cpp anti-corruption final
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Comparative Public Policy
ANTI-CORRUPTION STRATEGIESAT THE NATIONAL AND LOCAL LEVEL
10th January 2012
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I. Defining Corruption
II. Measuring CorruptionIII. Tackling Corruption: Case Studies
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I. DEFINING CORRUPTION
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HOW CAN CORRUPTIONBE DEFINED?
Transparency International: Corruption is the abuseof entrusted power for private gain.
I. DEFINING CORRUPTION
World Bank: corruption is the abuse of public office
for private benefit.
Asian Development Bank: the abuse of public or
private office for personal gain. Corruption involves
behaviour on the part of officials in the public and
private sectors, in which they improperly andunlawfully enrich themselves and/or those close to
them, or induce others to do so, by misusing the
position in which they are placed.
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LEVELSOF CORRUPTION
Petty corruption
Low level corruption
Junior officials
Grand corruption
High level corruption
Substantial amounts of money
I. DEFINING CORRUPTION
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TYPESOF CORRUPTION
Administrative corruption
Alters the implementation of policies
Political corruption
Influences the formulation of laws,
Public corruption Misuse of a public office for personal gain
I. DEFINING CORRUPTION
Private corruption Between individuals in the private sector
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FORMSOF CORRUPTION
Bribery
Extortion
Fraud Clientelism
Embezzlement
Favouritism Nepotism
Conflict of Interest as corruption
I. DEFINING CORRUPTION
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II. MEASURING CORRUPTION
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II.1 CORRUPTION PERCEPTIONINDEX
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The CPI measures the degree to which corruption(frequency and/or size of bribes) in public sector(corruption which involves public officials, civilservants or politicians)is perceived to exist in 183countries/territories around the world.
CORRUPTION PERCEPTION INDEX
II.1 CPI
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STEP I Collect 17 data sources from 13 institutions
STEP II Rescale the data collected by the Matching Percentile
Method.Countries score are between 0 and 10
STEP III Increase the standardized deviation among all countries by the
Beta-Transformation Method
STEP IV Determine CPI score by averaging all standardized values of
every source for each country
BRIEF METHODOLOGIESTO CALCULATE CPI
II.1 CPI
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STRENGTHS & SHORTCOMINGS
The Perception-based measure does not imply actual corruption.
CPI cannot be used for comparison of one country over an extended period.
The CPI look s at the aggregate picture only. There could still be big loopholes oncorruption in different forms, dimensions and sectors.
Aggregating and averaging several disparate ratings, which measure differentaspects of corruption, can exacerbate biases and inaccuracy.
Diversifies the risk of concentration on a few specific points of view.
CPI is favorable for cross-country comparison, due to its simplicity and overalloutlook.
II.1 CPI
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RESULTS 2011 WORLDWIDE MAP
New Zealand (9.5), Denmark (9.4) and Finland (9.4) are perceived countries with lowest
corruption level.
In contrast Afghanistan (1.5), Myanmar, (1.5) North Korea (1.0) and Somalia (1.0) are
countries with highest corruption perception.
II.1 CPI
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II.2 GLOBAL CORRUPTIONBAROMETER
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OVERALL VIEW
Annual publication since 2003 Public opinion poll conducted for Transparency
International mostly by Gallup International
Intended to complement Corruption PerceptionIndex and the Bribe Payers Index
Assesses public perception and experience of
corruption and bribery in selected countries
worldwide
Gives a better idea of how corruption permeates
society and the extent to which support is
available for anti-corruption effortsII.2 GPB
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WHATIS BEING MEASURED?
Peoples opinion on most corrupted public
sectors
Governments anti-corruption efforts
Peoples experiences with bribery
Personal willingness to engage in the fightagainst corruption
II.2 GPB
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Measures citizens
perception of andexperience with briberyin different publicinstitutions
Measures experiencewith corruption
Bribery is only form of
corruption assessed Assesses perceptions of
corruption, which may notbe indicative of the actuallevel of corruption
Does not assess institutionalframework/quality
20II.2 GPB
STRENGTHSAND WEAKNESSES
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2010 REPORT: 91,781 PEOPLEIN 86 COUNTRIES
II.2 GPB
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II.3 WORLDWIDE GOVERNANCEINDICATORS (WGI)
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WORLDWIDE GOVERNANCE INDICATORS (WGI)*
Survey 200 countries since 1996
Voice and Accountability
Political Stability & Absence of Violence and Terrorism
Government Effectiveness Regulatory Quality
Rule of Law
Control of Corruption
The WGI is a valuable tool for assessing cross-country differences & changes in
country performance over time on key dimensions of governance.
If you cannot measure it, you cannot improve it. Lord Kelvin
II.3 WGI
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The WGI draw on four different types of source data:
Surveys of households and firms (9 data sources)
Commercial business information providers (4 data sources)
Non-governmental organizations (9 data sources)
Public sector organizations (8 data sources)
Perceptions matter
Agents base actions on perceptions, impressions & views.
Citizens unlikely to avail themselves of public services if they are ineffecient.
(voting, courts, police)
Enterprises base investment decisions on perceived view of the investment
climate & the government's performance.
Few alternatives to relying on perceptions data
Particularly for corruption, which almost by definition leaves no paper trail
that can be captured by purely objective measures.
II.3 WGI
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WGI
Process
Voice andaccountability
Political stabilityand absence of
violence
Capacity
Governmenteffectiveness
Regulatoryquality
Respect
Rule of law
Control ofcorruption
II.3 WGI
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Measurement
Type
Conceptual
Dimension of
(Anti-)
Corruption
Input (Rule-
based) vs.
Output
(Outcomes-
based)
Composite vs.
Original Data
Internal vs.
External
Corruption
Perception
Index
Perception on
extent of petty
corruption-bribes
Outcome based Composite Both. Uses 3rd
party sources in
aggregation of
index
Global
Corruption
Barometer
Perceptions;
Experience with
corruption;
Bribery
Outcome based Original Internal.
Designed by TI,
carried out by
polling
organizations
World
Governance
Indicators
Assesses voice &
accountability,
government
effectiveness,
regulatory quality, rule
of law, control of
corruption
Hybrid Composite External
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II.4 CORRUPTION AND SOVEREIGN
CREDIT RATING
The big picture where does
corruption bite economically?
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QUANTIFYING CORRUPTION
Different corruption measurement indices have apseudo effect on fighting corruption
Credit ratings on possibility of sovereign defaultshave an immediate or stronger effect
Credit ratings are based on prevalence ofcorruption in different countries
Strong correlation between CPI and Standards & Poor
ratings Credit ratings by all three major agencies take political
and economic stability into account
II.4 CORRUPTION AND SOVEREIGN CREDIT RATING
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CORRUPTIONAND ITS EFFECTSON
SOVEREIGN CREDIT RATINGS
Corruption shifts economic activity from the
formal to informal (non-taxable) sector
So, basically corruption is resource misallocation
Credit ratings are dependent on how a
government can pay back its debt through taxes
or on other economic indicators (GDP, fiscal
balance, oil supply) Direct, significant and negative correlation found
between corruption and credit ratings
II.4 CORRUPTION AND SOVEREIGN CREDIT RATING
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FINDINGS
Relation holds amongst all four types of
bonds/debts (short/long or local/foreign
currency)
One standard deviation decrease in corruption
translates into improved rating by a full
category
Simply put, for every US$ 1 Million, annualsavings of US$ 10,100
II.4 CORRUPTION AND SOVEREIGN CREDIT RATING
Source: http://belkcollegeofbusiness.uncc.edu/cdepken/P/intl_corruption9.pdf
http://belkcollegeofbusiness.uncc.edu/cdepken/P/intl_corruption9.pdfhttp://belkcollegeofbusiness.uncc.edu/cdepken/P/intl_corruption9.pdfhttp://belkcollegeofbusiness.uncc.edu/cdepken/P/intl_corruption9.pdfhttp://belkcollegeofbusiness.uncc.edu/cdepken/P/intl_corruption9.pdf -
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PECUNIARY BENEFITS FROM ANTI-CORRUPTION
Eg. 1 - Argentina in 2003 had an outstandingdebt of $127,687 M. Reducing corruption by
one standard deviation would have saved
Argentina $1,289 M annually, equivalent to1% of its 2003 GDP of $129,596 M.
Eg. 2 - Chile had an outstanding debt of
$35,727 M. Reducing corruption could havesaved it $361 M annually in interest.
II.4 CORRUPTION AND SOVEREIGN CREDIT RATING
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BUT DOES IT REALLY HELP US? CREDIT RATING
AGENCIES THEMSELVESARE CORRUPT
Dominated by three giants - S&Ps, Moodys and Fitch
Ratings are issuer-requested
Banks, investors require all bonds to be rated by theseprivate, independent rating agencies to assess the
quality of debt being sold
Agencies and issuers conspire and fix the rating of adebt
Any country looking to raise capital in internationalmarket will have to get their debt rated
Corruption from a supra-national to a national level
Ties with corruption from local and national level
II.4 CORRUPTION AND SOVEREIGN CREDIT RATINGSource: http://rru.worldbank.org/documents/CrisisResponse/Note8.pdf
http://rru.worldbank.org/documents/CrisisResponse/Note8.pdfhttp://rru.worldbank.org/documents/CrisisResponse/Note8.pdfhttp://rru.worldbank.org/documents/CrisisResponse/Note8.pdfhttp://rru.worldbank.org/documents/CrisisResponse/Note8.pdf -
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III. TACKLING CORRUPTION
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CORRUPTION: CHIMERA CHARACTERISTICS
multifaceted
multi-functional
multi-spatial phenomenon
chimeric:
composed ofparts that are ofdifferentoriginand
are seeminglyincompatible (and operating
differently in different contexts or spheres ofsociety)
http://www.biology-online.org/dictionary/Chimeric
III. TACKLING CORRUPTION
http://www.biology-online.org/dictionary/Partshttp://www.biology-online.org/dictionary/Originhttp://www.biology-online.org/dictionary/Originhttp://www.biology-online.org/dictionary/Seeminglyhttp://www.biology-online.org/dictionary/Incompatiblehttp://www.biology-online.org/dictionary/Incompatiblehttp://www.biology-online.org/dictionary/Incompatiblehttp://www.biology-online.org/dictionary/Seeminglyhttp://www.biology-online.org/dictionary/Originhttp://www.biology-online.org/dictionary/Originhttp://www.biology-online.org/dictionary/Parts -
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SPHERESOF SOCIETY
Public to public Diversion of resources
Appointments and transfers
Embezzlement and fraud inplanning and budgeting
Public to private Procurement collusion, fraud,
bribery
Construction fraud and bribery
Public to Citizen
Illegal connections Falsifying bills and meters
Source: Janelle Plummer
Public
Officials
Public
Actors
ConsumersPrivate
Corruption occurs between
Plummer, J. 2007. Making Anti-Corruption Approaches Work for the Poor: Issues for consideration in the development of pro-
poor anti-corruption strategies in water services and irrigation. Swedish Water House, SIWI and WIN. [online] Available atwww.swedishwaterhouse.se
III. TACKLING CORRUPTION
http://www.swedishwaterhouse.se/http://www.swedishwaterhouse.se/ -
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CAUTION
No one-size-fits-all strategyjust ideas and adaptations from WB and TI
Workable strategy is context dependent
Begin with WB schematic followed by TITemple
III. TACKLING CORRUPTION
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WORLD BANK STRATEGY
III. TACKLING CORRUPTION
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Jeremy Pope (ed), TI Sourcebook2000, p.35
TI NATIONAL INTEGRITY SYSTEMGREEK TEMPLE
III. TACKLING CORRUPTION
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Institutional pillar Corresponding core rules/practicesExecutive Separation of Powers
Conflict of interest rules
Legislature Separation of Powers
Independence
Fair electionsOversight: Parliamentary Integrity
Commissioner
Judiciary Independence
Good facilities to ensure effectiveperformance
Proper remuneration
III. TACKLING CORRUPTION
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Institutional pillar Corresponding core
rules/practicesPublic Accounts Committee (of
legislature)
Power to question senior
officials
Auditor General Independence/Autonomy
Adequate resources
Public Reporting
Public service Public service ethics
Codes of Ethics
Media Freedom of information
Freedom of speech
Competition vis vis
III. TACKLING CORRUPTION
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Institutional pillar Corresponding core
rules/practicesCivil society Freedom of speech
Ombudsman Records management
Public reporting
Raising public awarenessAnti-corruption/watchdog
agencies
Enforceable and enforced
laws (Justiciability)
Private sector Competition policy, including
public procurement rules
International community Effective mutual
legal/judicial assistance
III. TACKLING CORRUPTION
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UN Convention Against Corruption (2003)
Council of Europe Criminal Law Convention on Corruption (2002)
Asian Development Bank/OECD Anti-Corruption Initiative for Asia-
Pacific (2001)
OECD Convention Against Bribery of Foreign Public Officials in
International Business Transactions (1999)
Organisation of American States Inter-American Convention
Against Corruption (1997) US Foreign Corrupt Practices Act (1977)
African Union Convention on Preventing and Combating
Corruption (not yet in force)
INTERNATIONAL CONVENTIONS
III. TACKLING CORRUPTION
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WHAT DOES IT TAKE?
1. Generate political will and localownership
2. Resource and capacity-based
3. Measurable
4. Transparent, non-partisan and mindful
of relevant conflict of interest issues
III. TACKLING CORRUPTION
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POSSIBLE SOURCESOF CONFLICTOF INTEREST
www.issafrica.org
Conflicts ofinterest
Friendship/kinship ties
Private
FundingPoliticalParties
Transformatoryeconomic
policies (VAT)
Overlapbetween
party, state
and business
III. TACKLING CORRUPTION
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SAMPLE INVENTORYOF
ANTI-CORRUPTION MEASURES
1. Institutional Reforms:
Limiting Authority
Privatization
Liberalization
Competitive Procurement
Competition in Public
Service
2. Institutional Reforms:
Improving Accountability
Freedom of Information
Legislation
Financial Disclosure laws
Open Budget Process
Financial Management
Systems and Audit
offices
Inventory of Anti-
Corruption Measures
III. TACKLING CORRUPTION
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SAMPLE INVENTORYOF
ANTI-CORRUPTION MEASURES2. Institutional Reforms:
Improving Accountability
(cont.)
Inspector
General/Ombudsmen/Anti-Corruption Agency
Hot Lines and Whistle-
Blower Protection
Sanctions
Judicial Reform
Elections
3. Institutional Reforms:
Realigning Incentives
4. Societal Reforms: Changing
Attitudes and Mobilizing
Political Will
Public Relations
Campaigns
Investigative Journalism
Civic Advocacy
Organizations
Workshops
International Pressure
III. TACKLING CORRUPTION
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CASE STUDIES:
SUCCESSES & FAILURES INTACKLING CORRUPTION
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Hong Kong MexicoPolitical will for fighting
corruption: creation of the ICAC
and the succeeding support to it
Lack of political will: only limited
efforts and initiatives against
corruption since the year 2000
Multilevel strategy against
corruption
Localized efforts directed only to
some sectors of society
Adequate system of Checks and
Balances
The system of Checks and
Balances confronts a crisis
Proper and clear legislation on
corruption
Strong legal framework, lack of
enforcement, complex procedures
Active civil society and freedom of
speech
Weak but quickly growing civil
society
Specialized Anti-Corruption Body:Independent Commission Against
Corruption ICAC
Ministry of Public Administration
Federal Superior Auditor
IV. CASE STUDIES
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Source: 2009 ICAC Annual Report
IV. CASE STUDIES
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Evaluation Hong Kong MexicoTI Corruption PerceptionIndex 2011
12 100
Worldwide Governance
Indicators 2011 / World
Bank Control of
corruption (-2.5 the
lowest, 2.5 the highest)
1.94 -0.37
TI Global Corruption
Barometer 2010 / Table
1: In the past three
years, how has the levelof corruption in this
country changed?
Decreased: 32%
Stayed the same: 35%
Increased: 33%
Decreased: 7%
Stayed the same: 18%
Increased: 75%
IV. CASE STUDIES
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THANKYOUFORYOURATTENTION
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