Mike Tyson and the UK’s Anti-Corruption Plan

On 18 December UK Government finally unveiled its long-awaited National Anti-Corruption Plan (see here). The plan covers pretty much every area of public life in the UK, ranging from sport to prisons, and from how British companies should do business abroad to policing issues. The 66 action points are for the most part detailed and clear. The plan subsequently looks like a genuine step forward in the UK’s attempt to get to grips with the challenges that corruption poses.

The plan is not something that’s appeared overnight. Indeed, the anti-corruption community has been eagerly waiting the day when it finally emerged – it was originally scheduled to be published in June – and it didn’t take long for their comments and analyses to appear. Transparency International UK’s Chief Executive, the ever-sensible Robert Barrington, called the plan (see here) a “ground-breaking document” and praised the government for saying more about corruption in recent times than any UK government in living memory. Barrington was also quick, however, to note that there are still rumblings in the background about, for example, closing the Serious Fraud Office (the “only law enforcement body in the UK that has corruption as one of its top two priorities”) and that only this week the the audit commission’s renowned anti-fraud unit was unceremoniously closed down.

Alex Stevenson, writing on politicos.co.uk’s website, took a slightly different approach (see here), criticising what he described as “two politician-sized holes” in the plan. On the one hand the issue of a ‘revolving door’ that helps well-connected (often ex-) politicians move seamlessly in and between positions in the private sector (see here for a controversial recent example) was largely glossed over. How these relationships should be regulated subsequently remains decidedly unclear. On the other hand Stevenson also lamented the lack of anything substantive on party funding (a favourite topic of this blog, see here and here). Given the animosity between Labour and the Conservatives on this issue, that’s perhaps unsurprising. But, Stevenson claims, no less unfortunate for that.

Given that you can never please all of the people all of the time, how much substance is there to doubts such as these? One would hope that the fact that Westminster will soon lock down and descend in to election mode shouldn’t affect things unduly, although there is of course an outside chance that the next government might have no interest in taking the plan’s aims forward. Not impossible, but still very unlikely. That having been said, the biggest problem with plans – any plans – is not formulating them, it’s putting them in to practice. As Mike Tyson once said “(every one of) my opponents has a plan … until they get punched on the nose”. Iron Mike has a point. Even assuming the very best of intentions, plans can still be very big let-downs as (often unforeseen) things get in the way and stop aims from being fulfilled. The metaphorical punch on the nose can come at any time and in ways you’re not necessarily expecting.  Plus, some of the aims in this document are still just a little too vague for comfort. In the area of sport there is talk of the problems of match-fixing when the real issue is sports governance (something that is glossed over), whilst the action point (singular – point 14) on tackling corruption in prisons means everything and nothing.

The government also hasn’t really explained how it will evaluate progress. Would it not make sense for the (decidedly low-key) anti-corruption champion, currently Tory MP Matthew Hancock (the business minister with the intriguing full title of ‘Minister of State at the Department for Business, Innovation and Skills, Minister of State at the Department of Energy and Climate Change and Minister of State for Portsmouth’), to report back to parliament annually on this? It also appears to be everyone’s duty to take the plan’s aim forward, yet no one’s obligation. Political will is a notoriously hard concept to pin down (see here for one attempt to do so), but there is a feeling that if the will had been stronger, then someone would have been commissioned to take this forward as a main priority.

Ultimately, tackling corruption is – like many things in politics – not an event but a process. We will only be able to judge the plan’s success over time, and that means substantive change in key areas. Whether the resources and the commitment are going to made available to affect this change nonetheless remains very much to be seen.

Dan Hough

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Selling both gold and money; German party funding goes weird

How best should political life be funded? The question is hardly new, and it should come as no surprise that it’s received coverage on this blog before (see here and here). For some the introduction (or expansion) of the state funding of politics is one way of fighting the influence of big business in political life. For others state funding brings with it more problems than it solves, and it’s subsequently viewed more sceptically. The more interesting work moves beyond this and tries to work out how different funding regimes can lead to different types of corruption (see here). Be all that as it may, debates as to how politics should or shouldn’t be funded have taken on a peculiar new dimension in Germany in recent weeks. And this debate has done plenty to muddy the decidedly murky waters yet further.

Germany has a system of party funding that comprises three basic elements. Party members pay subscriptions, individuals and corporate entities can donate money directly and parties that poll above 0.5 per cent of the vote in national elections receive subsidies from the state. Some parties rely particularly heavily on membership dues, others do better in terms of the donations they receive whilst some are particularly reliant on state funding. Table 1 illustrates the balance per category for each of the main parties represented in the German parliament (as of 2011).

Table 1

Party Funding in Germany

Who gets what and how (in per cent)?

Party Membership Dues Public Subsidies Donations Others*
CDU 28.46 31.65 15.47 24.42
SPD 30.51 27.23 7.77 34.49
FDP 21.64 39.77 19.30 19.29
Left Party 33.92 42.31 6.64 17.13
Green Party 21.73 37.50 13.04 27.73
CSU 27.57 28.11 15.95 28.37

Source; Bundestags-Drucksache, 17/12340

* Most of this money (around 55m Euro in total in 2011) is made of by contributions from elected officials such as MPs, MEPs, local councillors and members of regional parliaments (MdLs).

Germans (and Germany-watchers) regularly dissect the traditional arguments about the virtues of this system (see here for a good summary of the main issues). Are smaller parties over compensated? Does the not inconsiderable state subsidy make life just a little too easy for the parties? Do parties with free-market ideologies (such as the FDP in this case) benefit unduly from donations from business? And so on. The focus none the less tends to be on the traditional parties. Every once in a while there will be a piece in a Sunday supplement about the challenges that micro-parties face, but the attention of both the popular and academic world tends to remain on the big six. Two rather peculiar developments in the Autumn of 2014 have changed that just a little.

In October 2014 the Alternative for Germany (AfD), a new and spikey right-wing anti-Euro movement that entered the European Parliament in 2014 (having narrowly missed entering the federal parliament in Berlin the year before), began selling gold in its online shop. They sold it in the form of gold coins (the 490 Euro replica German Mark coin was particularly popular – it sold out within days) and gold bars. In the first 11 days of business the party had managed to persuade over 800 people to part with their cash to the tune of around 1.6m Euro (see here, in German, for more on this).   Even the AfD was surprised by the uptake.

The AfD’s metamorphosis in to a gold-selling business has had a direct and an indirect effect on its coffers. On the one hand the profits flow directly in to the party’s bank account and help it carry out its activities. On the other hand it also means that it can claim more money from the state.  Why?  The party is currently entitled to claim around 5m Euro on account of the votes it has received in recent elections, but it can only get that if it can illustrate that it has raised the same amount of money itself.  If it can’t, then it will only get funds proportionate to what it has raised (so, if the AfD raised 4m Euro from members’ contributions, donations and other business, it could claim 4m of the 5m it is theoretically due from the state). So, the more gold it sells, the more money German taxpayers give the party.

It didn’t take long for a reaction to the AfD’s money-making wheeze to materialise. Protests were lodged, investigations were undertaken. Indeed, the Bundestag’s administration conducted a thorough enquiry in to whether the AfD’s behaviour in any contravened Germany’s ‘Party Law’. Much to the consternation of the President of the Federal Parliament (effectively the Speaker), Norbert Lammert, it didn’t and the gold-selling continued. Cue lots of head-shaking from the German political class. Lammert, meanwhile, called for the Home Affairs Select Committee to change the law precisely to outlaw this type of shenanigans.

If that wasn’t enough, the current law was made to look even more ridiculous in early December. Another party, ‘Die Partei’, found an altogether different way of getting the state to fund its activities. The ‘Partei’ is rather like the Monster Raving Looney Party (MLP) in the UK, taking a light-hearted, satirical look at all things political. The major difference to the MLP is that on account of Germany’s electoral system the ‘Partei’ only needs relatively few votes to make it in to parliaments – and this it did in 2014, sending Martin Sonneborn to the European Parliament after polling a mere 0.6 of the vote.

‘Die Partei’ is well known for coming up with schemes and ideas that are aimed at making others look just a little silly.  So we perhaps shouldn’t have been surprised when the Partei announced that if the AfD could sell gold, then it could sell money. The Partei announced that for 105 Euro you could buy 100 Euro from them, for 25 Euro, meanwhile, you’d get 20 Euro. Much to the Partei’s surprise, 80,000 Euro has already landed in the party’s account, and orders totaling over 163,000 Euro have come in. Following the same logic as the AfD, the 5 Euro profit on every transaction moves the party that little bit closer to claiming the 240,000 Euro it claims it has access to from state coffers (see here for more on this).

Whether the ‘Partei’ actually sees any of that money remains to be seen, but one thing is for sure; ingenious actors can make even the most well-thought through system look like the proverbial ass. The German party-funding regime is short on neither laws nor judicial attempts to interpret them, but that hasn’t saved it from two parties trying (successfully) to ‘play the game’. What can we learn from this? Firstly, party funding regimes never stand still as rational actors do their level best to get the most (in financial terms) out of them. Secondly, normative assumptions about what is and what isn’t appropriate behaviour will differ considerably; for some the AfD and ‘Die Partei’ are chancers bringing the system in to disrepute, for others they are simply quicker and more nimble than their bigger, more established opponents who may well be unhappy simply as they themselves didn’t think of similar schemes first.  Is, in other words, selling a victoria sponge at a summer garden party any different to selling gold on the open market (or indeed cash to those who want to pay more for it than its face value)? The method (selling something for profit) and the end product (that profit flows to your party of choice) are the exactly same.  One thing is none the less for sure – it’ll be worth watching how the German political class deals with these unconventional challenges to the party funding regime.

Dan Hough

The CPI’s far from perfect, but maybe we should cut it some slack

Another year, another CPI.  The world’s most well-watched measure of public sector corruption was published on 3 December and the usual suspects were in pretty much their usual places.  Denmark (92 out of 100) pipped perennial rivals New Zealand (91) and Finland (89) for the top spot, whilst North Korea and Somalia once more share the dubious honour of coming joint 174th and therefore last.  A number of countries can be celebrated as apparent success stories; the Ivory Coast, Egypt, Saint Vincent and the Grenadines, for example, all improved on their 2013 performance by five points, whilst Afghanistan, Jordan, Mali and Swaziland added four points to their previous totals.  At the other end of the spectrum Recep Tayyip Erdoğan’s Turkey dropped five points (from 50 to 45, and with that from to 64th from 53rd), whilst Angola, Malawi and most notably China – despite an ongoing and high-profile anti-corruption campaign from leader Xi Jinping (see here and here for more on that) – dropped four places.

So much for the nuts and bolts of the results, which can be dissected in all their glory here.  What can and should we read out of all this?  In order to answer that question it is worth stepping back and remembering how the index works and what TI is trying (successfully and unsuccessfully) to do with it.  The CPI is a composite index and a variety – 12 in 2014 – of data sources are used to create what is effectively a poll of polls on perceptions of public sector corruption in a given country.  TI provides a detailed account of where its data comes from (see here) and also how it uses it.  The CPI was first published in 1995 when it included 41 countries, with New Zealand achieving the best score (i.e. nearest to 10, as it was then) and Indonesia the worst (nearest to 0).  By 2014 the CPI had expanded to 175 countries.  The data produced is used, in varying ways and for varying purposes, by journalists, other anti-corruption organisations and not least politicians, and the CPI has undoubtedly developed into the key brand name in the study of corruption worldwide.

The CPI’s prominence has certainly not shielded it from criticism.  Indeed, criticising the methodology that underpins the CPI has become very commonplace.  Steffan Andersson and Paul Heywood, for example, see a number of basic problems (see here).  Firstly, the CPI measures perceptions of corruption rather than corruption itself.  Secondly, there are fundamental definitional problems that should lead us to be very unsure of what respondents actually understand the term corruption to mean.  Indeed, frequently it appears that the terms bribery and corruption are used interchangeably and are for many one and the same thing.  Thirdly, the CPI suffers from ‘false accuracy’ and there is no way of knowing what the real difference between scores that are closely grouped together is in practice.  A difference, in other words, of just a few points can lead to countries being a fair distance apart in the league table and yet we are not at all sure that these differences actually reflect what is happening in the real world.  Finally, responses to the various surveys are very likely to be shaped by – whether directly or indirectly – the assumptions and attitudes of the western business community; for the simple reason that the majority of people asked have roots in this particular milieu.

Other analysts have also not been slow in coming forward with their criticisms.  Steve Sampson, speaking for many in the development studies community, is sceptical of what he regards as “corruption becoming a scientific concept” as measurement tools like the CPI can, and have, easily become objects of political manipulation (see here for Sampson’s at times biting critique).  Even fellow quantifiers such as Theresa Thompson and Anwar Shah from the World Bank have criticised some of the statistical techniques that TI have employed (see here). They leave no one in any doubt as to how grave they think the CPI’s methodological shortcomings are when they state that “closer scrutiny of the methodology … raises serious doubts about the usefulness of aggregated measures of corruption” and “potential bias introduced by measurement errors lead to the conclusion that these measures are unlikely to be reliable, especially when employed in econometric analyses” (Thompson and Shah, 2005, pp-8-9).  Stephen Knack’s careful dissection of the CPI (here) also makes uncomfortable reading for TI defenders; he argues, for example, that scores are frequently not based on the same set of sources that were used for that country in the previous year.  This is evidence, he claims, of the unreliability of scores even within one country, let alone on a cross national basis. He also raises further significant issues about the independence – in a statistical sense – of the data used, claiming that many of the ‘statistically significant’ changes that TI claims to have uncovered would not in reality be so if “appropriate corrections for interdependence” had been made.

For its part, TI has certainly tried its level best both to be open about the methodological shortcomings of the CPI (as well as its other corruption indices) and also to adjust them wherever possible.  The founder of the CPI index, Johann Graf Lambsdorff, for example, is careful to acknowledge some of the methodological issues inherent in all composite indicators and he is always careful to describe changes in country scores from year to year as changes in perceived corruption rather in actual corruption levels.  TI has also tacitly admitted that the CPI has its limitations by the very fact that it has developed a whole host of other indices – such as the Bribe Payers Index and the Global Corruption Barometer – looking at both the perceptions and experiences of specific groups of stakeholders (ranging from businessmen to households).  One of TI’s founders, Jeremy Pope, has been rather more explicit, claiming that “the CPI’s major usefulness is in the past” and the TI has to be “a lot more sophisticated these days” (quoted in Andersson and Heywood, 2009, p.755).

And yet, all these criticisms not withstanding, the CPI has done one indisputable thing; it has put the issues of corruption and anti-corruption well and truly on the policy map.  Indeed, as Andersson and Heywood astutely observe;

“We should not underplay its significance in the fight against corruption: its value goes beyond the stimulation of research activity, since the publication of the CPI each autumn has generated widespread media interest across the world and contributed to galvanising international anti-corruption initiatives, such as those sponsored by the World Bank and the OECD” (Andersson and Heywood, 209, p.747).

Even staunch critics of the quantification of corruption have begrudgingly admitted that “whatever its limitations” the development of the CPI has “undoubtedly done much to promote the anti-corruption agenda” (see here).  It is also doubtful that any of the more nuanced second and third generation indices that both TI itself and other organisations have developed would have seen the light of day if the CPI hadn’t existed before them.

So, with all that in mind, we should be careful of perhaps reading too much in to the data that has been produced.  But we should also perhaps be wary that cynicism gets us nowhere and that TI, for all its sins, continues to push the analysis of corruption to the forefront of our thinking.  And that alone should be reason enough to cut the CPI just a little slack.