PA (00) III 1 E rev. 1 Original: English

REPORT

FOR THE GENERAL COMMITTEE ON DEMOCRACY, HUMAN RIGHTS AND HUMANITARIAN QUESTIONS

"GOOD GOVERNANCE: REGIONAL CO-OPERATION,

STRENGTHENING DEMOCRATIC INSTITUTIONS, PROMOTING TRANSPARENCY, ENFORCING THE RULE

OF LAW AND COMBATING CORRUPTION"

RAPPORTEUR NINO BURJANADZE

GEORGIA

BUCHAREST, 6 - 10 JULY 2000

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REPORT BY NINO BURJANADZE MP (GEORGIA), RAPPORTEUR OF THE THIRD GENERAL COMMITTEE

‘Good Governance: Regional Co-operation, Strengthening Democratic Institutions, Promoting Transparency, Enforcing the Rule of Law and Combating Corruption’

Introduction

Good Governance is a contested term. Although many of the concepts or elements included in the definition of Good Governance have long been present in democratic parlance, there is no absolute consensus on a precise and comprehensive definition of the term. In general, international institutions or organizations define Good Governance according to their own specific interests and particular areas of focus.

Broadly defined, Good Governance requires the good conduct of political, economic and administrative authorities within a country. Governance is defined not only in relation to the state, but also encompasses the private sector and civil society. Good Governance requires the state to uphold democracy, the rule of law and respect for human rights, and entails the establishment of an efficient and accountable administration. In tandem, mechanisms, processes and institutions must be established through which citizens and groups can articulate their interests, mediate differences and exercise rights and obligations.

All these aspects of Good Governance are mutually interconnected. This report approaches the issue of Good Governance from this perspective. The ‘Human Dimension’ operates from the premise that all major issues and problems confronting society are strong interrelated and interdependent. Thus, ecological issues are considered to be political matters which, in turn, cannot be divorced from economic, ideological, cultural and linguistic considerations.

Recognizing this interdependence, this report will consider the impact that corruption and organized crime have upon democratic consolidation and argue that tackling corruption and organized crime constitutes a fundamental step in promoting Good Governance. Although corruption and organized crime are more often associated with the economic dimension, their causes and effects have devastating consequences for democracy and, thus, the human dimension in general.

The report will elaborate the immense danger that corruption and organized crime pose to democracy and the rule of law, both in established democratic systems and in those countries undergoing transitions to democracy. Particular attention will be focused on the ways in which Parliamentarians and the OSCE Parliamentary Assembly, in particular, can contribute towards elaborating effective strategies to combat corruption and organized crime.

Human Dimension

The ‘Human Dimension’ of OSCE work refers to the commitments made by participating States to ensure full respect for human rights and fundamental freedoms, to abide by the rule of law, to promote the principles of democracy, to build, strengthen and protect democratic institutions, and to promote tolerance throughout the OSCE area.

Like other OSCE commitments, those in the human dimension have their roots in the Helsinki Final Act which states that the participating States will “respect human rights and

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fundamental freedoms, including freedom of thought, conscience, religion or belief, for all, without distinction as to race, sex, language or religion.” The inclusion of these commitments was one of the major achievements of the Helsinki process, according human rights the same importance as other fundamental tenets of international relations such as sovereign equality and the territorial integrity of states.

By the early 1990s the CSCE had an extensive range of human dimension commitments and a well-developed set of mechanisms for encouraging and reviewing their implementation. One aspect of this process was the establishment of several institutions designed to assist and monitor the implementation of human dimension commitments. Since 1990, the OSCE has developed institutions and mechanisms to promote respect for these commitments, such as the Office for Democratic Institutions and Human Rights, the High Commissioner on National Minorities, the Representative on Freedom of the Media and the Field Missions.

Corruption

Corruption is the misuse of public power for private gain. Corruption has obvious economic repercussions, distorting market competition and hindering economic development. This, in turn, has a detrimental impact on fairness and social justice. Corruption’s wider effects permeate the entire democratic system, undermining good governance, the rule of law and human rights, and thus endangering the stability of democratic institutions and the moral foundations of the state.

In this report, we will focus on the problem of corruption among officials in the public sector: politicians or civil servants who improperly and unlawfully enrich themselves, or those close to them, by misusing the public power entrusted to them. Although we will focus on the abuse of public office and the reform of public institutions, it is acknowledged that corruption depends not just on the organization of government but also on the organization and power of private actors. Moreover, corruption can only be combated if societal attitudes, as well as public institutions, are altered. Ultimately, each of these processes are linked: societal attitudes, such as allegiance to personal loyalties over objective rules, tend to be most prevalent in societies in which the legitimacy of government is low, and a political party or ruling elite dominates over political and economic processes.

Corruption is a universal problem but the degree to which it affects different societies varies. Countries with low levels of corruption tend to be democracies, but democracy is too general a term to capture the full range of government forms that fall under the category. However, all democracies should promote open and transparent government whose activities are checked by other public institutions and by the exercise of free speech and civil liberties. Non-democratic states are more susceptible to corrupt practices precisely because government is organized with few checks and balances on its power. Corruption will flourish where either the government or the private sector has monopoly power in dealing with the other.

In the Newly Independent States, corruption has become a major threat both to democracy and to stability. The fact that cases of corruption are quite frequent and that those involved in such practices are not being prosecuted is a serious destabilizing factor. In transition countries often the most serious penalty corrupt officials have to face is the loss of their public posts through “forced” resignation. In such societies, the problem of double morality arises, and this has an immediate effect on the way in which the public perceives corruption. This perception moves further apart from the legal definition, and thus the probable consequence is that corruption will generally become accepted by society. Therefore, in order to gain efficiency in

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the fight against corruption, the “immunity” that public officials enjoy when they are involved in corruption should be eradicated by producing legislation when necessary and by properly implementing existing legislation.

However, even within democratic systems, wide scope for corruption exists. The distinctive incentives for corruption in democracies depend on the organization of electoral and legislative processes. This report will recommend that in order to reduce opportunities for corruption within the system and to exposure corrupt practices when they occur, high standards of public service ethics must be fostered through institutional and legal reforms. A fundamental means of combating corruption and ensuring good governance is through the durable separation of powers between the executive, legislative and judicial branches of government. Effective checks and balances between institutions must be built into the democratic system. Simultaneously, reform within each administrative and governmental level must also be encouraged.

Organized Crime

Corruption often has links to organized crime, though the two practices do not necessarily depend on one another. Taken separately, organized crime and corruption already constitute major threats to democracy and rule of law. When combined, they have a devastating effect on fundamental democratic values. Organized crime groups engage in criminal activity in the pursuit of profit and power. A common characteristic of these criminal groups is a structure which mimics that of a regular business, though the scope of their criminal activities is not uniform, with some groups specializing in a particular activity and others engaging in a broader range of criminal activities. Organized crime networks require a significant degree of co-operation, organization, and specialization, and depend on the practice of corruption and violence. Corrupt public officials are used to facilitate the criminal activities of these groups; violence can be used to intimidate or eliminate those rivals or authorities that are viewed as impediments. In corrupt systems organized crime groups operate without fear of prosecution by paying off the police and politicians or including them directly in their business. Those involved seek not only immunity from prosecution but also an assurance of monopoly power within the illegal market which they have helped to create. The considerable financial resources of criminal organizations allow them to use corruption as means to gain access to information, to minimize their risks, to launder their proceeds, to infiltrate political and economic circles; in sum to gain influence.

The establishment of the European single market and the abolition of borders control coupled with the post-communism process of greater integration between Western and Eastern Europe, have contributed to a rapid increase in transnational criminal activities. The task of controlling organized crime is thus becoming increasingly problematic. What had been a domestic, local or national problem has developed into a major regional and global problem, with far reaching consequences not only for individual states but also for the international community as a whole. The internationalization of organized crime, its frequent reliance on state-level corruption, and the incapability (or reluctance) of national governments to confront the problem by themselves, have led many international institutions to undertake anti-corruption initiatives in an attempt to fight the widespread problem.

Newly Independent States are highly affected by the internationalization of organized crime. Such criminal structures have established themselves rapidly and easily in areas in which democratic institutions are still very fragile. The problem becomes even bigger in those countries that are involved in intrastate conflicts. The difficulty of applying the rule of law

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and fighting corruption and organized crime increases if a state is not able to control its territory. In these circumstances, corrupt practices spread very quickly - fostered by the impunity provided by chaos - and the criminalization of society arises as a consequence. Some Separatist movements in order to achieve or preserve power require funds which they cannot receive legally. Therefore such movements are often financed and supported by groups of organized criminals, mainly specialized in drugs, arms trafficking and kidnapping.

Combating corruption involves and thus requires action from various actors. Therefore, regional co-operation is a crucial instrument to eradicate these phenomena, or at least to diminish their effects. Neighboring countries should co-operate by co-ordinating their efforts and by learning from similar experiences, achievements, mistakes and actions undertaken by their governments.

Money Laundering

An important consequence of corruption and organized crime is money laundering. Money laundering is the conversion of illegally obtained proceeds into apparently legal profits, during the course of which deliberate cover-up methods are used to prevent or impede the disclosure of the origin of the assets concerned. Money laundering occurs because criminal groups may find it too risky to invest their profits directly in the country in which they were illegally earned. Questions may arise concerning the money’s origin, and any criminal investigation could result in the funds being seized by the state. Thus, criminal groups seek to launder the funds abroad and then invest them at high rates of return either outside the country or as new, “clean” investments in the country of origin.

The laundering process involves three phases:

�� Placement of cash proceeds into the financial system through banks or other financial institutions, carried out either through a number of small transitions or through smuggling large amounts of cash out of a country and depositing it where the reporting requirements are less stringent.

�� Layering the origins of cash proceeds through numerous transactions, thereby obscuring the source of the funds and complicating the task of investigative auditors.

�� Integration of laundered money into the legal financial and economic system.

The globalization of financial markets has increased the volume of activities of organized criminal groups. Thus, the amount of money laundered has also increased since capital flows freely within those markets. It has become very difficult to control the path of illegitimately obtained money before it is transformed into “legal” funds. Not all illegal funds are re-invested but the majority are. Normally a small amount is invested in illegal activities to ensure the continuation of the illegal “business” concerned, but organized crime groups launder most money by investing it in legitimate activities such as construction, agriculture, services and so on.

Most laundering is achieved through complex international financial transfers to foreign banks, “tax havens” and offshore financial centers.1 An offshore financial center is a territory in which the conduct of international banking business in facilitated by favorable and/or flexibly administered tax, exchange control and banking laws, bank secrecy, good

1 Already in 1991 the global business estimated in both Tax heavens and offshore financial centres was estimated at over one trillion US dollars.

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communications and political stability, and in which the volume of banking business may bear little relation to the size and needs of the domestic market. The large capital market of offshore finance has undermined the global capacity to control financial flows, limited onshore sovereignty over the taxation of companies and individuals, and has facilitated money laundering and other illicit activities. Since bank secrecy and weak regulations favor the growth of illegal activities and make counter-operations against money laundering more difficult, offshore financial centers’ authorities are under international pressure to take action in order to better regulate their financial systems.

Offshore financial centers become havens for illegitimate capital because their company registers and banking codes are subject to secrecy laws. In many cases financial centers do not comply with agreed international standards on supervision, transparency and assistance in investigations. If these centers were excluded from the international banking system, they would be far less profitable businesses.

Criminal organizations also seek to exploit financial services in countries where the banking legislation is not sufficiently developed and lacks adequate restrictions. Therefore, countries in transition in Central and Eastern Europe are particularly at risk from these corrupt activities. These states often lack anti-money laundering legislation, an adequate regulatory framework on banking and sufficient enforcement mechanisms. To combat corruption and organized crime and to ensure the working of democracy and the rule of law, it is essential to co-ordinate joint international action.

OSCE Initiatives

The OSCE has been directing its efforts towards fighting corruption and organized crime mainly as an issue relating to the economic dimension. However, the effects of both corruption and organized crime on the human dimension have been recognized, especially as they impact upon Good Governance. The challenge now is to raise the profile of corruption and organized crime within the human dimension, transforming it into an issue of principal priority. As corruption cannot be isolated from issues of democracy, good governance and the rule of law, its relevance to the human dimension must be underlined.

Corruption undoubtedly is an obstacle to economic development, but it is also an obstacle to democracy in itself, not only because corruption widens social inequality in underdeveloped countries, but also because the rule of law is essential for guaranteeing human rights. We ought to take into consideration that rule of law is not only a key instrument in fighting corruption, but also that without rule of law there is no order and thus democracy cannot function. In the era of globalization these elements cannot be separated from each other, we have to consider all simultaneously. The Economic Forum, established within the framework of the CSO at the Prague Council Meeting of CSCE Ministers in January 1992, has addressed the issue of corruption as a major area of concern to the new democracies.2 Although the Forum has recognized that corruption should be approached from the perspective of Good Governance as it poses a danger to democracy and stability within the new democracies, the focus of meetings has been placed

2 The Forum was established to give political stimulus to dialogue on the transition to, and development of, free market economies (as an essential contribution to the building of democracy), to suggest practical efforts for the development of free market systems and economic co-operation, and to encourage activities already under way within organizations such as the Organization for Economic Co-operation and Development (OECD), the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the Council of Europe (CoE).

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mainly on the economic consequences of corruption and how it affects development, stability and security. The Third Committee should acknowledge the importance of economic development, but further emphasize the importance of rule of law, not only as a means of fighting corruption and thus achieving economic development, but as an essential prerequisite to guaranteeing effective and democratic Governance.

Other OSCE initiatives have begun to undertake this approach. In July 1998 the OSCE organized, in co-operation with the OECD, a conference on “National and International Approaches to improving Integrity and Transparency in Government.” The aim of this conference was to draw attention to the measures national governments, civil society and the private sector should take in order to achieve political stability and integrity, as well as economic growth. Corruption was pushed, once more, to the center of the debate as a threat to economic development and consequently the rule of law. Finally, in the Charter for European Security signed in Istanbul at the OSCE 1999 Summit, the OSCE recognized the danger that corruption poses not only to economic growth but also to democracy. It was stated that efforts should be increased, across all dimensions of the OSCE, to combat corruption and to promote the rule of law throughout all member states. It was recognized that corruption poses a great threat to the OSCE’s values by generating instability and threatening all aspects of the security, economic and human dimensions. It was recognized that efforts to combat corruption and the conditions that foster it must be placed within a framework for good governance. The Charter clearly supported the view that there is interdependence between the different OSCE dimensions.

Recommendations

We have argued that democratic institutions should be transparent, accountable and accessible, upholding impartiality and fairness according to the rule of law. Corruption strikes at the very heart of the democratic state, undermining the effectiveness, fairness and stability of public institutions. The resulting loss of public confidence in the integrity and reliability of democratic institutions undermines the very legitimacy of the democratic system. In order to reduce opportunities for corruption within the system and to exposure corrupt practices when they occur, high standards of public service ethics must be fostered through institutional and legal reforms.

This aim can be pursued in the following ways:

�� The durable separation of powers between the executive, legislative and judicial branches of government;

�� Reform within each administrative and governmental level;

�� A well-functioning civil society, and an independent media, in particular.

Post-Communist states differ from other states in transition in that they have been undergoing multiple and simultaneous transitions since the collapse of communism, along economic, legal, ideological and social lines. The scope of attempted change has meant that there has been a legislative lag in the past decade. This lack of adequate legal safeguards has created a system ripe for corruption and organized crime. The privatization process - which is ultimately administered by the state - has itself created new opportunities for corruption among state officials. By transferring state activities to the private realm, transparency is reduced, and the boundaries between the state and private sector are blurred. Despite obvious abuses of power among officials, western critics of corruption in the post-Communist

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countries should acknowledge both that the reform process has created unique legitimacy problems for states in transition, and that some western states themselves are setting a poor example by failing to deal with corruption problems of their own.

It is clear that instituting measures and reforms to combat corruption will simultaneously further the interests of democratic governance in general.

The Separation of Powers

Accountability and transparency in public life are effective deterrents to corruption. Given the powerful position of the executive branch of government, it is essential that its actions are accountable and open to public scrutiny. Encouraging participation and transparency in government not only deters abuse of public office, but also contributes to the formulation of better public policy. Parliament, the judiciary, civil society and the public at large must be equipped with the necessary independence, information and powers to scrutinize all forms of public administration. Corruption flourishes where these regulatory ‘watchdog’ institutions are weak, and where they, too, are infected with corrupt practices.

Parliament In a representative democracy, parliament is the institutional link between the citizens and their government. Good governance requires executive power to be checked by the legislature, ensuring transparency and consensus in government. Given that corruption is often associated with an over-powerful executive branch, Parliament has a particularly important role to play in combating corruption. Parliamentarians must act to promote and uphold high standards of conduct within all state institutions, including within Parliament itself.

Parliamentarians have recourse to three main strategies in the fight against corruption:

�� Anti-corruption legislation, covering officials in national, regional and local government, members of the judiciary, and companies;

�� Parliamentary Rules of Procedure that establish effective monitoring and hearing systems and set out and govern the proper conduct of parliamentarians;

�� Party rules against corruption, covering, in particular, party financing and electioneering.

The importance of Parliament as a legislative guard against corruption cannot be underestimated. Although it is crucial to establish effective judicial and punitive measures to expose and punish those engaged in corruption, Parliament has a unique legislative role to play in shaping an overall system of public administration that is more likely to withstand corruption. In other words, a system should be designed in which companies, officials, and individuals are less likely to find opportunities and incentives to engage in corruption. Therefore, the role of Parliaments as bodies that put forward the necessary legislation to fight corruption is crucial, but so too is the role Parliaments have to play in assuring that the judicial base of a country has no flaws, and that its laws cannot be broken. Indeed, legislation already exists in many countries, but fails to make an impact as it is improperly applied.

In theory, the separation of powers is defined in every democratic constitution, but in practice, in many countries, mainly among the Newly Independent States, the rights of legislative assemblies are not fully developed, or are not fully respected. This is an issue that needs to be

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addressed and corrected if control of the executive is to be effective, and if democracy is to function properly.

Political Party Financing Reform Parliaments also have a unique responsibility to ensure the highest possible conduct of political parties and their parliamentary members. In a democratic system competitive elections help to limit corruption because opposition candidates have an incentive to expose corrupt incumbents. However the need to finance political campaigns introduces new incentives to favor special interests. ‘Structural corruption’ in party campaigning and financing can involve systematic violations of existing legal rules or the introduction of rules and practices that contradict major constitutional principles, such as equality of opportunity, transparency of government activities, lack of favoritism, etc.

There are many techniques which can be applied in order to discourage and expose corruption in party financing. One obvious solution is the removal of provisions which allow for the secret funding of political parties, another would be the introduction of legislation which would require political parties to declare donations. This ensures transparency and allows monitoring bodies and the public to scrutinize party finances. In a democracy, it is also desirable, in the interests of fairness and accountability, to use public funds to finance political parties. Admittedly, public spending on political party campaigning must remain within certain limits if it is to be accepted by the public. Public resources must be divided among political parties according to their degree of representation in Parliament and on the basis of other objectively defined criteria. These rules must be closely monitored in order to prevent the abuse of public funding at the state or governmental level.

Despite the attractions of public funding, however, few democratic systems leave political parties solely reliant on state funding. Therefore, in order to prevent corruption in private financing, either at the corporate or individual levels, party financing rules must be closely defined and scrutinized. The following measures can be taken in order to discourage corruption:

�� Impose a ban on contributions from public corporate bodies;

�� Restrict the level of contributions to a uniform amount;

�� Define a threshold above which parties must fully disclose their funding sources;

�� Require parties to publish their accounts.

Although the above-mentioned measures should be legally binding, the activities of political parties must be continually monitored as cover-ups can always occur, allowing illegal financing to appear legal and transparent. In attempting to combat corruption, realism is required: there is no such thing as a perfect law that cannot be circumvented, and transparency cannot be achieved by new legislation alone.

Transparency will be promoted by cross-checking information and using multidisciplinary methods to uncover corrupt procedures. It is impossible to combat the illegal financing of political parties purely by means of regulations on party funding. The whole political environment must be ‘cleaned up’, in order to expose the hidden areas where corruption and irresponsible attitudes towards public office breed.

Rule of Law

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Corruption undermines the basic right of individuals to have equal access to and consideration before the law. The legal system must provide disincentives to corruption throughout society. In many countries it is often economically rational to engage in corruption even if the corrupt individual is caught and found guilty. Existing legal ‘loop-holes’ must be removed, and legislation, such as conflict of interest laws, introduced or amended. However, unless the judiciary itself is politically independent, honest and reliable, anti-corruption legislation is rendered ineffective. Therefore, the importance of the role of the judiciary in the effective implementation of legislation concerning corruption and organized crime must be emphasized. It is crucial not only to pass legislation, but also to ensure its implementation for the further development of democratic systems. A corrupt or politically dependent judiciary facilitates high-level corruption, undermines reform and is incapable of serving as an adequate check on other branches of government.

The impact of a corrupt judiciary extends beyond the public sphere to purely private disputes, especially those involving contracts and property. Ordinary people may be systematically exploited because they lack access to an impartial system of dispute resolution. Where there is low public confidence in the institutions of justice, citizens will avoid bringing disputes before the courts, unless they are prepared to bribe their way through the system. In these circumstances, citizens may resort to other ways of solving their disputes, including seeking the protection of organized crime networks. A secure legal framework must therefore be created for private market activity, and the judicial process and law enforcement agencies must ensure that the rule of law is applied fairly across society.

In order to ensure fairness and efficiency in the judiciary and police force, adequate resources and attention must be directed to their material resourcing and training. Additional funding and retraining is particularly important in newly democratizing systems. Officials in these countries are called upon to deal with new and unknown types of dispute which arise in the context of the market economy. They must have the knowledge and resources to deal with the demands of the new system. Improved conditions will, in turn, reduce incentives for bribe- taking among members of the judiciary.

Civil Society Initiatives

Although corruption is often perceived to be remote from ordinary citizens, its effects have a direct and detrimental impact on individual civil liberties. Corruption perverts the political, legal and socio-economic development of the state, directly depriving citizens of access to the benefits of a well-functioning democracy. Corruption also affects citizens in their everyday transactions. Corruption can permeate the system from top to bottom; from the highest level government transactions to everyday dealings. When corruption becomes an inevitable part of everyday life, individuals are effectively powerless to change a system in which it has become almost acceptable to give and take bribes. Therefore, in order to combat corruption effectively, it is essential to extend institutional and legal reforms to the realm of civil society.

Newly democratizing states require popular consent and legitimacy in order to make a successful transition. However, many citizens are ambivalent about the process of democratization and liberal economic reform precisely because they associate these processes with a perceived increase in corruption and organized crime. The presence of corruption in government undermines citizens’ faith in the transition state, simultaneously jeopardizing the entire democratic process. It is all the more important to ensure the public understands and condemns corruption as public attitudes can overshadow legal definitions of corruption. If the public is apathetic or passively accepting of corruption, officials may act in accordance with

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the public view, and in so doing transgress the law. It is therefore crucial that the public be informed and enlightened as to corruptions damaging and pernicious effects.

Public Access to Information

If the public is to act as an effective check on the arbitrary powers of government, citizens must have access to relevant information about governmental activities. The basic requirement of public access must be accompanied by effective public channels through which individuals may lodge complaints against arbitrary or corrupt government practices.

Independent Anti-corruption Agencies

The work of anti-corruption agencies can serve not only to reduce corruption, but also to positively alter public perception of corruption within the state. These agencies can assume many roles: investigative; punitive; preventative, and educational. In order to remain effective, investigative agencies or commissions must remain independent from other public bodies. In particular, agencies must not be subject to undue executive influence as governments may misuse enquiry findings in order to tarnish political opponents. To avoid undue executive influence the agency may report directly to the legislature.

Public campaigns aimed at raising public awareness of corruption can have an educative function, and may help to alter the cultural ‘acceptability’ of corruption in everyday life. However, in order to prevent these campaigns breeding total public scepticism and loss of faith in public authority, the state must simultaneously be seen to implement actual measures to combat corruption. Similarly, the work of anti-corruption agencies will not be useful if it leaves in place the restrictive laws and cumbersome processes that produced incentives for bribery in the first place.

Media and Public Opinion

Where formal structures of accountability do not function adequately, a free press is an essential check on the activities of government, especially in developing democracies where other means of constraining politicians and bureaucrats are weak. However, nominal press freedom is not sufficient if media organizations are under the influence of political parties. It should also be recognized that members of the media face commercial pressures which can affect the independence and critical edge of their work. As media ownership is increasingly in the hands of economic groups with other commercial interests, there is greater scope for pressure to be placed on them to conform to particular editorial biases. The role of the media in transition countries is ambiguous. Independent media is an effective check on governments, but the independence of the media in many transition countries cannot be assured. Besides the above-mentioned problems, it is important to take into consideration that in some of these countries, part of the media are owned and controlled by financial oligarchs, some political forces and groups or even sometimes by organized crime groups. This affects the independence and objectivity of the media, undermining its political role as means of controlling those in power, one of the main principles of its existence. Despite the often formidable problems, media independence should be aimed at, as the media should assume an important investigative function, acting as a deterrent and powerful check against corruption in public life.

International and Regional Co-operation

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Since corruption and organized crime are cross-border phenomena which affect countries both in the East and the West, it is essential to promote international co-operation. Fostering an anti-corruption watch by human rights organizations could be a way to develop further international co-operation in this area. This kind of monitoring initiative could be charged with the task of following the mechanisms used by different countries to tackle corruption and organized crime, and it could use such information as educational examples for future anti-corruption initiatives. Further, the establishment of regional instruments to support and foster regional co-operation would be a useful mechanism since the problems that transition states are facing have similar characteristics.

Another mechanism which can be developed within the OSCE and other international institutions is the organization of more conferences, seminars and meetings dealing with corruption and organized crime, and approaching the problem sector by sector: independence of the legislature, the judiciary, the police, the media, the role of civil society and so on. A common approach to the issue of extradition, for example, would also facilitate better international cooperation. We should therefore call upon the Participating States to ratify existing conventions and further to reach common agreement on an extradition act to be signed by all OSCE member States.

OSCE PA Perspective

The 1998 Copenhagen Declaration of the Parliamentary Assembly recognized corruption and organized crime as issues of great concern to the OSCE participating states. It recognized that organized crime has become a threat to society and the legal standards which underpin the state. The Parliamentary Assembly called upon governments of the participating States to take the necessary legislative and law enforcement measures to fight organized crime, to continue their exchange of information on the subject, and to consider possible countermeasures which could be taken within the OSCE framework. Criminal Mafia-style organizations and corruption were recognized as two closely linked phenomena, jeopardizing business, public administration, the state’s general economic framework and market transparency. It was also noted that criminal organizations operating in the OSCE area are transnational and that their influence is growing due to the globalization of financial markets.

The Assembly called upon the Governments of OSCE participating States to combat international fraud, tax evasion, organized crime and all forms of illicit trafficking through judicial and police co-operation and an exchange of information with agencies such as INTERPOL. National Parliaments were urged to play a special part in harmonizing policies against corruption and organized crime by proposing legislative and administrative measures to fight these phenomena and by informing public debate of the threat posed by organized crime. All states were also encouraged to ratify the Council of Europe’s Convention on Money Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, of 8 November 1990. Finally, the Parliamentary Assembly recognized the importance of co-operation between OSCE institutions and other international and sub-regional organizations in the fight against transnational crime, further suggesting the creation of an OSCE judicial area.

The 1999 St. Petersburg Declaration continued to promote corruption and organized crime as an issue of grave concern. The Declaration recognized the fact that States with unstable democratic institutions are prone to vulnerable public structures, unreliable economic conditions and increased infiltration by organized crime, all of which can significantly discourage investment while undermining the general business climate. Therefore the PA urged all OSCE participating States to intensify efforts to resolutely combat corruption and

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organized crime, to fully implement respective international agreements, to co-operate efficiently among themselves and with the respective international organizations and to support, where necessary, the establishment of high-level inter-agency corruption fighting mechanisms.

During the Second Parliamentary Conference on “Sub-regional Economic Co-operation Processes in Europe Faced with New Challenges” held in Nantes on 13-15 October 1999, corruption and organized crime were again debated. The conference reiterated the threat that corruption and organized crime pose to democracy and the stability of states, and underlined the need to intensify efforts to combat them. The importance of co-operating with other international organizations and NGOs was stressed.

Despite the value of such OSCE Parliamentary Assembly efforts, once more, corruption and organized crime are being approached solely from the perspective of the Economic Dimension. We reiterate that the Parliamentary Assembly should work to highlight the fact that organized crime and corruption are not isolated problems, but that they affect every aspect of democratic society. The problems of corruption and organized crime must be highlighted as issues of priority for the Human Dimension, as they directly distort democracy and the rule of law. Parliamentarians must communicate these implications to their electorates. The Assembly should emphasize that its goal is not to undertake work that is already being carried out by other international organizations or by other institutions within the OSCE family. Instead, Parliamentarians within the PA should seek to co-operate and exchange ideas in order to achieve more efficient and lasting solutions.

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APENDIX 1

Initiatives undertaken to fight corruption and organized crime

Council of Europe (CoE)

�� Criminal Law Convention on Corruption of the Council of Europe.

�� The Draft Model Code of Conduct for Public Officials.

�� Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (8 November 1990).

European Union

�� Convention on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union (Council of European Union Act of 26 May 1997).

�� Council Resolution of 21 December 1998 on the Prevention of Organized Crime with Reference to the Establishment of a Comprehensive Strategy for Combating it.

�� Joint Action of 3 December 1998 on Money Laundering, the Identification, Tracing, Freezing, Seizing and Confiscation of Instrumentalities and the Proceeds from Crime.

�� Joint Action of 22 December 1998 on Corruption in the Private Sector.

Financial Task Force on Money Laundering

�� The Forty Recommendations of the Financial Task Force on Money Laundering.

Organization of American States (OAS)

�� Interamerican Convention Against Corruption of the Organization of American States.

�� Convention Against Corruption.

�� Resolutions of the General Assembly of the Organization of American States on Corruption (1992-1999).

�� Model legislation on transnational bribery developed by the Organization of American States.

Organization for Economic Co-operation & Development (OECD)

�� Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Cooperation and Development.

�� 1996 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials.

�� 1997 Revised Recommendation on Combating Bribery in International Business Transactions.

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�� 1998 Recommendation on Improving Ethical Conduct in the Public Service (28 April 1998).

United Nations

�� United Nations General Assembly Resolution A/RES/51/59 “Action Against Corruption” and “International Code of Conduct for Public Officials”, 12 December 1996.

�� United Nations General Assembly Resolution A/RES/51/191 “Declaration Against Corruption and Bribery in International Commercial Transactions”, 16 December 1996.

�� United Nations General Assembly Resolution A/RES/53/176 “Action Against Corruption and Bribery in International Commercial Transactions, 15 December 1998.