The last 10 years have seen turbulent economic times. The global economic crises was rooted, in part, in standards for guiding private sector behavior and setting economic policy that failed to meet emerging challenges and risks. One of the lower profile, but important, consequences has been to reexamine the fiscal standards that have guided fiscal policy and management practices.
On October 6, 2014 the International Monetary Fund, at a joint event with the World Bank, launched its new Fiscal Transparency Code (FTC) and Evaluation following two years of intensive analysis and consultation. I congratulate the IMF on creating a set of standards that capture the quality of fiscal reports and data, are graduated to reflect different levels of country capacity, and more comprehensively covers fiscal risks.
In a sector that is scarce and expensive to begin with, corruption can mean the difference between life and death.
I recently attended the World Bank Group’s second annual Youth Summit, developed in partnership with the Office of the United Nations Secretary-General's Envoy on Youth. The event, hosted thanks to the leadership and initiative of young World Bank Group employees, focused on increasing youth engagement to end corruption and promote open and responsive governments. In the wake of the Ebola crisis, and amidst some very eager, idealist, and passionate conversations, I couldn’t help but think about the price of corruption in health.
Many have argued that decades of corruption and distrust of government left African nations prey to Ebola. Whether in Africa or any other continent, it should come as no surprise that complex, variable, and dangerously fragmented health systems can breed dishonest practices. The mysterious dance between regulators, insurers, health care providers, suppliers, and consumers obscures transparency and accountability-based imperatives. As the recent allegations about Ebola-stricken families paying bribes for falsified death certificates illustrate, when it comes to health, local corruption can have serious consequences internationally.
Four years ago, I became part of the newly formed Global Youth Anti-Corruption Network (GYAC). It was then a group of about 50 civil society leaders, journalists, and musicians (or “artivists”) who, using various methods, are fighting corruption in their home countries. I was part of the pack of six journalists. After a week of training and networking in Brussels, I came home to the Philippines more inspired and energized than I could remember. I was baptized and inducted into the anti-corruption world, but could a freelance writer be really tipping the scale in ending corruption?
These laws are commonly referred as the right to information (RTI) or freedom of information (FOI). The international community recognizes citizens’ ability to access public information as a human right.
Last week, we invited Jennifer Bussell from UC Berkeley to present her fascinating study on corruption, politics and public service reforms in the digital age. The study is based in India and draws on a wealth of qualitative and quantitative data collected in 2009 from 20 subnational states, investigating how pre-existing institutional conditions influence e-Governance reforms.
Public service reforms in the digital age constitute a new era of relations between the citizen and the state. However, scholars have argued that much of the discourse on e-Government has been normative, with fairly optimistic predictions, and wanting deeper moorings in public management theory (Coursey & Norris, 2008; Heeks & Bailur, 2007; Yildiz, 2007).
What do Simeon Marcelo of the Philippines, Santosh Hegde of India, KPK of Indonesia. ACC of Bhutan and ACRC of South Korea have in common? All of them are anti-corruption super heroes (click on the hyperlinks to read their stories) and beacons of hope for all people against corruption. Corrupt officials are terrified of them and they all have served independent ombudsman/anti-corruption agency functions in their country. Over the years I have admired the courageous, professional and dedicated work of these individuals and organizations and had first hand experience of visiting and working with some of them. Based on this I can confidently say that Ombudsman can and do fight corruption successfully when they have the enabling environment and leadership (later I comment on what the success factors are in my view).
How good are the experts at evaluating countries’ anti-money-laundering and combating the financing of terrorism (AML/CFT) systems? That was the central question in a new report released last week by the Center on Law and Globalization. The report takes a critical look at the IMF’s evaluations of the AML/CFT systems of 150 countries from 2004 to 2013. Although we may differ on some of the analysis and recommendations, the report provides ample food for thought and raises issues that need to be addressed and, in certain instances, corrected.
It isn’t possible here to provide a full overview of all the points raised in the report, but a few key messages stand out:
The report finds that assessors were too focused on formal compliance (“rules on the books”) and did not, in any systematic fashion, try to ascertain the real impact of a country’s entire AML/CFT regime in practice. In the words of the report, “Reliance (by assessors) was placed on the prima facie plausibility of the claim that adherence to the [international AML] standards would help reduce money laundering and the financing of terrorism.” This criticism goes to a wider point: that evaluations were conducted without a clear articulation of the objectives to be achieved by AML/CFT measures. If you don’t know what a system is meant to accomplish, how can you evaluate it?
These are valid points and they hold true, not just for IMF evaluations, but also for others (including the World Bank) who carried out assessments using the same internationally agreed methodology. However, the report fails to take due account of the considerable work that has been undertaken in recent years to address and correct those shortcomings.
Since 2010, an intensive process of revision has been underway to improve the AML/CFT standards and the assessment methodology. There has been a long and vigorous debate within the Financial Action Task Force (FATF), the global standard-setter on these issues, and between the FATF and other bodies, about the best way to remedy the system’s deficiencies to make assessment reports more useful. Both the Bank and the Fund have played a very active role in this discussion.
As a result of this process, the new standards approved in 2012, along with a new methodology approved in 2013, provide a framework to address those concerns: Countries’ AML/CFT systems are to be judged based upon an assessment of their effectiveness in addressing a country’s ML/FT risks. Are government interventions commensurate to the risks faced? For example, a country with a negligible financial sector and a high use of cash should probably not spend too much money and manpower on policing its securities sector. Conversely, a sophisticated financial center providing easily usable incorporation services should probably keep a close eye on company registration. As a participant in this process, the World Bank has been a strong proponent of this pivot toward risk and effectiveness. In our view, only such an approach can help countries make meaningful decisions regarding their priorities and their strategies.
(The author works for the Department of Budget and Management and is the Co-Lead Coordinator for the Open Data Philippines Task Force in the Philippines that organized the open data program of the government.)
The Philippines has risen from being a laggard in Asia to an emerging economy fueling growth in the region. The government’s program of transparency and anti-corruption, the bedrock of President Benigno Aquino’s leadership, has served as the nation’s springboard for reforms.
The recently-concluded state-level elections in India’s capital city-state, Delhi, yielded a remarkable outcome. The country’s newest political party, the Aam Aadmi Party (AAP), literally “Common Man” Party, formed only a year ago by civil society activists affiliated to the landmark 2010 anti-corruption movement, routed the country’s oldest political party, the Congress, which has governed the country through most of its post-Independence years. The fledgling party’s performance and subsequent formation of the state government (ironically with the backing in the state legislature of the same party it had demolished), is being hailed as the beginning of something like a peaceful democratic revolution. It has galvanized political participation in a fairly unprecedented way as hundreds of thousands of “common people” across the country have rushed to join the ranks of a political force they hope will deliver better governance. And it had sowed the seeds of fresh optimism in the possibility of an ethical and accountable governance system.
This euphoria might be somewhat premature in the absence of any track record of AAP’s performance in government. But the party’s ascent undoubtedly represents a distinct break from traditional politics and suggests a new paradigm in at least two ways. First, AAP transcends the politics of identity and sectarian interests and practices instead what has been called the “politics of citizenship.” While other political parties have emerged from the grassroots in post-independence India and gone on to become potent regional forces, they have typically had their moorings in identity politics of one sort or another – caste, religion, ethnicity – that gave them dedicated support bases. In contrast, the AAP’s primary plank is good governance. Although it has been criticized for espousing untenable populist economic policies – such as subsidized water and electricity, its economic ideology and policies are very much at a formative stage. Its largest selling point has been its promise to fight corruption and bring probity to governance. Its success has catapulted the problem of corruption center-stage as the defining issue in the upcoming national elections.