A Letter to Stephen Harper and Lee Myung-Bak

July 29th, 2010

Transparency has been at the forefront of public debate since the beginning of the global crisis in October 2008. One of the indirect outcomes of the crisis has probably been the rise of the G20 as the forum where global governance was discussed, with a strong stance towards transparency in the first summits that dealt with the crisis.

General assessment of G20 performance in transparency-related matters is probably mixed. Whereas strong language is extremely welcome against corruption, enhanced regulation and increased disclosure lag behind with respect to financial markets or disbursement of public funds, not to mention domestic implementation in each of the 19 G20 countries, which is extremely uneven and difficult to monitor by civil society. The attached letter takes stock of progress made but still urges the G20 to take swift and comprehensive action in order to avoid repetition of crises and bring about a more transparent global economy.

The Rt. Hon. Stephen Harper

Prime Minister


H.E. Lee Myung-bak


Republic of Korea

16 July 2010

Your Excellencies,

We commend you for acknowledging in Pittsburgh and again in Toronto, the importance of strong anticorruption measures for the success of reforms towards a sound and sustainable financial system. As we have emphasized since the financial crisis began in 2008, implementation of commitments to transparency and accountability is critical to G20 success in resolving the economic crisis and restoring public trust.

Financial Sector Reform:

Improved financial regulation, including enhanced transparency and government oversight and stronger corporate governance, remains a key priority for a sustainable recovery. We therefore welcome the G20’s goal to “achieve the commitments to reform the financial sector made at the Washington, London and Pittsburgh Summits by the agreed or accelerated time frames.”  (Toronto Summit Declaration ¶16). It is crucial that the G20 take action as indicated in ¶¶ 15 and 18 – 22 of the Toronto Leaders Statement. In particular, we urge the G20 to:

  • Introduce coordinated measures to prevent conflicts of interest among credit rating agencies, auditing firms, financial firms;
  • Agree on a single, easily understood set of global accounting standards for asset valuation in financial services firms;
  • Establish comprehensive cross-border regulations that mandate stronger corporate governance in financial services firms, with particular reference to all aspects of risk management, greater accountability of boards of directors, and the disclosure of financial products offered by firms to their clients;
  • Ensure regular reporting by supervisory authorities on the condition of institutions that pose systemic risks because of their size or leverage; Ensure regular and comprehensive reporting to the public by the multilateral institutions with lead responsibilities for financial reform and regulation – the Financial Stability Board (FSB), the Basel Committee on Banking Supervision, the International Monetary Fund – on progress made by G20 countries on reforms as well as on further actions needed.

Working Group Mandates:

We welcome the G20 commitment to “establish a Working Group to make comprehensive recommendations for consideration by Leaders in Korea on how the G20 could continue to make practical and valuable contributions to international efforts to combat corruption and lead by example.” (Toronto Summit Declaration ¶40). We also welcome the G20 Commitment to establish a Working Group on Development with a mandate “to elaborate, consistent with the G20’s focus on measures to promote economic growth and resilience, a development agenda and multi-year action plans to be adopted at the Seoul Summit.” (Toronto Summit Declaration ¶44).

To achieve these objectives, the Working Groups should develop concrete, detailed implementation strategies, benchmarks and timeframes for G20 action. The Working Groups should operate with transparency, providing prior public notice of Working Group meetings and agendas; publication of findings and draft recommendations; and opportunities for civil society participation.

The Toronto Summit Declaration indicates that the G20 “reform agenda rests on four pillars,” including “transparent international assessment and peer review.” Effective anti-corruption and development reform agendas also rest on such a pillar. Therefore, the Working Groups’ terms of reference should ensure that they continue to monitor, promote and report publicly on progress until the Leaders’ commitments have been fulfilled.

TI submits the following recommendations and looks forward to providing more detailed recommendations to the Working Groups.

I.             Anti-Corruption Working Group Agenda:

We welcome the G20 emphasis on “preventing access of corrupt persons to global financial systems” and to “cooperation in visa denial, extradition and asset recovery”. (Toronto Summit Declaration ¶40).

To effectively counter money laundering and facilitate asset recovery, we urge the G20 to take action on the following critical measures:

  • A mandatory national register of trusts, foundations, and Anstalte (a financial entity specific to Liechtenstein) and their operators, trustees and beneficial owners;
  • Mechanisms to share these registers with the tax, customs, and judicial authorities of other countries;
  • Sanctions against non-cooperative financial centres;
  • Enhanced due diligence (based on Financial Action Task Force (FATF) Recommendations) on Politically Exposed Persons;
  • Coordinated action on initiatives such as the Stolen Asset Recovery programme.

We welcome the G20 commitment to ratification and full implementation of the United Nations Convention against Corruption (UNCAC), including its provisions on asset recovery, extradition and whistleblower protection, as well as to “fully implement the reviews in accordance with the provisions of UNCAC”. (Pittsburgh Leaders’ Statement ¶42; Toronto Summit Declaration ¶40).

To set an example and establish best practice G20 countries under review in the 1st round should commit to onsite reviews with active civil society participation and full publication of country reports. As the world’s leading economies, G20 Leaders should provide leadership as well as technical assistance to developing countries in fulfilling the UNCAC’s provisions.

At the 2009 Pittsburgh Summit, G20 Leaders committed to adopt and enforce “laws against transnational bribery, such as the OECD Anti-Bribery Convention.” (Pittsburgh Leaders’ Statement ¶42). To reduce foreign bribery as a factor in international business and

development, it is critical that each G20 country:

  • Implement and enforce laws criminalising foreign bribery and prohibiting off-book accounts;
  • Support private sector adoption of programs consistent with the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance and reporting according to the UN Global Compact – Transparency International Reporting Guidance, and encourage companies to publish key financial and legal data in every country where they operate;
  • Ensure that export credit agencies enforce rules that forbid deals secured through bribery, fraud or collusion;
  • Ensure that beneficiaries of government rescue packages, economic stimulus funds or multilateral lending facilities to publicly report on their use and implement anticorruption programmes.

II.            Development Working Group Agenda

Effective development outcomes, including progress alleviating poverty and meeting the MDGs by 2015, depend on good governance and a corruption-risk mitigation approach to development. As noted in the June 17, 2010 Development Issue Paper of the Presidential Committee for the G20 Summit, governance is “the most important determinant of successful development.” G20 action is critical to ensure aid transparency and accountability by donors as well as recipients. In Pittsburgh and Toronto, the Leaders recognized the important role of the multilateral development banks and committed to “specific actions for greater transparency, stronger accountability” and other measures to ensure aid effectiveness.

To help ensure that aid is not lost to corruption, the Working Group on Development should recommend concrete steps and timetables for reforms, including enhanced transparency of aid flows, corruption risk assessment, supervision and audit, and transparency of budget and procurement processes, particularly in countries receiving significant budget support. The G20 emphasis on country ownership should ensure integrity, accountability and transparency in relationships between stakeholders: leaders, parliamentarians, civil service, civil society and citizens and a significant role for the non-executive branches of government and for civil society, particularly in weak rule of law environments.

We appreciate the opportunity to submit these recommendations and look forward to engaging with the G20 Working Groups to move the process forward.

Yours sincerely,

Huguette Labelle


Geo-Sung Kim

Member of International Board

Chair of TI Korea

Written by François Valérian

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