Call for Papers: Data Analytics for Anticorruption in Public Administration

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The CSC is cooperating with the World Bank and other academic and development partners to solicit ideas for using data analytics as an anti-corruption tool in public administration. In this post, CSC Director Liz David-Barrett explains how such tools might help policy makers.

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The UK’s hard choices on tackling corruption

Robert Barrington, Professor of Anti-Corruption Practice at the Centre for the Study of Corruption, looks at how the new Biden administration will change the international anti-corruption scene – and what this might mean for the government of the UK.

The election of Joe Biden is a game-changer for the UK government in the global fight against corruption. A mere five years ago, at the London Anti-Corruption Summit of May 2016, David Cameron and John Kerry were setting out an ambitious agenda for global leadership.  Cue Brexit, Trump, China.  Since 2016, neither the UK nor the USA has shown the same leadership on corruption, allowing China and Russia to take tentative steps to fill the vacuum.

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What lessons can be learnt from Ireland’s lobbying regulation?

Megan Roe who is currently taking the Masters in Corruption & Governance at the Centre for the Study of Corruption, looks at what lessons the UK might learn from Ireland about the regulation of lobbying – an issue with particular relevance during the Covid-19 pandemic when government contracts and funds are awarded without the usual scrutiny and behind the scenes lobbying can produce an immediate financial reward.

When conducted in an appropriate way, lobbying plays an important role in the democratic process. But its often secretive nature, in combination with numerous political scandals across Europe, fuels perceptions of a shady world of influence peddling, where special interests are placed above the public good. Behind the scenes lobbying contains elements that Klitgaard’s ‘corruption formula’ (Corruption = Monopoly + Discretion – Accountability) suggests makes a favourable environment for corruption – in this case discretionary power without accountability. So in this regard, why is lobbying regulation so weak in so many countries?

Transparency, through a statutory lobbying register, is a way of improving perceptions of and limiting influence peddling. It puts back the accountability. The UK and Ireland both have registers of lobbyists, designed to increase the transparency. But even though the UK’s register was introduced a year before Ireland’s, the latter has received ten times more returns than the UK’s, and the UK’s register is strongly criticised by transparency campaigners. What does that tell us about good regulation in this area?

Ireland’s Regulation of Lobbying Act (2015) meant that from September 2015, those who lobby designated public officials (DPOs) are required to register and report their lobbying behaviour on a quarterly basis. The enforcement and investigative provisions of the Act came into force in January 2017, which helped fortify the 2015 law as one of the strictest lobbying regulations in the world. After a public consultation process, the Standards in Public Office Commissions introduced a Code of Conduct for lobbyists last year.

The essence of Ireland’s register is “to provide information to the public about who is lobbying whom about what.” The date and nature of all communications between lobbyists and DPOs are recorded – from meetings to tweets. The act itself employs one of the widest definitions of a lobbyist by international standards, and is easy to discern through the ‘Am I Lobbying?’ feature on the register’s website. Those within scope of the act include:

· Anyone who employs over 10 individuals

· A representative or advocacy body with one or more employees

· Professional lobbyists who are paid to communicate on behalf of a client

· Anyone communicating in regards to land development/zoning.

By comparison, the Association of Professional Political Consultants estimated that the UK register covers about one per cent of lobbying activity, contradicting the government’s statement that those unregulated under The Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act (2014) were already covered under existing transparency measures.

Back in Ireland, failure to register leads to an automatic fixed penalty notice of €200, and more serious violations of the act may be punishable by a fine of up to €2,500 or a two-year prison sentence. Greater compliance with the Act enables the public and press to know who is lobbying, who is being lobbied, and to what end.

Another function of Ireland’s regulation is to impose a one-year ‘cooling off’ period for former DPOs who wish to engage in lobbying. The flow of powerful figures between government and industry is not limited to lobbying alone, but is a major part of the problem when we consider the access, influence, and sensitive information former public servants and politicians can offer those seeking to lobby the state. Conflict of interest risks are particularly high, and in some circumstances, industry leaders trade promises of future employment for regulatory allowances, making revolving doors criminally corrupt.

These post-employment restrictions are not perfect, as the Labour party and Transparency International Ireland initially sought to impose a two-year ‘ethical firewall’. Canada, which was very much the model for Ireland’s reforms, has a five-year cooling off period. In the UK, former ministers and senior crown servants are prohibited from lobbying government for two years, and are required to contact the Advisory Committee on Business Appointments (ACOBA) for advice on any appointments within this period. In practice, ACOBA has been described as ‘toothless’ in its regulation of revolving-door employment.

Ireland’s Head of Ethics and Lobbying Regulation stated in the Standards in Public Office Commission’s 2018 report that lobbying is still thriving in Ireland – rebutting ideas that stricter laws would have a damaging impact on lobbying. This is not just the view of politicians and campaigners, as the CEO of one of Ireland’s largest lobbying firms agrees that the act has not tied the hands of lobbyists, arguing “it’s always better in our industry to have transparency, we’re all stronger for it.” Opening the books on lobbying can limit the likelihood of inappropriate influence and corrupt exchanges, as the public are afforded greater scrutiny into the decision-making process.

In the UK, only consultant lobbying firms are required to register – not campaigning organisations or in-house lobbyists. Prior to the Lobbying Act, self-regulation was promoted through three British associations, and operated under a shared code of conduct. The government did not include this code or any other ethical framework in the statute, and there are no post-employment restrictions on former public office holders becoming lobbyists. According to Transparency International, it is important to address issues surrounding lobbying, the revolving door, and also party funding in the same breath as greater regulation in one area can easily lead corruption to flow into another.

The effectiveness of Ireland’s regulation lies in its five-point approach. It is one of the only EU members with a lobbying law, register, a cooling-off period for public servants, an ethical code of conduct, and sanctions in the form of monetary penalties and imprisonment. A comprehensive approach built upon these five key elements promotes transparency and accountability within lobbying processes. France and Slovenia also include many of these provisions under their lobbying legislation, while much of Europe lags in implementing a rigorous lobbying framework, if any regulation at all. The UK has fallen short on regulating a clandestine lobbying industry, but Ireland demonstrates that reform is possible.

CORRUPTION: When the Cheese Moved

John Githongo, CEO of Inuka Kenya and a prominent figure in the global anti-corruption movement, explains how the nature and definition of corruption have changed over the past two decades.  He examines the intersection between complex financial transactions, professional enablers and unaccountable tech companies and warns that these ingredients allied to the Covid-19 crisis create long-term corruption risks

I have been involved in anti-corruption work in media, government, the academy, civil society and the private sector for 23 years. I have watched the topology of graft change over this time. By the time Transparency International was founded in the early 1990s corruption in the public sector was a particular focus especially vis-à-vis its impact on development, democracy and a free and open society generally. This was driven largely by the fall of the Berlin Wall in 1989 and the fact that of some of the essential political tools of Cold War political competition and leadership were essentially redesignated as ‘corruption’. Dictators across the world complained about this dramatic shifting of the goal posts by their allies and patrons in the West. A wave of democratic reform swept across Africa and Latin America in particular. Anti-corruption was an essential part of the reform package. For a while the interests of billions of citizens in developing countries coincided with the liberal democracy promotion efforts of the West as the Soviet Union fell apart and China started its rise.

Three decades later I have come to believe that ‘corruption’ has changed dramatically. This change has been driven first by the scale of financialisation of the global economy that globalisation forged, and the intersection of this financialisation with digital technology. Secondly, the nature of corruption, crime and other illicit networks of principal actors in corrupt transactions has also been transformed. This transformation has outstripped the capacity of governments to keep pace with it – to oversee and regulate its assorted permutations. The traditional private sector that makes and sells things, the political class, bureaucracy and security services were essential components of corruption networks from the 1950s through to the early 1990s. By the mid-1990s globalisation and deregulation meant that the service and technology sectors were far more central to corruption networks than ever previously contemplated. Technology acted and continues to act as an accelerator of the changes.

Once commonly viewed as corruption ‘enablers’, the banking; accounting and audit; law; big tech companies; and, other service sector players had become far more essential to the corruption reality – their transactional infrastructure increasingly central to the design of complex illicit endeavours in the hyper-financialised era. By 2010 it had become clear, for example, that the profound concentration of these actors in a few tax havens had caused trillions of dollars and the dealings that underlay them, to be lifted away from the effective oversight of nation-states. As entire chunks of the work lawyers and auditors once did have been rendered redundant by technology these professions have increasingly morphed into highly specialised ‘advisors’ to finance. This has nuanced the definition of corruption from being the ‘abuse of vested authority for private gain’ to also being ‘the illegitimate transfer of economic surpluses from those without power to the few who wield it’.

Prior to the current COVID-19 economic disruption UNCTAD warned late last year that the threat of recession had been attenuated by ‘excessive financialisation’ of a fragile global economy. It called for a ‘new approach that would boost public investment with an eye to averting environmental breakdown and promote wage led growth in place of finance-led growth.’ By 2017, total developing country debt had reached its highest level on record at 190 percent of GDP, most of it private sector debt which has risen from 79 percent of GDP to 139 percent of GDP in 2017 . An April 2020 blog by Homi Kharas for the Brookings Institution argued that “Emerging markets and developing countries have about $11 trillion in external debt and about $3.9 trillion in debt service due in 2020. Of this, about $3.5 trillion is for principal repayments. Around $1 trillion is debt service due on medium- and long-term (MLT) debt, while the remainder is short-term debt, much of which is normal trade finance.” Needless to say some of the egregious corruption scandals in the developing world over the past decade have emerged out of the acquisition and theft of sovereign debt by corrupt elites in collaboration with the service sector in the West and Chinese state owned entities. This will likely continue and accelerate in the coming months as a result of the COVID-19 pandemic.

The first 20 years of anti-corruption research and advocacy saw considerable discussion of a national integrity system based very much on an institutional, legal and civic infrastructure informed by the value of transparency as a public good in a society that aspires to openness and equity. We’ve gone from advocating national integrity systems to realising that integrity cannot be digitised. Everyone from tax dodgers, the titans of digital technology whose business model does not anticipate great oversight and accountability because it is changing quicker than lawmakers can keep up with; the corrupt, organised crime, drug traffickers etc – are combining to change the rules of the game so that you don’t have to steal when global public relations, lobbying, legal, management consultancy, audit firms together form a bulwark with the power to amend the law so your unethical behaviour does not offend it.

Much corruption has effectively been legalised by the transfer of such a huge proportion of the transactions of financial intermediation being digitised. In South Africa, the term for this repurposing of governance institutions to serve private interests is state capture. In truth, its morbid symptoms in a variety of countries have been exposed by the media and data leaks with increasing frequency over the last 15 years. The Panama Papers, Paradise Papers, Malaysia’s IMDB scandal that cost US$4 billion, the 2014 scandal that led Ukraine’s President Victor Yanukovych to flee to Russia are examples. So is the fate of assorted Eurobond borrowing in a whole raft of developing countries where huge sums borrowed have been predated upon by venal elites confident that using sovereign bonds as instruments of theft in processes tightly managed by the financial services sector makes them immune to accountability.

The COVID-19 pandemic could be about to take this to the next level as digital solutions are proffered for education, commerce, manufacturing, even health and transport etc in an era where humans have temporarily become biohazards. The planet’s apex predator has bumped into a resilient viral opponent. Additionally, though a huge amount of money is about to be spent quickly saving economies from the devastating impact of the measures introduced to mitigate the pandemic. As is the case when massive responses are necessitated by major disasters this is often a recipe for ‘leakages’ caused by incompetence and outright corruption. The COVID-19 response will likely play out over a longer period making mitigation of these risks all the more urgent.

In Kosovo, journalists and civil society beat organised crime by getting more organised

Recent elections in Kosovo saw the opposition defeat long-standing incumbents, electing a new generation with fresh talent and integrity. Jeta Xharra (Balkan Investigative Reporting Network) explains the role that civil society played in making it happen.

Vetëvendosje (LV), winners of the biggest share of votes at Kosovo’s October 2019 election (balkaneu.com).

It is a rare moment in the recent history of Kosovo that I can report that the narrative of civil society, investigative journalists and anti-corruption activists has won, against the narrative of those who we exposed.

Usually we tell our story, we probe, reveal, prove, document, publish, broadcast, file complaints, and we get read, seen, talked about, commented on. But there it ends. It is rare that our anti-corruption narrative becomes mainstream and brings about change.

This is because the opposing narrative, that of the state, has a bigger budget, more power, more police, more prosecutors, more judges, more spin-doctors on their side and more paid ‘journalists’ who toe their line. And the state usually plays the nationalist card to further capture the public imagination.

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Mexico; Making Progress in Tackling Corruption?

Miguel Angel Lara Otaola (University of Sussex)

Mexico’s new President, Enrique Peña Nieto, has proposed two initiatives to tackle corruption in the country. These include strengthening the Federal Institute for the Access to Information and Data Protection (IFAI) and creating a National Anti-Corruption Commission. However, as Professor Dan Hough wrote in this same space a few weeks ago, “knowing what works in terms of tackling corruption is not easy”.  Will these proposals work? From international examples and best practices we have learnt that political support and independence are key to the success of anti-corruption efforts.

The first proposal has already been approved and extends the powers of the Federal Institute for the Access to Information and Data Protection (IFAI). Now, the institution has become autonomous and in addition to overseeing the Executive branch, and it can now guarantee access to the information in power of the legislature and the judiciary, unions, political parties, and any other institution or body that receives public funding.

In addition, the second proposal – which has not yet been presented – consists in the creation of an independent and autonomous National Anti-Corruption Commission. This Commission will replace the Ministry of Public Administration and go beyond its powers as in addition to prosecuting corruption cases in the executive branch, it will have the power to investigate and prosecute cases in all three branches of government and at all levels (National, Provincial and Municipal). Another novelty is that it will be independent as it will no longer be part of the executive and its commissioners will be nominated by the President and ratified by a 2/3 majority in the Senate. Besides targeting civil servants, it will also go after corrupt politicians and citizens.

On paper, these proposals look good. However, experience from around 150 Anti-Corruption Agencies (ACA) around the world and from the UN Convention Against Corruption (UNCAC), shows that Anti-Corruption Commissions must be independent and enjoy wide political support. In addition, they must act in a favouring context with a strong system of accountability and rule of law.

As for political support, the initiative to create the Anti-Corruption Commission is part of the “Pacto por Mexico” (Pact for Mexico), a comprehensive and informal agreement between the main political parties for passing reforms that contribute to Mexico’s growth, competitiveness and development. So far, this Pact has achieved many and long overdue structural transformations to the country. In a year, the constitution has been modified several times (which requires a 2/3 majority and an approval by the legislatures of 17 states) to implement reforms to Mexico’s education, tax, telecommunications, finance and political systems. Amongst others, a national civil service for teachers was implemented, independent candidates can now compete against political parties, revenue tax has increased and become more progressive, and there is now more competition between the main TV networks. It seems that this political momentum will continue and widely support the creation of the Anti-Corruption Commission.

In addition, creating and Anti-Corruption Commission alone does not solve the problem of corruption. It success also depends on its independence and the political system where it operates. Doig et al (2005) warn against the “Icarus Paradox” of Anti-Corruption commissions whereby agencies that get to close to the sun can become victims of their own success.  Anti-corruption agencies must be shielded from its foes and from political pressures. Moreover, agencies must operate in an enabling environment. As a forthcoming paper argues, Mexico’s new Anti-Corruption Commission faces a weak judiciary, an under-developed legal system, and the lack of coordination in Mexico’s federal system (Lara-Otaola, Miguel Tromme, Matthieu, 2014). These are not easy challenges and need to be addressed in the design of the new agency but also in reforming other institutions and systems needed for effective tackling of corruption.

 

References

­­­Doig Alan, Watt, David, Williams, Robert, (2005), ‘Measuring ‘Success’ in Five Africa Anti-Corruption Commissions. The Cases of Ghana, Malawi, Tanzania, Uganda and Zambia’, U4 Research Report, Bergen: Chr. Michelsen Institute

Lara-Otaola, Tromme, Mathieu (2014). ‘Enrique Peña Nieto’s National Anti-Corruption Commission and the challenges for waging war against corruption in Mexico’, Forthcoming, 2014.

For more information on issues raised in this post, please contact Miguel at M.Lara-Otaola@sussex.ac.uk

Anti-corruption by text message?

Hong Kong’s Independent Commission Against Corruption (ICAC) is forty years old this year. This has subsequently prompted plenty of discussion in China as to whether the mainland can learn from the ICAC’s successes.  Being realistic, any suggestion that the ICAC model can be transferred to mainland China is almost certainly wide of the mark. If Chinese officials want to seriously tackle corruption, then they are going to have come up with more innovative ideas than that.

Hong Kong’s ICAC has a formidable reputation.  A recent scandal about the inflated expenses of Timothy Tong (see here) may have caused a degree of consternation at home, but when anti-corruption agencies are discussed outside of Hong Kong, it is never long before the ‘ICAC Model’ is mentioned. The ICAC is the Rolls Royce of ACAs.  It therefore shouldn’t be too much of a surprise when questions are asked about what China can learn from the ICAC’s experience.  Given the way contemporary China works, the answer to this question is straightforward; very little.

If an ICAC-like model were to have any traction in Beijing, then China’s entire system of governance would have to be re-shaped and re-moulded. It would have to be given an independence that would place it above and (far) beyond the Central Commission for Discipline Inspection (CCDI). It would need to have strong leadership and ample resources. And, most importantly, it would need to be free from political interference.  With the best will in the world, any Chinese ICAC is not going to be granted these things.

Practical moves to tackle corruption in China will therefore have to begin from rather different starting points.  One such method is to genuinely empower citizens to report on any incidences of corruption that they’ve experienced. All anti-corruption campaigns claim to want to empower citizens, but very few do so in anything more than a superficial way. One approach that might have mileage in China, however, can be found in Lahore, Pakistan.  Corruption in land transactions in particular reached such proportions in the capital of Pakistani Punjab that the Chief Minister, Shahbaz Sharif, introduced a system (the ‘Citizen Feedback Model’) that would enable citizens to report back on corrupt transactions. The Lahore authorities created a private organisation to send everyone who had dealings with local government offices a so-called ‘robo-call’ (you have to sign up, and be able to speak Urdu, but you can hear it here!) from the Chief Minister, and then a text asking them to report back on the quality of the service that they received, and, most pressingly, whether they were asked to pay a bribe.

Over 2.1m text messages have been dispatched since 2010 and over 8,000 cases of corruption have been reported.  From that the quango can create so-called heat maps, illustrating where bribes tend to be demanded and how much has generally been paid.  The statistics aren’t there solely to enable law enforcement to arrest those corrupters who have been regularly mentioned, rather the aims are more subtle. On the one hand, public servants who are suspected of feathering their own nests can be tested out by so-called ‘mystery customers’.  Corrupt officials can then be caught in the act.  On the other hand, the very knowledge that the text message service exists is hopefully enough to channel the minds of some potential bribers. The system therefore has both carrots and sticks in it, as well as a degree of subtlety.

The Lahore system clearly can’t simply be transposed on to the whole of China.  It does, however, have the advantage of empowering citizens to take action.  It subsequently also doesn’t go against the ethos of the current anti-corruption drive.

One of the things that successful anti-corruption work has to do is under-promise in the hope of over-performing. All too frequently anti-corruption in practice does precisely the opposite; over-promise but ultimately under-achieve.  The Lahore experiment with anti-corruption by text message might be one small way that China could begin to make progress.

Dan Hough

University of Sussex