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Corruption in fragile states: A panel discussion on the intersections of development, conflict and exploitation

Roxanne Bauer's picture

Just say NO to corruptionCorruption 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.”

McCarthy noted in his opening address that corruption takes advantage of conflict states by exploiting weak institutions or a lack of governance structures. This was later echoed by Devarajan who stated that not only does corruption establish itself in conflict states, but those states that allow corruption to flourish are also more likely to devolve into conflict and turmoil. Harden followed up by reminding us that it is the systemic nature of corruption that drives conflict because it distorts how power is shared.

While all agreed that corruption is inherently pernicious, there was some debate about what can or should be considered corrupt activity. Devarajan provided the traditional definition that corruption is “abuse of public office for private gain” as the basis for discussion. Thomas answered this with a call to include private sector activity as well, and she argued that corruption should be defined the “misuse of entrusted power for private gain”.

Nevertheless, both definitions present challenges for analyzing and acting strategically to combat corruption in fragile states. The first is that, in fragile states, holders of public offices (national and sub-national) are usually not universally recognized as legitimately “public”. Instead, officials are often perceived to be representatives of factional interests and are treated by large sections of the population as such. In these cases, the power of ‘public officials’ is not legitimate and may even seem predatory. Kauffman suggested that government capture by the military could be considered corruption because it is an action taken to assume power without the consent of the people. Furthermore, many ‘public officials’ do not maintain a clear distinction between what is public and what is private, which is typical in patrimonial systems,  further diluting the meaning of abuse or misuse for private gain.

For these reasons, tackling corruption cannot be disconnected from other tasks that are fundamental to good governance, such as fair elections, professionalizing political office, putting in measures to safeguard institutions from misconduct, and building trust between the state and its citizens. Kaufmann followed up by saying that space for civil society should be carved out so that bottom-up approaches can be pursued.

In tackling corruption, however, it should be noted that the term ‘corruption’ is inherently normative, and according to Thomas, international organizations may undermine the rule of law in labeling some government practices as corrupt. She argues that the international community needs to consider ‘what is possible?’ when demanding that governments take action to curb corruption. Devaranjan pushed back, contending that high standards for ethical behavior should not be compromised because programs that fail to take the integrity and security of public institutions into account may undermine efforts to promote stability. 

Harden responded to this by offering technology as way to open up closed systems. He believes that encouraging technological change can alter the institutional structures in which corruption operates to make it more visible and thus more vulnerable to accountability. He also argued that donors can choose where to spend their money and that it’s ethical to shift funding from one organization or department to another if corrupt activity is discovered. Thomas replied to this by saying that instead of de-funding crucial services where corruption occurs, donors should consider incentives structures. Instead of paying up-front for a project, donors could pay for services to be delivered after they are, in fact, delivered. For example, Devaranjan and Kaufmann suggested that states can employ direct distribution of resource revenues, as exemplified by “oil-to-cash”, to avoid the dreaded ‘resource curse’.

Despite these and other debates, the panel did agree that corruption is taxing for any government, but even more so for states also battling fragility or conflict.  While it's possible to realize discrete victories in the struggle against corruption, sustainability is difficult because people revert to their previous behaviors when attention shifts away. Continuing to educate people, to fight for equality, and ending impunity are all part of the anthem against corruption and will continue to be.
 

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Photograph by Lars Plougmann via Flickr

 

Comments

Submitted by Amir on

I have read with interest your article and based on my experience as an outsider leading WBG technical assistance operations to support the private sector development, I think that some actions should be also taken from the Bank’s side.

How would you rate your corruption management system when:
− An agent being a WBG procurement senior specialist is likely to be involved in a corruption case and is “covered”?
− The agent potentially involved in the corruption is the one doing the investigations and obviously harassed the person who reported the fraud, as he reported it after the non objection notice?
− Evidence shows it was a corruption cases liable to the provider and no action has been taken to avoid a similar case to happen again in the future?

Here are few suggestions to the attention of the WBG Team:

1. Take advantage of lesson learnt and external best practice. Clarify in your procurement directives if it is allowed to buy commodity goods above their market value even after a "WBG competitive procedure". Your directives have not evolved since concrete cases have been reported. While buying above market price is totally forbidden with the Millennium challenge corporation procurement procedures. Also firms in the private sector are not authorized to do that.
2. There is no incentive for whistle-blowers, it just the opposite. Corruptions systems involved a chain of people who can be also within your team. A whistle-blower finds himself in a situation of being alone versus 10+ people from different areas trying by all means to discredit him. Not giving fair assistance or protection to external people from the WBG that resisted against "corrupted minds" within your team just encourages corruption to remain.
3. Encourage rotation of duty station and apply consistent salary packages at least for your procurement and financial specialist. Especially your offices located in “fragile countries” and where you can have a huge salary gap (4 times or more) of the same/equivalent level colleagues locally based vs. the expats coming from DC. The resulting frustration of such inequity may lead to perverse side behaviour. A good procurement team can generate cost savings that may fund their total costs.
4. Implement e-procurement system to support effectively governments. The current procurement approaches promoted by the WBG consist in pushing procurement procedures, and the setting up organisations like Autorité de Regulation des Marchés Publics (ARMP), the Diretion Nationale de Controle des Marchés Publics, the Personne Responsable des Marchés Publics…. This should be completed with an e-procurement system in order to streamline processes and provide further transparencies.
5. Clearly clarify in detail the PIU Coordinator and the TTL role and responsibilities. Is a non-objection notice sufficient to waive a corruption case? The more specific you will be, the easiest it should be for those managing your funds to proceed effectively on the field.

Hope it will help.
My two cents.
Thanks you

Submitted by Amir on

I have read with interest your article and based on my experience as an outsider who led WBG technical assistance operations to support the private sector development, I think that some actions should be also taken from the Bank’s side.

How would you rate your corruption management system when:
− An agent being a WBG procurement senior specialist is likely to be involved in a corruption case has been “covered”?
− The agent potentially involved in the corruption is the one doing the investigations and obviously harassed the person who reported the fraud?
− Evidence shows the corruption case was liable to the provider and no action has been taken to avoid a similar case to happen again in the future?

Here are few suggestions to the attention of the WBG:

1. Take advantage of lesson learnt and external best practice. Clarify in your procurement directives if it is allowed to buy commodity goods above their market value even after a "WBG competitive procedure". Your directives have not evolved since concrete cases have been reported. While buying above market price is totally forbidden with the Millennium challenge corporation procurement procedures. Also firms in the private sector are not authorized to do that.
2. There is no incentive for whistle-blowers, it just the opposite. Corruptions systems involved a chain of people who can be also within your team. A whistle-blower finds himself in a situation of being alone versus 10+ people from different areas trying by all means to discredit him. Not giving fair assistance or protection to external people from the WBG that resisted against "corrupted minds" within your team just encourages corruption to remain.
3. Encourage rotation of duty station and apply consistent salary packages at least for your procurement and financial specialist. Especially your offices located in “fragile countries” and where you can have a huge salary gap (4 times or more) of the same/equivalent level colleagues locally based vs. the expats coming from DC. The resulting frustration of such inequity may lead to perverse side behaviour. A good procurement team can generate cost savings that may fund their total costs.
4. Implement e-procurement system to support effectively governments. The current procurement approaches promoted by the WBG consist in pushing procurement procedures, and the setting up organisations like Autorité de Regulation des Marchés Publics (ARMP), the Diretion Nationale de Controle des Marchés Publics, the Personne Responsable des Marchés Publics…. This should be completed with an e-procurement system in order to streamline processes and provide further transparencies.
5. Clearly clarify in detail the PIU Coordinator and the TTL role and responsibilities. Is a non-objection notice sufficient to waive a corruption case? The more specific you will be, the easiest it should be for those managing your funds to proceed effectively on the field.

My two cents
Thank you

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