest and
effective. He called on parliamentarians to form regional groupings,
such as the African Parliamentarians Network Against Corruption.
DFID should examine what support and assistance needs to be given
to help parliamentarians in developing countries tackle corruption.
It should also look at what support regional groups of parliamentarians
would need to be an effective focus for anti-corruption work.
PRIVATISATION AND LIBERALISATION
57. We have already seen that centralised state owned
enterprises and high levels of bureaucracy are often associated
with high levels of corruption. DFID has said that the break up
of state monopolies, liberalisation and privatisation, removal
of tax exemptions, and streamlining of business licensing requirements
were all changes that are required to limit and reduce opportunities
However, the process of privatisation needs to be planned and
handled carefully in order to avoid creating new opportunities
for corruption. Transparency International indicated that privatisation
had provided opportunities for corrupt deals often based on "insider
cabals" surrounding corrupt officials or ministers engaged
in deals that maximised personal enrichment rather than the return
to the state.
Mark Malloch Brown said that when the anti-corruption drive first
began there had been an assumption that privatisation would reduce
corruption by introducing decision making driven by market forces
rather than by the discretionary powers of local and central government
The first wave of privatisations were often associated with allegations
of corruption and in some ways privatisation reduced the accountability
of new enterprises. Many of the early privatisations also created
organisations that failed to deliver services, particularly in
the telecommunications and energy sectors. He was encouraged that
this was now driving a diversification of supplier
and hoped that this increased competition would drive improvements
in efficiency and thereby reduce corruption (as corrupt systems
tend to allocate resources inefficiently). Mark Malloch Brown
was hopeful that "After a bubble generated by the imperfections
of first generation privatisation we are now going to see a spread
of private ownership and a much greater strengthening of the institutional
frameworks of market economies in developing countries and a greater
transparency, greater environment law. You will see after a lag
time the work of Transparency International and others really
paying off in that we will now see corruption start to sharply
PROVISION OF TECHNICAL ASSISTANCE THROUGH TWINNING
58. Jeremy Carver, Clifford Chance, recognised that
there were a wide range of actions that could be taken to "increase
the flow of technical assistance to other parts of the world,
and there is a great deal that we can learn and bring back here
to improve our systems".
He spoke positively of the role that DFID was playing in building
capacity in the judiciary and criminal law in developing countries.
He was more critical of the role of the Foreign and Commonwealth
Office suggesting that there was little evidence that they recognised
corruption as an issue.
Philip Thorpe, Financial Services Authority, said that confidentiality
requirements in existing legislation prevented them from simply
passing information on to third parties. He was encouraged that
new legislation would allow them to deal directly with authorities
in other jurisdictions and to provide them with some information.
Both the Serious Fraud Office (SFO) and the Metropolitan Police
also noted that they had worked with or assisted organisations
and individuals from a number of developing countries.
There is a great deal of scope for greater use of mentoring
and twinning arrangements so that public sector institutions and
professional bodies in the UK can directly help similar organisations
in developing countries to build stronger institutions. This is
already happening but could be done on a more systematic basis.
DFID could provide support to coordinate and facilitate such activity.
INVOLVING LOCAL PEOPLE AND DECENTRALISING POWER
59. Anne Cockcroft, CIET, said people were vulnerable
to corrupt practice because they had a lack of knowledge about
how systems worked and what their entitlement was.
Clare Short said "With very highly centralised systems you
get a real problem because someone is running the system at the
centre, but no one at the local level knows what they are entitled
A lack of knowledge and information may be one of the reasons
that corruption is so difficult to tackle in the judiciary, which
is usually a complex system. Anne Cockcroft suggested that by
telling people what to expect, what they need to pay for, what
they do not need to pay for, and highlighting the fact that paying
a bribe did not actually buy a better service, people's vulnerability
could be reduced. It is important to involve ordinary people in
tackling petty corruption. They often have views on what can be
done to tackle corruption and should be consulted in developing
When asked how best to tackle corruption local people often raise
the monitoring and control of services.
60. The decentralisation of service delivery provides
an opportunity for improving local accountability and transparency.
Mark Malloch Brown said that the UNDP puts "... great emphasis
on decentralisation because where people see some transparent
control over resources and are able to hold government to account
for the delivery of education and health care to their communities,
you see an absolute transformation in delivery capability".
However, decentralisation needs to be managed so that it does
not simply add another layer of bureaucracy, and another opportunity
for corrupt practices.
There are valid questions about the capacity of regional and local
government institutions to plan, deliver and manage services in
some developing countries. In this respect, we welcome the efforts
of the Commonwealth Local Government Forum which has sought to
strengthen the capacity of local government through training schemes,
information exchange, and through the pooling of professional
and administrative know-how.
There is certainly the scope for donors to start looking at
the kinds of capacity building activities that will be needed
to support effective decentralisation of services once the institutions
of central government have been reformed and strengthened.
EXTERNAL MONITORING AND EVALUATION
61. The external evaluation of projects is important
if mismanagement and corruption are to be controlled. Anne Cockcroft
gave an example of a World Bank agriculture extension project
where internal evaluation showed 75 per cent of farmers in the
project were visited by an extension worker while CIET's evaluation,
which happened to geographically overlap the same area, showed
only 10 per cent of farmers were visited.
She argued that donors needed to be more sceptical and a little
tougher about actually monitoring projects on the ground and not
always to rely on the internal evaluation of projects. Good management
and some kind of external monitoring arrangement are vital if
service reforms, which are going to be effective in reducing corruption,
are to be delivered.
Local people should be involved in the external monitoring
of projects and programmes through social audits, participatory
assessments of services and service delivery. Local communities
can usefully be involved in directly monitoring services.
USING THE MEDIA
62. Sometimes corruption is not hidden and occurs
quite openly. When in Bangladesh, the Committee were told by Transparency
International (Bangladesh) that transparency was not in itself
a solution to the problem of corruption since in Bangladesh corruption
took place perfectly transparently. Incidents of corruption were
reported regularly in newspapers but there was little, if any,
follow up. Transparency International research suggested that
in 60 per cent of cases reported in newspapers there had been
no followup. Donors need to consider how best to support
the development of a free but responsible media that is appropriately
trained in the techniques of investigative journalism.
63. Transparency International have emphasised the
possibility of civil remedy as an alternative to criminal proceedings
for those who wish to see assets frozen or recovered.
They believe that work can be done to raise awareness of civil
remedies in victim countries.
Kenya provides a good example with the Law Society taking civil
action in the Goldenberg scandal. (The Goldenberg scandal arose
from a scheme whereby the Kenyan Government paid exporters as
an incentive to export gold and diamonds. Billions of dollars
were lost through fraudulent exports; in one instance, Swiss customs
officials discovered that a shipment of gold jewellery turned
out to be sand). Where DFID has programmes that are seeking
to build anti-corruption coalitions with civil society groups,
civil action should be put forward as one means of raising awareness
of corruption and providing some form of redress where the criminal
justice system is failing.
INTERNATIONAL CONVENTIONS AND OTHER ANTICORRUPTION
INITIATIVES IN DEVELOPING COUNTRIES
64. The Corner House noted that much of what was
written about corruption dwelt on developing countries as bribe
takers rather than the industrial countries as the bribe makers.
The focus of the various conventions to tackle corruption is very
much on developed countries. Table 1 compares a number of the
current anti-corruption initiatives.
Table 1: Anti Corruption Initiatives (Conventions
and Protocols as of January 2000)
|1997 OECD Convention on Bribery of Foreign Public Officials
||Inter-American Convention Against Corruption (OAS)
||Council of Europe Criminal Law Convention
|Type of Initiative
||Convention||Convention and Protocols
|Entry into Force
||15 Feb. 99||6 Mar. 97
|Opened for signature
||17. Dec. 97||29 Mar. 96
||27 Jan. 99||
||Foreign Only||Foreign and Domestic
||Foreign and Domestic
||Protocols call for the criminalisation of certain types of active (supply) and passive (demand) bribery of EU or member state officials
||Public Only||Public Only
||Public and Private
||Obtain/retain international business
||Domestic - Any Purpose
Foreign - Any economic or commercial transaction
||Not Covered||Domestic Only
||Foreign and Domestic
||Not Covered||Public Only
||Public and Private
|System in Place?
||Monitoring Beginning||No regularised system in place
* Parties are countries that have signed and ratified the respective
Source: No Longer Business as Usual, OECD, 2000
65. The importance of international conventions in
tackling bribery is not doubted. We agree with DFID that they
provide a useful function in condemning corruption by the states
which are party to them and highlight the importance of halting
the practice of companies offering bribes to win business abroad.
However, we see little evidence of steps being taken by the development
community as a whole to extend the reach of these conventions
to cover developing and transitional economies. The support for
the development of regional conventions by DFID is welcome
but we feel that there is much more that can be done in this regard.
It is unlikely that a multinational enterprise is going to want
to take account of a large number of regional conventions which
may all end up with slightly differing contents. The extension
of existing conventions may achieve a more harmonised approach
to tackling corruption than the initiation of many regional conventions.
Unilever said "There is a risk here of 'code fatigue' as
governments, multinational organisations, and NGOs produce separate
initiatives designed to tackle the same series of problems. For
that reason we would not support the idea of a single overarching
global code on corruption unless it incorporated and replaced
the best provisions of existing initiatives. Otherwise, there
would simply be an increase in the incoherence which already exists".
The Sustainability of Efforts to Tackle Corruption
66. Corruption is unlikely to be overcome in the
short term. The changes required to combat corruption are complex
and their implications may not yet be fully understood (as was
the case with the first round of privatisations that were tried
as a panacea for corruption in state owned enterprises). Laurence
Cockcroft said "The key thing is to recognise that one needs
a longterm perspective and what one is really doing is trying
to support local change agents".
It is essential that DFID, along with other donors, take a long
term view in the battle against corruption.
67. The UNDP discussion paper on good governance
said "...the history of anticorruption efforts is filled
with programmes that succeeded at first, only to be undermined
by subsequent governments or by economic and political crises".
There are questions about the sustainability of specific anti-corruption
and good governance projects and programmes as well as the sustainability
of the work in general. Sustainability was raised as a key issue
within The US General Accounting Office Report on the World Bank.
This said that the 1998 Annual Review of Development Effectiveness
(World Bank 1999) found that only 40 per cent of projects had
a substantial impact on institutional development and that institution
building in the financial sector was likely to be sustainable
in only 50 per cent of countries. DFID and other donors need
to look very carefully at the work that has proved to be unsustainable
in the past and determine what lessons can be learned for the
future. DFID should also review its current anti-corruption and
governance work to determine the sustainability of the work. The
political stability of a country is likely to have an impact on
sustainability. Engaging in long term institution-building in
an environment that is politically volatile will mean there is
some risk to taxpayers money but we recognise that development
of this nature is important.
Working with Governments in Developing Countries
68. Economic growth and successfully reducing poverty
are both dependent on good governance.
Clare Short said "You cannot do development without dealing
with corruption if you are operating in countries that have got
She stressed that a holistic approach was needed to governance
saying that improving governance was about creating efficient
modern states that had removed inefficiency and corrupt practice
through the whole of the government system.
It is apparent that in many developing countries tax and customs
revenues are well below the levels needed to support basic government
services in social sectors like health and education. This was
evident to the Committee when it visited Vietnam and Cambodia.
Corruption may distort the pattern of revenue collection (as people
pay bribes to avoid tax and excise duty and as the rich can afford
bribes the poor are taxed disproportionately) and further reduce
state revenues (as tax collected is diverted for private benefit
or people pay bribes to obtain reductions in their liability).
A stable and sustainable revenue base is essential for development
but is undermined by corruption. DFID should build anti-corruption
measures into any programmes for reform of public finances, tax
and revenue collection systems.
69. Mark Malloch Brown said "First, as an
absolute precondition to be effective against corruption
you have to have a leadership who believes in the fight against
Corruption cannot be tackled without political will, leadership
and a genuine commitment to reform. No reform programme will be
successful without support from a country's political and economic
There was evidence that such a high level commitment can deliver
Tackling governance successfully requires a commitment to reform
and re-engineer current systems and processes. Such change is
traumatic, will involve confronting vested interest and is resource
intensive. DFID stated that it was ready to support governments
that were committed to tackling corruption where governments have
translated that commitment into a wellarticulated anticorruption
Donors are very keen to push governments on issues of governance
and much support is conditional on a government making progress
on governance issues. There is a danger that this can create an
incentive for governments to make public statements about their
level of commitment to reform that are not backed by real political
will. Transparency International said "Assistance through
aid mechanisms can only be effective when it is actively sought
by the Government in question and is not simply a response to
donor pressure for governance programmes".
Bilateral donors, the World Bank and the EU have agreed to make
good governance a condition for their continued support. Mark
Malloch Brown cautioned that this created a massive incentive
to pay lip service to governance issues without a genuine commitment
to deliver the necessary changes. Donors must take account of
the fact that as they better coordinate their efforts to tackle
corruption and harmonise their conditionalities on assistance,
the incentive to pay lip service to demands for improvements in
governance is likely to increase.
70. It is important that donors test a government's
commitment to reform. The IMF and the World Bank are withholding
financial aid to Kenya because the government has failed to keep
its promise to implement anticorruption measures. The Kenyan
Government had promised that the AntiCorruption and Economics
Crimes Bill and the Code of Ethics Bill, would be passed by the
last session of parliament, but this did not happen. DFID, in
its Kenya Country Strategy Paper stated that "Priority actions
to improve governance include making anti-corruption measures
operational and effective". In this respect, the Kenyan Anti
Corruption Authority (KACA) was seen as an important element in
Kenya's anti-corruption drive and was funded by the government
and donors to the tune of more than US$ 4 million. However, on
22 December 2000, the KACA was ruled 'unconstitutional'
by Kenya's High Court because, amongst other things, it was considered
a breach of the doctrine of the separation of powers for the Authority
to be presided over by a serving judge. It was also found that
the KACA undermined the powers and authority of the Attorney-General
and the Commissioner of Police as conferred on them by the constitution.
71. Richard Manning, DFID, said "We can only
work ... where there is a genuine commitment to reform and where
there is something we can make a contribution to".
A genuine commitment to reform is a prerequisite for effectively
tackling corruption. DFID will need to test carefully the commitment
of recipient governments on a regular basis to avoid a situation
like that in Kenya. DFID should seek to use the leverage of other
donors and particularly the UNDP in pressing governments where
commitment to address governance is weak. Mark Malloch Brown
was clear that no matter how often they were rebuffed and how
unpalatable the message, the UNDP was committed to pushing governance
and corruption issues. The UNDP's unique position as the developing
countries' development agency makes such a commitment very important.
FUNDING THROUGH GOVERNMENTS
72. Clare Short stressed the importance of building
sustainable, effective systems of government with transparency
in the management of public finances - "That is the work
that will enable countries to have the effective modern state
that brings health care and education to all their people; and
create a climate for a private sector that will grow and improve
their economy. That is the real answer to corruption - systems".
73. In corrupt states, working outside government
systems may be a good way to protect development funds from corruption
but it is unlikely to be sustainable.
Clare Short said that DFID and its predecessor used to run high
quality projects that had their own financial and accounting systems.
These systems were a good way of preventing corruption but led
to no improvements in the systems of the countries where DFID
She saw working with governments as key. She said that funding
through NGOs rather than through governments was "a method
of avoiding corruption but it weakened an already weak state".
Richard Manning, DFID, made a similar point when he noted that
there was a danger of undermining local accountability in countries
that were highly aid dependent and where aid money was not subject
to some kind of oversight or scrutiny.
74. Richard Manning, DFID, said it was important
aid was provided transparently and that it was subject, as much
as possible, to democratic scrutiny through the parliamentary
and civil society processes of the recipient country.
Sector wide approaches force developing countries to put in place
systems to manage the money coming from donors. This effectively
means that they have the systems that enable them to account to
their own people for all the state revenues, not only those provided
Many donors, including DFID, make the development of effective
anticorruption programmes and the existence of accountable
financial systems a precondition for sector wide and budgetary
support. DFID uses special project and audit arrangements to safeguard
UK taxpayers' resources and ensure they are used for their intended
In preparing its Country Strategy Paper for Kenya, DFID developed
high and low case funding scenarios depending on the level of
commitment to tackling corruption demonstrated by the Kenya Government.
This allowed DFID to allocate significantly different levels of
funding depending on the commitment demonstrated by the Kenya
government. If a long-term development partnership was established
the high case scenario would deliver increased funding through
sector wide approaches. In the absence of such a partnership the
low case scenario would deliver reduced funding mainly through
NGOs. Governance was one of six impact areas used to test the
strength of the commitment by the Kenya Government.
75. Donors are faced with difficult choices when
governments are unwilling to make the commitment required to address
corruption or renege on previous commitments. DFID told us that
where this is the case the level of development assistance provided
is reduced. They continued to support the programmes that benefited
the poor by channelling support through NGOs, local government
and other agencies but recognised that such support cannot lead
to improvements in economic performance or in government systems.
Clare Short said "In a country where you cannot work with
government systems because they are corrupt or do not care about
people or are not focussed on the needs of the poor, you can find
some NGOs and that is better than nothing but it is not systemic
76. Laurence Cockcroft, Transparency International
(UK), argued that "there is a strong case for tapering aid
to countries which are endemically corrupt and where governments
show no sign of changing their position".
He felt money should be channelled through civil society and NGOs.
He was concerned that key government institutions in such countries,
like offices of auditors-general, should not be ignored.
He did acknowledge that there was a danger that cutting off aid
where corruption was rife could increase the extent to which political
leaders would resort to criminal activity to maintain their financial
77. Clare Short confirmed that DFID would work through
civil society and NGOs in difficult countries. It was important
to maintain some presence in those countries as the feedback from
people on the ground was important to DFID's understanding of
what was happening in a country.
Mark Malloch Brown said that in Myanmar, because of corruption
and broader concerns about the political legitimacy of the government,
the UNDP had adopted a community based development approach which
bypassed government. He said that similarly a power system project
in northern Iraq was being funded entirely outside government
channels. Mark Malloch Brown went on to say "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".
Clare Short said that humanitarian assistance was given anywhere
and everywhere under any kind of government - "No people
should go hungry because they have a rotten government".
78. We recognise that this is a complex issue. The
response from donors to corruption must be flexible. We are encouraged
that DFID have demonstrated such a flexible approach - the development
of high and low funding scenarios, a desire to work with governments
committed to change, a willingness to work outside government
where there is little option are all positive moves. We agree
that Sector Wide Approaches have the capacity to offer long-term
sustainable development on a country-wide scale but we have very
real concerns about the willingness of some governments to change.
We support DFID in adopting a flexible approach to funding. We
would be keen to see that key institutions in the fight against
corruption such as the offices of Auditors-General and anti-corruption
commissions continue to receive support and technical assistance
even where DFID is unable to move to sector wide or budgetary
support. DFID should also support parliamentary scrutiny and oversight
and ensure parliaments have knowledge of donor funding to governments
and NGOs in the country.
79. In addition to working through NGOs, DFID has
worked with regional government in some countries although there
were questions about the sustainability of this work.
Clare Short gave the example of a country where they work with
local government to get books into schools. She raised some concerns
about the lack of appropriate skills and institutions at a local
level. She said "When you move from highly centralised systems
in weak states with poor administrative capacity, to decentralise
you sometimes get an upsurge of corruption because you have even
weaker systems at local level".
We have already seen that decentralisation
is one of the successful ways accountability and transparency
can be improved adding urgency to the need for donors to address
the strength of regional and local institutions. Donors must
look at the need to build capacity and strengthen institutions
at a regional and local level in addition to the work they are
doing with central governments.
Working with Civil Society
80. Mark Malloch Brown spoke of the important role
civil society had to play in tackling corruption.
The Corner House said anticorruption drives by civil society
and governments in developing countries had exposed many instances
of corruption involving UK companies.
Transparency International lists a number of ways in which civil
society can be active in the fight against corruption including
raising awareness, political lobbying, prosecution or legal representation
on corruption issues, civic education and monitoring the anti-corruption
aspects of growth and poverty alleviation programmes.
Manzoor Hasan, Transparency International (Bangladesh), stressed
the importance of citizens' participation in tackling corruption
and described how Transparency International were working with
groups of citizens who had come together to act as a watchdog
body for local services.
There is scope for civil society to be involved in monitoring
the anti-corruption elements contained in Poverty Reduction Strategies.
Laurence Cockcroft noted that donors used aid conditionalities
as an incentive for change in developing countries but said he
was keen to see civil society become an equally, if not more,
important source of change. He felt that conditionalities were
a shortterm solution for donors and that civil society within
each country should be encouraged and enabled to fight corruption
81. We are concerned that the role of civil society,
including NGOs, in tackling corruption should not be overlooked
and that even where DFID is able to work through a government,
some support should continue to be provided to those building
support for tackling corruption outside government as mobilising
community support is an important part of the battle against corruption.
We are also concerned that NGOs supported by DFID are themselves
transparent, honest and open to investigation. We were pleased
to note that DFID had recognised this when Richard Manning, DFID,
said "We have realised increasingly in developing countries
that we have to work with governments. We have to look beyond
governments to help energise civil society, and to work with those
who are concerned about these issues, with government and without".
Working with Multilateral and Other Bilateral
Donors in Developing Countries
82. Clare Short explained that it was impossible
to tackle corruption successfully with lots of small anti-corruption
initiatives being pushed by different donors.
A systematic approach is needed in building good legal systems
and effective modern states. It was clear that cooperation with
the multilateral and bilateral donors was the key to successfully
tackling governance issues. Crown Agents complained of a lack
of donor coordination in tackling corruption.
DFID conceded that "The effectiveness of support for anticorruption
programmes would be substantially enhanced by better coordination
between development agencies".
DFID has been cooperating with members of the Utstein Group (Netherlands,
Norway, Germany and UK) to reduce the effects of corruption on
development. DFID has agreed an action plan with the Utstein group
and told us that together they planned to develop a resource centre
dedicated to anti-corruption and money laundering expertise.
83. DFID should take a lead in sharing information
on past, present and future work as a means of avoiding duplication
of effort by donors. It would provide a useful resource on successful
and unsuccessful strategies if evaluation was to be included.
We welcome the development of a common resource centre with the
Utstein partners and look forward to seeing this.
104 Evidence, p.2 Back
106 Q.754 Back
107 Q.27 Back
108 Q.98 Back
109 Q.146 Back
110 Q.778 Back
116 Q.381 Back
121 Q.146 Back
123 Q.126 Back
128 Q.289 Back
129 Q.290 Back
130 Q.806 Back
131 Q.807 Back
135 Q.282 Back
136 Q.282 Back
137 Q.282 Back
138 Q.612 Back
139 Q.613 Back
140 Q.222 Back
p.360 and Evidence, p.360 Back
142 Q.479 Back
143 Q.788 Back
144 Q.506 Back
145 Q.506 Back
146 Q.280 Back
147 Q.494 Back
148 http://www.clgf.demon.co.uk/ Back
149 Q.519 Back
150 Q.515 Back
157 Q.146 Back
and Good Governance, Discussion Paper 3, UNDP July 1997, Executive
Summary p.viii Back
Corruption to Improve Governance, UNDP, Feb 1999, p.11 Back
160 Q.759 Back
161 Q.769 Back
162 Q.769 Back
and Good Governance, Discussion Paper 3, UNDP, July 1997, p106 Back
164 Q.279 Back
and Good Governance, Discussion Paper 3, UNDP, July 1997, Executive
Summary p.ix Back
166 Q.23 Back
169 Http://news.bbc.co.uk/hi/english/world/africa/newsid_1124000/1124262.stm Back
The East African (Nairobi), 11 January 2001 Back
171 Q.26 Back
172 Q.274 Back
173 Q.754 Back
174 Q.754 Back
175 Q.788 Back
176 Q.759 Back
177 Q.10 Back
178 Q.10 Back
179 Q.802 Back
Kenya Country Strategy Paper, Nov 1998, paras E3 and E4 Back
183 Q.790 Back
and Q.111 Back
185 Q.146 Back
187 Q.789 Back
188 Q.278 Back
189 Q.794 Back
190 Q.798 Back
191 Q.788 Back
192 Q.304 Back
195 Q.132 Back
196 Q.137 Back
197 Q.24 Back
198 Q.758 Back
199 Q.383 Back
203 Q.758 Back