5 Steps to Curtail Corruption in Pakistan

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Pakistan Blog

By: Pakistan Representative, Accountability Lab, Fayyaz Yaseen and Executive Director, Accountability Lab, Blair Glencorse.

This blog post was originally published by the World Economic Forum then Accountability Lab. Posted on CCTrends with permission.

“What kind of Pakistan do we want for our children?”, a civil society activist asked recently. “It has to be an inclusive state which is fair, honest and open to everyone.” The promise of this future lies in an entire generation standing-up for accountability and holding those in power responsible for their actions. This is not easy, of course, but it is essential- and it can be done in Pakistan as it can in other countries in South Asia and beyond.

At the Accountability Lab we’re learning a lot about how to do it – here are some ideas.

First, young people must lead change. The median age in Pakistan is now 22 years old, with 63% of the population under the age of 25.

  Read More...

How Do We Support Corporate Compliance in a Democratizing Global Marketplace?

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Writing on Medium, CIPE’s acting Executive Director Andrew Wilson asks: with technological change and trade deals making it easier than ever to enter the global marketplace, how can we ensure robust compliance with anti-corruption, labor, environmental, and corporate governance standards?

Read the story on Medium and follow CIPE for more stories like this one.  Read More...

Q&A with Paul Heywood: Anti-Corruption Evidence Research Programme

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Paul Heywood (photo credit: Nottingham Ambassador Programme)

As the world’s attention turns this month towards U.K. Prime Minister David Cameron’s Anti-Corruption Summit in London, the British government has launched an ambitious project to understand what works and doesn’t work when it comes to reducing corruption in developing countries. The multi-year, $5.2 million effort is part of an Anti-Corruption Evidence partnership between the British Academy and the U.K. government’s Department for International Development (DFID). It is led by Paul Heywood, a professor of European politics at the University of Nottingham. Heywood is the author of 18 books, a member of the board of trustees of Transparency International and an anti-corruption practitioner with experience in Europe, Hong Kong and China. He spoke recently with Frank Brown, CIPE’s Anti-Corruption/Value Chain team leader.

What is the main aim of the Anti-Corruption Evidence Research Programme and what makes it unique?

The program focuses on evidence gaps in understanding what actually works to reduce corruption in developing countries.   Read More...

Boosting Integrity in Global Trade

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2016 OECD Integrity Forum

Mutually beneficial exchange of goods and services is at the heart of David Ricardo’s comparative advantage argument and Adam Smith’s The Wealth of Nations. Over the centuries, such exchange through commerce has connected countries around the globe through a web of economic links and lifted millions out of poverty. In the modern era, international agreements under the World Trade Organization (WTO) have done much to lower tariffs and increase trade. However, in many countries, non-tariff barriers continue to impede growth and development. Lack of integrity in border control and customs administration is one such key barrier.

As estimated by the World Customs Organization (WCO), the loss of revenue among its 180 member countries caused by customs-related corruption is at least USD 2 billion in customs revenue each year. India and Russia alone are losing USD 334 million and USD 223 million, respectively. Beyond monetary losses, lack of integrity in customs also presents big risks for global value chains and security concerns when it comes to criminal activity and illicit trade.  Read More...

Rule of Law Makes Good Business

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photo credit: barbwire.com

Four billion people, more than half of the Earth’s population, live outside of the rule of law according to a 2008 report by the United Nations Development Program.  Lack of rule of law is connected to human rights abuse, crippled democracies, and wasted national resources, a nexus that activists, NGOs and governments call attention to every day, often achieving significant change.

But the voice of the business community, one of the most powerful advocates for improving the rule of law in emerging markets, often goes unheard, left out of traditional coalitions for reform despite natural synergies on a range of issues. One of the most obvious is corruption. Corruption not only corrodes the institutions key to the functioning of a democratic state but it also perpetuates inefficient systems for conducting business and trade. It impedes starting a business, purchasing property, settling disputes, and managing risk. It spooks potential foreign investors and business partners.  Read More...

Ukraine Needs to Privatize its State-Owned Companies — But Rushing It Would Repeat the Mistakes of the Past

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Storied aviation company Antonov, makers of the world's largest cargo plane, is in no position to be privatized.

Storied aviation company Antonov, makers of the world’s largest cargo plane, is in no position to be privatized.

By Eric Hontz

The stakes for reforming Ukraine’s state-owned companies are high: these companies are the lifeblood of a corrupt, sclerotic crony capitalist system that scares away potential investors, drives off international donors, and robs the Ukrainian government of legitimacy. But  privatizing them as quickly as possible is not the solution.

Even after mass privatization in Ukraine in the 1990s, the government still owns a large portfolio of companies in a variety of sectors – from heavy industry to banking — that employ over 900,000 employees, far more than any private firm.  Reforming these state-owned enterprises (SOEs) has been a slow process and remains incomplete due to weak corporate governance, unmotivated management, and a near-total lack of transparency. None of these problems will be solved by simply speeding up the process.

The demand for rapid privatization is a familiar tune. Western “expert” advice in the early 1990s led to a huge transfer of wealth from the former Soviet Union to a handful of connected insiders, particularly in Russia: first through voucher privatization and later through the disastrously corrupt loans-for-shares schemes in the run-up to Russia’s 1996 election.

To get an idea of the scale involved, a 1993 paper by several Western economists who worked directly on the voucher privatization program estimated that most of the Russian Federation’s civilian industrial base – nearly every plant, factory, and mine in the country – was effectively sold off to insiders for between $5 and $10 billion, less than it would have cost to buy a single mid-sized Fortune 500 company (and roughly equal to the market capitalization of Whole Foods today). Still, at the time they regarded this program as a great success.

Unfortunately, the corrupt and predatory “oligarch” elite, created practically overnight, proved to be more interested in asset-stripping than in transforming their new firms into firms that could compete on world markets. What followed was the largest peacetime economic collapse of any country in recorded history. The sheer volume of banditry surrounding state assets during the 1990s led many average citizens in post-Soviet countries to believe that lower standards of living and a complete lack of justice were a natural part of living under democracy. Read more…

How Kenya’s Private Sector is Addressing the “Supply Side” of Corruption

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Photo Credit: Citizen Digital

A recent report by Kenya’s Ethics and Anti-Corruption Commission (EACC) paints a rather grim picture of the extent of corruption in Kenya. In the top 10 counties by average bribe size, bribes range from KSH 80,000 (about $800 US) to about KSH 6,000 ($60 US) — in a country where the average monthly wage is just $76. Situations where bribes are most commonly solicited include obtaining basic services such as medical attention or a national identity card. Not surprisingly, Transparency International puts Kenya at 139th out of 168 countries in its latest corruption ranking.

Even a cursory review of Kenyan daily news coverage shows that corruption at all levels (from county to national) and in all its forms (from bribes to graft) is a major issue of concern for the country. Many commentators express frustration at the extent of the problem and the dearth of constructive solutions.  Read More...

You’re the new compliance chief. Now what?

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Screen+Shot+2016-03-18+at+9.45.48+AMThis blog first appeared in The FCPA Blog on March 18, 2016. It is posted here with permission.

By Worth MacMurray

Heads up: The six-month anniversary in your new position will arrive in a flash.

If you were hired as part of your organization’s response to a serious corruption allegation, you may still be in fire-fighting mode at this point, but starting to emerge for air.

If you were hired to design and implement your organization’s first compliance program, and basically to create your own role, you may be starting to encounter some obstacles.

Regardless of the circumstances of your hiring, you’ll arrive at the six-month point having likely accomplished more and laid better groundwork for the future if you ponder the following — both before you assume office and during your first few weeks on the job.

1. Manage your own expectations. The CCO role can be engaging and satisfying, particularly if one enjoys applying a variety of skills to challenging situations and issues.  Read More...

Leave it to the Ladies: Addressing Corruption Head-on to Attract Foreign Investment in Africa

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Photo Credit: U.S. Department of State

Despite the thick Lagos air and long journey 60 women entered the The Moorhouse hotel on a recent Saturday morning, exchanging excited greetings and fresh ideas. Women business leaders adorned in brightly colored fabric and empowered with strong ambitions went around the room introducing themselves and their businesses. It was the inaugural meeting of the Lagos chapter of the African Women’s Entrepreneurship Program (AWEP), launched by the U.S. Department of State in July 2010 to assist women entrepreneurs across sub-Saharan Africa. The program supports African women entrepreneurs to promote business growth, increase trade both regionally and to U.S. markets, create better business environments, and empower African women entrepreneurs to become voices of change in their communities. Although AWEP in Nigeria initially started as a group of women’s businesses in agriculture, the members now represent a variety of sectors including fashion, textiles, professional services, cosmetics, and home decor.  Since AWEP’s inception, chapters such as the Lagos chapter have started all over Africa bringing together 1,600 women entrepreneurs and 33 business associations across the continent creating over 17,000 jobs. Read more…

Countering Procurement Corruption with Integrity Pacts: The Indian Experience

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Photo Credit: Partnership for Transparency Fund

This blog appeared originally on March 4, 2016 on The Global Anti-Corruption Blog. It is re-posted here with permission.

by Nayana RenuKumar

Corruption in government procurement is a massive problem worldwide, especially in developing countries. In an ideal world, measures to combat procurement corruption would include structural changes that would open up monopolies, break cartels, and enact rational, uniform, and effective procurement laws. Sadly, the potential effectiveness of these measures is matched only by the near impossibility of their implementation any time soon. We should continue to push for comprehensive structural solutions to the procurement mess, of course. But in the meantime, are there other measures that can be implemented in countries struggling with widespread procurement corruption, which can at least help alleviate the problem?

One possible solution, heavily promoted by Transparency International (TI), is the use of so-called “Integrity Pacts” (IPs). An integrity pact is a voluntary agreement between a government agency and the bidders entering into a procurement contract, where both sides agree to refrain from corrupt practices.  Read More...