Attachment 1
Topic Briefing for British Council staff
CORRUPTION
Issued by the Governance Team, Manchester
The purpose of this topic briefing is:
— to inform British Council staff,
primarily those working outside the UK, about the topic of Corruption;
and
— to help them plan British Council
initiatives in this field.
The document provides an overview of issues
internationally but is written from the viewpoint of experience
in the UK. It provides information on key resources and information
sources and recommended further reading. It suggests three model
project ideas for British Council office.
The briefing is primarily intended as an internal
document for Council staff. If it is felt useful to use it with
external contacts and partners there is no reason not to. It is
a public document, has been issued in simple paper format to Council
offices and is posted on the Council's governance web pages. It
can be edited and reprinted locally as necessary.
The paper has been commissioned by the Governance
Team in Manchester and was written by Jon Moran of The Unit for
the Study of White Collar Crime at Liverpool John Moores University.
CORRUPTION—THE
ISSUES
1. WHAT IS
CORRUPTION AND
WHY IS
IT OF
INTEREST TO
THE BRITISH
COUNCIL?
At its most basic corruption is a breach of
the trust placed in individuals by the public. This trust may
be given to a public official or someone working in the private
sector. The public trusts that individuals concerned will perform
their duties impartially and properly. Corruption occurs when
someone in a position of trust abuses this trust for private gain.
Corruption is a problem because it destroys trust and distorts
normal public and private sector administration. Corruption undermines
fair administration of life affecting everything from local government
services to national politics.
Corruption in the Public Sector
Public sector officials including government
officials, elected politicians, local government officials and
others involved in the provision of public services are expected
to perform their duties fairly, professionally and on the basis
of their existing salaries. When public officials seek other benefits
for doing their job this is corruption. Such actions may include
requesting money for performing their job, or even not performing
their job (bribery) taking resources for their private use (theft,
embezzlement) or promoting or recruiting friends or relatives
(nepotism).
Corruption in the Private Sector
Corruption in the private sector is just as
much of a problem as public sector corruption. We give the private
sector our trust paying money for services which we expect to
be properly performed. Corruption in the private sector may include
tax evasion, smuggling, insider trading, fraud, theft, embezzlement
and so forth. An important area of corruption is where the public
and private meet for example when the government contracts services
for transport or construction or health or where the government
grants permission for private sector activities such as building
or foreign investment.
Whether in the public or private sector, corruption
is a breach of public trust, a breach of public responsibility
and is usually a breach of some law.
Why is corruption of interest to The British Council?
Target audiences for the Council in government,
the private sector and in NGOs will have concerns about corruption
and how it affects them in their work and daily life. Britain
has particular experience of the effects of corruption. This issue
provides a good opportunity to work with partners on the basis
of sharing an experience which is not always exemplary. The UK
government, through the FCO, DFID and DTI, and international agencies
take a keen interest in the effects of corruption. The World Bank
and other international agencies put considerable resources into
tackling corruption.
2. WHY IS
CORRUPTION A
PROBLEM?
Corruption distorts the normal processes of
government, public administration and economic activity. The effects
are overwhelmingly negative. In some countries corruption may
be seen as part of everyday life but there is strong evidence
that it is at a high economic and financial cost.
High level corruption involves major
regional and national organisations and individuals.
Examples of high level corruption
Political corruption: where politicians
attempt to control the political process and gain extra benefits.
They demand bribes and siphon money from the public sector to
fund election expenses or enrich themselves and their supporters.
They promote political supporters to the public administration,
judiciary, police and local government. This has the effects of
promoting inefficiency in government politicising public administration
and reducing trust by the public in the government.
Corruption in public administration: where civil servants
seek extra income for themselves or to pass on to their political
supporters. They demand money or other rewards for the performance
or non-performance of their duties, embezzle or steal funds. This
promotes inefficiency, poor decision-making and the unfair provision
of services. Private investment may be undermined by government
officials' demands for bribes; resources may to into unproductive
activities; the private sector turns to corruption to get things
done.
Corruption in the legal system: where judges, lawyers
or police seek extra income or promotions. They take bribes from
citizens, public officials, politicians or powerful groups. This
leads to the abuse of the judicial process, inefficiency and delays
for those who cannot pay bribes and abuse of human rights by police
in the pay of politicians, powerful business or criminal groups.
Low level corruption occurs in areas
where services are provided locally such as the police or health.
Low level officials demand bribes from citizens or take bribes
from local powerful groups or individuals. Citizens, especially
poorer citizens, are especially affected by this. They do not
receive a fair service, those who cannot afford bribes lose out;
inefficiency is commonplace. Wider effects can be a lack of faith
in the government, the political process and public administration.
Corruption in the private sector: Public-private
corruption in procurement affects fairness in the awarding of
contracts. Contracts can be awarded to inefficient bidders. Rigging
markets and contracts can affect the willingness of other private
companies to set up or invest. The embezzlement of company funds
or companies which deliberately bankrupt themselves can affect
trust. Offences like smuggling and tax avoidance deprives the
state of funds for the provisions of services.
3. CORRUPTION
IN THE
UK: THE ISSUES
Corruption in Britain is an issue in three areas.
They show the importance of corruption as a political and economic
issue.
— public sector corruption: political
corruption in the form of "sleaze" became a big issue
in the 1990s with allegations of politicians taking money or gifts
from businessmen to ask questions in parliament or affect legislation.
— public sector corruption: local
government saw scandals with local government politicians committing
fraud and taking bribes. In the police there were accusations
of corruption and officers taking bribe money from criminals.
— private sector corruption: following
financial deregulation in the City of London, a series of scandals
occurred including large fraud and insider trading cases.
Tackling corruption in the UK
To respond to these problems the UK used three
main strategies:
(a) Existing agencies
The National Audit Office examines public
spending on behalf of the UK Parliament. It is independent of
Government. It audits the accounts of all government departments
and a wide range of public bodies. It targets areas of government
expenditure where waste, misappropriation or fraud are risks.
It provides corruption prevention advice. The NAO reports to the
Public Accounts Committee, an independent parliamentary committee
which calls departments to account for their procedures and practices.
The Audit Commission audits local government
and the National Health Service. It reports on value for money,
efficiency and levels of public service. It has an anti-fraud
unit which publishes manuals on fraud and corruption prevention
and detection and which monitors trends and risks.
Parliamentary Committee on Standards
was set up to implement new rules on the conduct of Members of
Parliament. It asks for reports on MPs financial interests, the
gifts they have received from domestic or foreign bodies and makes
reports on individual MPs. It can recommend their suspension from
the House of Commons.
Parliamentary Ombudsman deals with complaints
from citizens on government maladministration.
(b) Official Inquiries
Inquiries were made into specific problems.
Official enquiries can be headed by a judge or other public figure.
The Committee on Standards in Public Life, known as the Neil Committee,
monitors conduct across the public sector including both elected
office holders and non-elected officials.
(c) Anti-Corruption Agencies
The Serious Fraud Office was established in
1988 to look into large, complex frauds in the private sector.
It has tackled fraud and embezzlement by a number of large companies
in the UK. The CIB3 organisation was established to tackle corruption
in the Metropolitan Police through investigations, internal discipline,
integrity testing and providing evidence for prosecution.
Successes
The Parliamentary Committee on Standards has
successfully subjected Members of Parliament to scrutiny. The
publication of its findings has placed pressure on MPs to explain
their conduct. The Audit Commission successfully contributed to
the reform of some corrupt local governments by providing information
for prosecutions, internal local government discipline or public
reports which increased pressure on corrupt individuals. The CIB3
has successfully gathered intelligence on the scope and type of
corruption in the Metropolitan Police and has weeded out corrupt
officers through forced retirement or prosecution.
Problems
The large number of bodies concerned with corruption
in the UK makes overall co-ordination difficult. Many authorities
have overlapping roles and responsibilities for example the tax
authority, the Serious Fraud Office, Customs and Excise and the
Police can all deal with similar offences. The stress on self
regulation for many areas of UK life such as the finance industry
has not worked and has made the development of agencies like the
Serious Fraud Office an expensive and time consuming way to control
financial corruption.
4. CORRUPTION
AS AN
INTERNATIONAL ISSUE
The rise of corruption as an international issue
Many countries have been affected by recent
economic and public administration reforms which have diluted
financial controls and presented opportunities for corruption.
The end of the Cold War brought an expansion of opportunities
for trade and investment but corruption became apparent as a major
block to stable economic development in transitional countries.
The growing evidence of corruption undermining aid programmes
added to international interest in tackling the issue. The USA
has enacted anti-bribery legislation which covers American companies
operating abroad and is keen for other developed countries to
enact similar legislation.
International organisations tackling corruption
and their polices
OECD
The OECD Convention Combating the Bribery of
Foreign Public Officials in International Business Transactions
makes it necessary for member states to pass legislation which
makes it a crime for companies based in their countries to pay
bribes to foreign governments. It came into force in 1998 and
matches the Foreign Corrupt Practices Act passed by the USA in
1977. It represents the belief that corruption in developing countries
could not be tackled until it was made a crime for companies from
developed countries to pay bribes. The OECD also demands that
its member countries match internationally recognised standards
in accountancy, financial record keeping and bank management and
procurement.
UN
The United Nations as a whole has become increasingly
concerned with corruption and organised crime. Corruption issues
are often dealt with through the United National Development Programme
which researches on the causes and effects of corruption in developing
countries and provides assistance to countries trying to establish
or improve basic financial management and accountability. The
UNDP has also collaborated with civil society initiatives such
as supporting the Centre for Investigative Journalism in the Philippines.
UNCTAD also undertakes work which is linked to anti-corruption
such as assisting countries in introducing new computer systems
for information management in customs services.
World Bank
The World Bank has since the mid-1990s made
corruption a major issue. As part of its package of assistance
to countries the Bank usually requires them to implement reforms
to the financial sector to improve regulation. It also encourages
civil service reform which include administrative and organisational
reform, the removal of "ghost" workers, changes in job
description and performance appraisal. The Bank sees privatisation
and deregulation as an important anti-corruption reform.
Transparency International
TI was established in 1993. It is an NGO which
has "Chapters" in individual countries which monitor
and report on corruption and anti-corruption initiatives and work
to develop media and public relations strategies to highlight
corruption. Local chapters also work to develop anti-corruption
strategies.
The UK Department for International Development
The Department for International Development
(DFID) approach links anti-corruption to poverty alleviation.
It focuses on low-level public corruption eg in local government
service provision which prevents citizens having access to basic
resources. The DFID approach seeks to increase local participation
in the management of local resources, increase local government
transparency and responsiveness to civil society groups.
5. TACKLING CORRUPTION
Tackling corruption is not easy. Reforms can
take years to have an effect. Corruption brings benefits to certain
groups. It leads to a "race to the bottom" as other
people begin to realise they must be corrupt if they are to achieve
anything. It may develop from an existing culture of gift giving
and so it can quickly become embedded in a society.
Legal strategies
Laws can be passed to deal with corruption.
This may include a law specifically defining corruption, or laws
covering offences which can be grouped under the term corruption
such as bribery, fraud, embezzlement, conflict of interest, money
laundering, insider dealing and so forth.
Laws have to be enforced. There is a choice
whether to leave this to the existing agencies such as police,
tax or customs authorities or whether to establish a special Anti-Corruption
Organisation to enforce these anti-corruption laws. The most famous
example is the Independent Commission Against Corruption in Hong
Kong. This was set up in 1974 to tackle corruption in the police
and other public services and also covers the private sector.
The Corrupt Practices Investigation Bureau in Singapore is similar.
Other countries which have Anti-Corruption Organisations include
Australia, Botswana, Lithuania, Malaysia and Pakistan. An Anti-Corruption
Organisation often performs community relations and public education
functions and provides advice about preventing corruption.
Legal reforms can encounter difficulties as
the effective enforcement of law depends on a number of factors
such as an independent and efficient judiciary, a professional
and trained police force and a functioning prison system. Legal
strategies involving investigations, trials and prison are also
very expensive.
Non-legal strategies
Much attention recently has focused on non-legal
approaches to controlling corruption, which involve preventing
corruption rather than waiting to use laws and the police to punish
corruption after the offence. Such strategies can include:
Public sector organisational reforms
Adopting a formal anti-corruption policy
Marking out job roles clearly
Performance appraisal
Storing and managing record properly
Securing property and access to buildings
Having a written code of conduct
Appointing anti-corruption/ethics officers to hear
complaints
Educating staff in anti-corruption
Making a whistle blowing policy
Financial reforms
Having effective internal and external audit
Having a clear policy on procurement
Storing and managing records properly
Training staff in fraud investigation
Strengthening civil society.
Reforms involving civil society
It has been accepted that citizen participation
is an important anti-corruption tool. Reforms should not be top-down
and directed by officials. Citizens can be effective monitors
of services and corruption and can actively organise to change
national and local polices. Citizen initiatives can include:
— Establishing monitoring groups to
provide citizen reports on central and local government services
eg Public Affairs Centre, Bangalore, India.
— Incorporating citizen participation
in local government decisions.
— Helping citizens to manage local
resources (water, land) known as Common Property Resource Management.
— Helping local citizens to collectively
pay utility bills reducing the scope for corruption by officials.
— Strengthening the media through training.
— Establishing a chapter or links with
Transparency International.
Developing an anti-corruption strategy
There are few new ideas, the important thing
is the way they are put together. Anti-corruption initiatives
must take account of context. For example, there is little point
adopting a legal approach if a country cannot effectively investigate
and prosecute offences. There are five basic steps:
1. Gather intelligence: Whatever
the focus of anti-corruption work within a country be it an organisation,
a region or a type of corruption, time must be given to find out
what the corruption is, where it is, what are its effects, and
what steps have been taken to tackle it.
2. Planning: Develop a strategy
to tackle the corruption which takes account of context. What
can reasonably be achieved? Who is going to implement the strategy
(officials, police, citizens)? What resources are there?
3. Implementation: How is the strategy
to be implemented, for example over what time span? What benchmarks
are to be used?
4. Evaluation: Who will evaluate
the strategy? What will be the criteria?
5. Sustainability: What are the
costs of the programme? How will the strategy be supported in
the long term?
| 
