Financial Transparency Coalition

WASHINGTON, DC – Nearly 250 prosecutors, civil society representatives and other officials gathered in Washington, DC this week for a World Bank-hosted meeting of the International Corruption Hunters Alliance.  Speakers at the three-day event included World Bank President Robert B. Zoellick, United States Senator Patrick Leahy, Transparency International Chair Huguette Labelle, EU MP Eva Joly, ICC Prosecutor General Luis M. Ocampo, Fridtjov Thorkildsen of Norad, and dozens of other notable corruption fighters.  Overall the event was a good opportunity to hear what effort the Bank is making to curb bribery, to better understand initiatives underway in developed countries, and to hear what challenges prosecutors and corruption watchdogs are still facing in developing countries.

Here are some highlights from the presentations:

• Senator Leahy’s remarks were an excellent start to the second, main day of the conference.  He acknowledged that fighting corruption is extremely difficult, but it has the power to “destroy us” if we do not face and tackle it head-on.  Corruption and the opaque global financial system in which it thrives  undermines nascent democracies; robs the poor of aid for healthcare, schooling, and food; undermines competitiveness in the market; weakens the rule of law; and it undermines Unite States security, especially with regards to anti-terror efforts.

• Robert Zoellick discussed recent revisions to Bank policies to better address corruption and fraud in Bank-sponsored development contracts.  Like Senator Leahy, Mr. Zoellick also emphasized that “rule of law must be at the center of development,” because without rule of law it is impossible to hold corrupt officials and businesses accountable.  He hopes that the International Corruption Hunters Alliance will help support local anti-corruption capacity and generate the international political will that is necessary for real change.

• Soren Pind, Danish Minister for Development Cooperation, and Sir Richard Alderman, Director of the UK’s Serious Fraud Office, both spoke on efforts underway in their countries to address the supply side of corruption, namely aid money and business contracts.  Minister Pind called for a much more open and frank discussion about corruption and the overall effectiveness of development aid.  He lamented the corrosive effect corruption has on public support for aid money in his country but reminded the audience that accepting risk in order to provide critical aid is not the same as accepting corruption.  Risk cannot be an excuse to avoid trying.  Sir Alderman focused on the private sector and appealed to business owners to recognize that immoral practices are bad for business.  Corruption prevents the establishment of sustainable companies and erodes employee morale back home.  The UK’s Serious Fraud Office is getting ready for the new anti-bribery act to come into force, but he acknowledged that the UK justice system has not yet developed all the tools it needs to tackle corruption.

• Tax Justice Network-USA Chairman (and Task Force member) Jack Blum shared his experience of addressing corruption both on Capitol Hill and in the courtroom.   He noted that even more taboo at the World Bank in the 1990s than ‘corruption’ was ‘tax evasion’.  The problem we need to address is how do we prevent money from leaving out the back door?  An important first step would be to modernize our ideas about international cooperation and information sharing to match today’s banking and corruption practices.  Diplomats tasked with writing mutual legal assistance treaties should coordinate with their government colleagues tasked with prosecuting corruption and tax evasion to avoid the current mismatch between needs and reality.  Getting the illicit money back to the country from whence it was taken is essential for deterrence.  Don’t make it pay to steal!

• United States Acting Deputy Attorney General Gary G. Grinder echoed the sentiment expressed by others that corruption is an issue for all countries and is a common enemy that we must face together.  Bribery stifles competition in financial markets, thereby derailing the market process, and with more than $1 trillion paid in bribes per year it amounts to a 20% tax on foreign investment.  International cooperation is essential, and Acting Deputy AG Grinder applauded the recent Global Cross-Bar Agreement between the World Bank and other multi-lateral development banks (MDBs) to block from contracting opportunities any company or person found to be defrauding an MDB.  The central challenge now is to work together to implement existing anti-bribery/corruption laws, and to enhance the rule of law generally.

• World Bank Chief Financial Officer (CFO) Vincenzo La Via spoke to us about new World Bank efforts among auditors to curb fraud and corruption in Bank-funded development projects.  Mr. La Via noted that corruption impedes our ability to tackle poverty, and to address this problem “we need greater candor and transparency.”  Key to promoting transparency (as the Task Force repeats regularly) is auditors.  For public sector auditors this means increasing technical support from the Bank.  In the private sector we need to hold auditors to account; just because a business pays for auditing service does not mean auditors can or should bend or break the rules (businesses pay for audits because of legal requirements, not because they enjoy the process).   Similar to remarks by Danish Minister Pind, Mr. La Via is replacing the Bank’s disbursement policy with one based on risk, which will increasingly rely on web-based tools to keep up the inventive measures bankers invent to circumvent national bribery and tax laws.

Want to find out more?  The World Bank put out a press release, and they posted a short video on YouTube from the conference (yours truly has a cameo).

Scroll down to watch the video: