The very word “scandal” has a negative connotation. The dictionary definition says scandals are “associated with a disgraceful action or circumstance, or an offense caused by fault or misdeed” – and therefore, by definition, scandals damage someone’s reputation. No one wants to be involved in a scandal.
But: What if something good could actually come out of a scandal? Could some scandals become the source of good news?
When it comes to the disclosure of financial and business interests by public officials, the eruption of a scandal evidently can produce positive results.
From the United States in the 1970s to the recent scandals involving high-profile public figures in France, along with countless other examples worldwide, many high-profile scandals provide the impetus for the establishment or reform of disclosure systems. Initially, scandals push the issue of public officials’ integrity to the forefront of public debate. Discussions get heated up by colorful articles in the media about public officials’ wealth, both legitimate and illegitimate.
But, fortunately, some countries manage to keep their focus on the most important aspects of public officials’ financial misdeeds, without becoming distracted by breathless media gossip about the size of their bank accounts or vacation homes. Some countries take the opportunity to realize that an effective disclosure system requires the real attention.
Public officials are in powerful positions, in which they can be open to the temptation to make particular choices. Transparency and accountability mechanisms, such as disclosure requirements, play a key role in promoting integrity.
An effective disclosure system can identify and manage conflicts of interests and detect unexplained variations of wealth, thus discouraging or preventing corruption. Officials’ fear of being caught plays a large role in combating corruption. The very existence of a sound disclosure system – with an independent authority that can check the information that has been disclosed, and with enough teeth to apply sanctions when wrongdoing is discovered – is in itself a strong disincentive for officials who are contemplating giving in to temptation.
Ensuring the public availability of the information in officials’ disclosure statements can raise the bar even higher. Making the information available to all is important not only for achieving greater accountability; it also adds an endless number of eyes that can doublecheck the declarations of public officials. Outside parties – notably the news media and civil society organizations (CSOs) – can help government agencies in their task to ensure the integrity and the validity of the data. It is not surprising that many corruption investigations start off as a result of a journalistic exposé.
Access to information, moreover, should do more than focus on the content of an official’s declarations. It can also raise the stakes for the government agency, because its results then become a matter of public scrutiny. Information on the agency’s work – such as the number of declarations verified, compliance rates and sanctions imposed – are mutually reinforcing and can promote greater effectiveness.
As discussed in a previous blog post, there is no more effective deterrent of wrongdoing than the increased likelihood of being caught. The deterrent effect will probably be stronger when there is the possibility that the public will actually know that a once-high-flying official has been publicly humiliated by his misdeeds.
Scandals aside, the topic of financial disclosure is increasingly getting attention, and debates are gaining momentum in the international arena. Just last year, for example, the G20 approved a set of principles on asset disclosure by public officials. The G20 High-Level Principles are now a key source of guidance for all countries, including those with effective systems and sufficient capacity in place. Yet there is still room for improvement and innovation.
The World Bank is playing a key role both in the international debate and in supporting countries’ reform initiatives. The Bank’s Financial Market Integrity (FMI) unit has been working on such reforms for more than seven years. The wealth of analytical and practical knowledge that FMI has developed is increasingly making the Bank into the “:go-to place” when countries need experts on this topic. Just within the last few months, FMI’s workload has significantly increased – a fact that translates into greater opportunity for supporting client countries and having a positive impact on the anti-corruption fight.
So, scandals can indeed lead to positive results. They can uncover public officials’ wrongdoing and corruption; they can pave the way to having better prevention and detection mechanisms; they can result in greater accountability and better access to information; and they can create demand for more effective disclosure systems. So, while corruption scandals may be unwelcome news, they can, in the long run, be the catalyst of future good tidings, if they are dealt with properly.
(Photo Credit: Caffeinatrix, Flickr Creative Commons)
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