“We are not afraid — we haven’t done anything bad. I always sleep well at night. My conscience is clear.”
- Ramón Fonseca, a Panamanian novelist and lawyer. He is a co-founder of Mossack Fonseca, a law firm based in Panama with more than 40 offices worldwide that specialises in setting up offshore companies in tax havens. He was president of the Panameñista Party until he was dismissed in March 2016, due to the Brazilian Operation Car Wash (Operação Lava Jato). In early 2015, more than 11.5 million documents, including emails, bank records and client information dating back several decades, were leaked from Mossack Fonseca. On April 3, 2016, the first news reports based on the papers, and 149 of the documents themselves, were published. These documents have come to be known as the "Panama Papers", and have provided an unprecedented insight into the use of offshore financial centres by the rich and powerful. They show how wealthy individuals, including public officials, hide their money from public scrutiny.
“We are not afraid — we haven’t done anything bad. I always sleep well at night. My conscience is clear.”
Duncan Green’s blog hosted a post by LSE’s Jean-Paul Faguet titled: Is Decentralisation good for Development? Faguet has edited a book by the same name that you can find here. This is a subject very close to my heart, and I believe in decentralisation as a value, just as I believe in democracy. It is often a work in progress, but it is a project worth persisting with, an ideal worth pursuing. Faguet’s research (at least, my interpretation of his work) therefore, really speaks to me. In this post, he makes several interesting and compelling points. For instance:
On the advantage of competitive politics generated by decentralised systems:
Imagine you live in a centralized country, a hurricane is coming, and the government is inept. To whom can you turn? No one – you’re sunk. In a decentralized country, ineptitude in regional government implies nothing about the ability of local government. And even if both regional and local governments are inept, central government is independently constituted, probably run by a different party, and may be able to help. Indeed, the very fact of multiple government levels in a democracy generates a competitive dynamic in which candidates and parties use the far greater number of platforms to outdo each other by showing competence, and project themselves hierarchically upwards. In a centralized system, by contrast, there is only really one – very big – prize, and not much of a training ground on which to prepare.
Despite global commitments to and increasing enthusiasm for open data, little is actually known about its use and impact. What kinds of social and economic transformation has open data brought about, and what is its future potential? How—and under what circumstances—has it been most effective? How have open data practitioners mitigated risks and maximized social good?
Even as proponents of open data extol its virtues, the field continues to suffer from a paucity of empirical evidence. This limits our understanding of open data and its impact.
Over the last few months, The GovLab (@thegovlab), in collaboration with Omidyar Network (@OmidyarNetwork), has worked to address these shortcomings by developing 19 detailed open data case studies from around the world. The case studies have been selected for their sectoral and geographic representativeness. They are built in part from secondary sources (“desk research”), and also from more than 60 first-hand interviews with important players and key stakeholders. In a related collaboration with Omidyar Network, Becky Hogge (@barefoot_techie), an independent researcher, has developed an additional six open data case studies, all focused on the United Kingdom. Together, these case studies, seek to provide a more nuanced understanding of the various processes and factors underlying the demand, supply, release, use and impact of open data.
After receiving and integrating comments from dozens of peer reviewers through a unique open process, we are delighted to share an initial batch of 10 case studies, as well three of Hogge’s UK-based stories. These are being made available at a new custom-built repository, Open Data’s Impact, that will eventually house all the case studies, key findings across the studies, and additional resources related to the impact of open data. All this information will be stored in machine-readable HTML and PDF format, and will be searchable by area of impact, sector and region.
Dishonesty is usually something we think about at the individual level. Lies are errant, definite actions that individuals perform at specific moments.
But lies are also important in aggregate because the effect of many small lies taken together can be devastating.
Dan Ariely, a Professor of Psychology and Behavioral Economics at Duke University, and his collaborators, starting in 2002, conducted a series of studies called “The Matrix Experiments”. In this experiment, the team gave participants, men and women from different age groups, 20 simple math questions. They asked them to solve as many questions as they can in five minutes and promised to reward the participants $1 for each problem solved. After five minutes, the participants are instructed to count how many problems they solved, insert their answer sheets into paper shredder machines, and report their results to one of the test supervisors to receive their cash. They did not need to show their answers as a proof. What the test takers did not know was that Ariely’s team programmed the shredders in such a way that they only shredded the margins of the papers while the main body of the page remained intact.
In the end, Ariely and his colleagues found that very few people lie a lot, but almost everyone lies a little. They tested over 40,000 people and found that only a few dozen were “big cheaters” who claimed to have completed many more problems than they did. Conversely, more than 28,000 people, or nearly 70 percent, were “small cheaters” who, on average, solved four problems but reported to have solved six.
What is interesting to note is that the sum of the team’s losses to so-called big cheaters was a total of $400. Compare this to the few dollars each that “small cheaters” stole. Together, these small transgressions added up to a whopping $50,000, causing a much higher impact than the few bad apples.
Over the last year, we have reached several noteworthy milestones in the global fight against corruption. In the arena of fighting corruption in international development, two important milestones stand out as having paved the way for significant progress and in setting us on a course for our continued success in reducing the impact of corruption on the poor.
It was ten years ago that the investigation into the UN’s Oil for Food corruption scandal came to an end. This was perhaps the biggest, most complex, corruption investigation to date involving an international organization. By virtue of its extraordinary status, the investigation was conducted under the leadership of an independent panel, including Paul Volcker (as Chair), Mark Pieth and Richard Goldstone, all of whom were and continue to be thought leaders for global integrity. The findings of the panel were sweeping and unflinching and, importantly, largely public. An important consequence of the scandal and the ensuing investigation was in creating both the opportunity and a pressing mandate for international development agencies to take on corruption inside their own programs, and among their own staff.
As a result of this investigation, most UN agencies and other international financial institutions now have their own independent integrity office charged with rooting out fraud and corruption in their activities. While many are still small, under-resourced and looking for support from their leadership, individually and collectively they have the ability to make a difference. I am proud to say the World Bank Group has remained a leader in setting a high bar for integrity standards and in international development financing. Within that framework, the 90 staff of the Integrity Vice Presidency (INT) dedicate themselves to investigating, sanctioning and ultimately preventing fraud and corruption in Bank Group-financed operations.
Let me explain why the World Bank is optimistic for Moldova.
Reason for optimism number 1. On the edge of the largest market in the world - the European Union - and with labour costs a tiny fraction of the EU average, Moldova could be a magnet for investment for the European consumer. Moldova's Free Economic Zones show how attractive the country can be to foreign investors when businesses are protected from corruption and hassles. The day that Moldovans get a clean economy, therefore, they will see explosive growth in such areas as light manufacturing, for example, and with that will come higher demand for labour and better wages. And faster economic growth will mean more money to pay for decent education, health care and pensions.
Reason for optimism number 2. Moldova has already weathered the worst of the economic shock caused by Russia's economic downturn and the 2015 drought. After a 2 percent decline in 2015, we predict that GDP growth will resume slowly in 2016 to 0.5 percent and accelerate to 4 percent in 2017.
Yes, of course one should not be delusional. 2015 was a tough year for the economy. There is no other word to describe a recession, a drought and a massive bank fraud for which generations of Moldovans will bear the burden. The bank fraud takes part of the blame for the fall of the leu, high interest rates and rising prices. World Bank employees are supposed to be guided by economics, not by emotions, but I cannot help feeling outrage that the ordinary Ion or Ioana will have to pay for the authorities' tolerance of fraud in the three banks.
But prosperity is within Moldova's reach. So, for 2016 let’s do the following...
Corruption is a global threat to development and democratic rule. It diverts public resources to private interests, leaving fewer resources to build schools, hospitals, roads and other public facilities. When development money is diverted to private bank accounts, major infrastructure projects and badly needed human services come to a halt. Corruption also hinders democratic governance by destroying the rule of law, the integrity of institutions, and public trust in leaders. Sadly, the vulnerable suffer first and worst when corruption takes hold.
In fragile environments, however, the effects of corruption can be far more expensive. Corruption fuels extremism and undermines international efforts to build peace and security.
This was the theme of a panel discussion, entitled “Corruption in Fragile States: The Development Challenge,” which brought together Leonard McCarthy, the World Bank’s Vice President of Integrity; Jan Walliser, the World Bank Vice President of Equitable Growth, Finance and Institutions; Shanta Devarajan, World Bank Chief Economist of Middle East & North Africa; R. David Harden, USAID Mission Director for West Bank and Gaza; Daniel Kaufmann, President of Natural Resource Governance Institute; and Melissa Thomas, Political Scientist and author of “Govern Like Us.”
- Conflict and Fragility
- fragile states
- integrity risks
- cross debarment
- rule of law
- International Corruption Hunters Alliance
- Integrity Vice Presidency
- Law and Regulation