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Will financial disclosure by public officials mean less corruption?

Financial disclosure systems are attracting increasing attention. Can these systems credibly help to prevent corruption in public office? Can they play a useful role in detecting officials who engage in corrupt behaviors? Could they even assist in the complex global work of tracking and investigating illicit flows?

Credit: Perry French, Flickr Creative CommonsThe recently released  Public Office, Private Interests from the Stolen Asset Recovery (StAR) Initiative with data by the Public Accountability Mechanisms Initiative of the World Bank provides a practical approach to addressing the challenges and requirements of effective disclosure administration.  The overarching message is that effective disclosure is a balancing act. Yes, a disclosure system can make a meaningful contribution to corruption prevention and enforcement. But cannot do so if expected to tackle and apply sanctions for all forms of graft and corruption in public administration.

Requiring that public officials submit a signed declaration of their income, assets and business interests is on the face of it an intuitively simple way of ensuring that they think twice about seeking to profit illicitly from their public duties, or of allowing private interests to influence, appear to influence, or otherwise conflict with their official responsibilities. Fear of detection is the motivating force; a reminder of ethical obligations, and assistance in fulfilling them, the encouragement. In practice, however, this deceptively straightforward idea is very challenging to implement. 

The skeptics out there will rightly affirm that a determined official will find ways of concealing illicit gains. That the disclosure agency may be hard pressed to verify the accuracy of declarations, whether because of banking or tax secrecy laws, the lack of property, business and other registries, limited public access, or their own limited resources. They might add that the enforcement of sanctions is bedeviled by delays in the courts or other factors borne of the local environment. Finally, they would caution that the agency charged with this task must also steer a course through the inhibiting political straits of anti-corruption enforcement.

Are we perhaps expecting too much of an administrative mechanism that must at a minimum contend with the bureaucratic challenge of collecting, reviewing and auditing large quantities of information from an officialdom whose members and duties are continually evolving, and whose identities – in many countries – are not accurately reflected in public rolls?  Under such conditions, how can a disclosure system meaningfully contribute to corruption prevention, anti-corruption enforcement, and public accountability? 

The issue is partly a matter of scale; and largely a matter of context. As the StAR publication shows, a disclosure regime needs to be designed to suit the constraints and conditions of the local context. That means a mandate based on achievable objectives and backed up with commensurate resources. In practice this could result in a dispensation from disclosure for the state employees whose job presents little risk or opportunity for graft. It could also mean that the disclosure agency chooses not to treat all declarations as equally worthy of scrutiny. It could also mean that a new system, in a fragile environment, might require that only the most senior 100 officials submit a declaration, as a first step in an incremental roll-out of a disclosure law. These approaches – namely, risk-based disclosure requirements and targeted verification – make it easier to focus resources where they really count.

But that alone is rarely sufficient. Public access to disclosure information can exponentially enhance an agency’s ability to provide credible scrutiny. Despite the squeamishness and debate that public access can generate, there are examples from around the world of workable approaches to providing public access to certain categories of information so as to address the perceived safety risks and privacy concerns of officials and yet leverage the benefits of public access. Moreover, providing access to compliance statistics and other related data sends a strong signal that an agency is serious about fulfilling its mandate, without typically engendering too much squeamishness.

Delivering on the potential for disclosure systems to contribute to broader, international anti-corruption efforts requires that the basic ingredients of domestic implementation are in place. It also requires that policymakers and practitioners begin to view financial disclosure systems as part of an interconnected architecture of agencies and actors engaged in international financial investigations, asset tracing and anti-money laundering. Initial research undertaken by StAR and the World Bank’s Financial Market Integrity group provides recommendations on how to leverage these connections.

A drawback of any safeguard mechanism is that it shines a spotlight on the behaviors it seeks to deter. The implication of a disclosure requirement is that, given the chance, public officials will be corrupt or prone to corruption. This pessimistic view is not a new one. In the Republic, Plato put forward the notion that all ‘guardians’ should be prohibited from owning private property beyond the basic needs of their family, and should touch no income except a soldier’s wage. While no-one would think to propose such a disincentive to public service today, growing disenchantment with the perceived venality of governing classes around the world is intensifying calls for effective measures to curb such behaviors. That is a heavy expectation to place on a disclosure regime.

A disclosure regime should at most aspire to make life difficult for officials seeking to engage in corrupt practices, and to make life easier for the vast majority who wish neither to defraud the public trust nor to fall foul of disclosure requirements or codes of conduct that may be complex or difficult to navigate. Part of the balancing act for a disclosure regime then is to enforce compliance while reassuring the public that compliance is but a formality. Educating filers and the public about the government’s commitment to public ethics is an important step in communicating that message. Following through with the enforcement of sanctions for those caught breaking the rules is the other vital part of the equation.

 


 

Comments

Submitted by Anonymous on
This is one measure that is terribly needed in Nigeria. As we speak, the president of Nigeria, Dr Goodluck Jonathan has still not declared his assets even after occupying the office of president for over a year. Africa's problems could be solved by scrutinizing it's leadership. Any reader of this message who is concerned about the failures in Africa should do some research on how much each Nigerian senator takes home annually. You will be shocked to find out that the take home pay exceeds $1 million dollars PA. This is much more than what President Barack Obama and President Sarkozy earn annually. In Nigeria, public officials do not care about development. Most who aspire for public office see it as an avenue to get rich quick. This is why there are so many instances of political killings, vote rigging, thuggery, ballot snatching and other vices that occur during elections in the country. The honest truth is the whole structure of governance and those within it in Nigeria are seriously compromised by corruption and it has become a culture in practice. Without real far reaching sanctions on African leaders who steal from their people, I doubt there will be much change without conflict.

Submitted by Rogers on
I have always believed that the matter of widespread corruption is multidimensional: It has a double incidence of benefit, double incidence of criminality and thereby impetus for utmost secrecy. How do you prove a case in such circumstances? That is a discussion for another day. Often, when we discuss corruption, we view at as the 'looting by the big fish', because that is what it is potrayed as in the media. But, in my view, that is the tip of the iceberg.Whereas one top official can swindle $1,000,000 today, consider the amount that a 10,000-man strong traffic police force has solicited from drivers along the highway. Assuming each police officer solicited $10 from each errant motorist, how much does that come to? That's $100,000 per day. In a week, that is $700,000 and in a year, that is $36,400,000. In this illustration, who is the bigger thief, the one top official or the police force? What has fueled a 10,000-strong police force, the custodians of law and order, into looters of the very property they are to protect? Apathy and impunity. Apathy on the part of the public, believing 'that is how we live, we cant change that, let them have their chance as we await ours, there is no interest from anyone to change this', blah, blah, blah. So, who is going to report who? Who is going to blow this whistle? No body! Interesting. Impunity on the part of the police force. Arguments would be, 'everyone knows they have to give us something, its either you pay me or pay the courts, I am saving you alot of time by taking my share here and now, you are benefiting from this as much as I am' blah, blah, blah. So, who will refuse the corruption? No body! Interesting too. Apathy and impunity are twin attitudes in the corruption concept that need to be tacked from a perception angle. No matter how many oversight institutions we have, for as long as attitudinal aspects are not worked upon, we are fighting a losing battle. For God and my country.

Submitted by Anonymous on
To Rogers: Very well articulated. This applies to "almost" all countries, big & small, developed & developing. Changes in attitude will never happen unless there is justice, law & order, accountability and fear of public shame (brought to the individuals and organizations). But then, who will take the initiative? The common man?

Submitted by Bmahen on
After any length of deliberations & discussions bad remains big BAD. No one can say Corruption is good. This is universal truth. Wounder then, why the people in seats of highest powers in the world shy away to act by saying in one voice that we all shall stop Corruption anywhere and everywhere like the famous mission against "Weapons of Mass Destruction". We the global common-citizens ashamed of those who cannot push such a good cause and drive spontaneous aggression? If they do will get blessing from supreme powers i.e. almighty, the God. Those who do not believe in God there future generations will certainly bless forever making their names immortal for CENTURIES!

Submitted by terence on
nope it cant stop it, it will cushion it,corruption wil become more easy,why people who are bringing this idea,they already have a motive,the only solution is to create jobs for youth especially in less developed countries like nigeria.graduate intelligent youth can be employed in international agencies because they are stronger effective and efficient when ever they get a job.they wont want to jeopardise their work. A corrupt man will always be corrupt.

Submitted by Anonymous on
Can anyone point me towards more articles or debate on the topic of public financial disclosure? Specifically pros and cons or possible bad effects of disclosing Thanks!

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