Unmasked – Corruption in the West

Unmasked – Corruption in the West

by Laurence Cockcroft and Anne-Christine Wegener

 

Yesterday, 9th December, 2016, was International Anti-Corruption Day and many newspapers and journals used it to publicise the most venally corrupt nations, often those in Africa and the Middle East viz. NY Times.

 

These are developing nations, highlighted by Transparency International’s Corruption Perception Index, where those affected by corruption are most at risk of its exploitation by their leaders.

 

What Laurence and Anne-Christine have done is to shine a light on the developed West, where corruption remains a standard and where the mechanisms that enable corruption around the world, such as highly proficient banking systems, legal and accounting expertise, sophisticated technologies, exist to maximise the ability of those throughout the world to illegally and immorally syphon billions, possibly trillions, of dollars, pounds and euros away from legitimate ownership.

 

This is an important work that provides the bedrock of understanding for those who are interested in dealing with corruption to dig further into the subject. It highlights the enormous degree of corruption in the Americas and Europe, from political to banking, from sport to business to organised crime in a highly readable way but one that provides important information, not gloss. It also shows the huge challenge where, even in highly developed, wealthy economies, the desire to have more seems undiminished.

 

Laurence was a founder of Transparency International (TI) and Anne-Christine was a deputy director of Transparency International’s worldwide Defence and Security Programme (DSP). I am privileged to be both a Trustee of TI-UK and Chair of DSP, so I know the contribution both have made and also the huge work that still needs to be made.

 

The book is an important balance for the anti-corruption world. Corruption is not just in poor countries and, where grand corruption is concerned, the West is involved with the developed world anyway in financing the corruption and in enabling aspects of it such as money laundering. Together with the corrupt practices that appear to be endemic in the West, such as in lobbying, sport, political favours, business, crime-related, the West has a massive anti-corruption agenda to fulfil and knows it.

 

Three things, amongst many, cry out for action. First, there is the need for politicians and business people at the highest level to be far more active and vocal in this area. This includes their associations, such as Chambers of Commerce in the USA that are actively trying to water down the Foreign Corrupt Practices Act to dumb down the level playing field and make corruption easier. Beyond this, politicians in wealthy countries are too devoted to increasing GDP at any cost and the danger is growing that the ethics of doing business will be adversely affected as a direct consequence of the inequalities caused by the banking crash of 2007/8. Brexit and Trump are such outcomes and, viewed from the anti-corruption side, harrowing in their potential.

 

Second, the resources that are provided to implement and manage the laws that politicians might deliver on are woefully inadequate for the task. If legislatures enact new laws to strengthen anti-corruption norms, it is the execution of the laws that fail so often through inadequate expertise and sheer money provided.

 

Third, it is time for anti-corruption to be seen as a positive economic benefit. Corruption is bad for the wealth of the broad population, assisting only those at the top of the tree. In a world that seeks to reduce inequality and where voters are making their positions clear that they will not tolerate their position for much longer, intelligent politics and business (and development aid) means reducing corruption becomes more important. It is a key method of increasing economic well-being by ensuring that enormous flows of corrupt money stays in countries that require it as well as in the economies where it can be properly used rather than syphoned into a tax haven bank account where it remains as dead money. In an age where the velocity of money is slowing, corruption remains a cause of economic decline.

 

Unmasked comes as at important time, just as the world is turning in on itself. The West should learn the lessons that are described so well in the book and use this difficult period to ensure that the first gear in which it has for so long been engaged is kicked into second and upwards not into reverse.

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The Corruption Agenda gets into Higher Gear

Last night, 20th November, Transparency International – UK (the UK chapter of the world’s largest anti-corruption NGO) held its Annual Lecture. TI had invited Jose Ugaz several months ago and in the meantime he had been elected Chair of the world-wide TI organisation. It was in this new role that he addressed an audience of several hundred people in the Canary Wharf office of Clifford Chance.

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TI has been, for many years, known for its excellence in research (something we cherish in the UK), for its excellent people amongst over 100 chapters world-wide and, in the UK certainly, an ability to influence at the highest levels.

Recently, we were delighted by the Prime Minister’s pledge on beneficial ownership (the development of a register of all company owners in the UK).

A New Gear for Corruption

Jose Ugaz has a great background (bringing Fujimori to jail in Peru along with 1500 other successful prosecutions for grand corruption there – in effect, unravelling the overthrow of a state by an elite group that rules through corruption) and made a great speech.

The cornerstone of this speech was that, on the shoulders of TI’s success over the last 20 years, it would now be more forceful in attacking grand corruption and in bringing to book those responsible (ending impunity). This is a change for TI – not noted for its forcefulness in attacking individuals but more for its focus on changing systems. It will be a challenge as it develops and understands fully how to manage the process.

However, the approach has received tremendous support within TI and, from last night’s reception, this is also supported by those with an interest in the subject.

The World has changed

The timing of this re-emphasis is important. Not only is the world still reeling from the shocks of the financial disasters of 2007/8 but much of the world’s legal framework against corruption is in place. From the FCPA (introduced by the USA back in the 1970’s) to the  OECD anti-bribery convention through to the UK’s Bribery Act of 2010 and many other laws introduced in China and elsewhere, the word is out – that bribery and corruption are a central part of the world’s problems whether because of the billions annually stolen from the poor that deprive them of food, shelter, healthcare, education and so much else or because of the huge security issues that result from corruption in armed forces that allow situations to develop as badly as in Nigeria and Iraq.

The stage is now set for the implementation (understanding that laws will need to keep up with changes in the world). Implementation means the carrying out of the law on an international scale.

Making the anti-corruption laws work

It has taken over 20 years to bring in the legal changes that are now in place. While not perfect (and still fought by many such as Chambers of Commerce in the USA), they provide a basis for real change.

However, as Jose Ugaz was at pains to point out in his speech, levels of corruption world-wide are probably higher now than they were 20 years ago. This needs a focus on priorities (which he believes to be grand corruption – involving life changing amounts or having major adverse impacts on those defrauded – and “no impunity”) and means a change in several areas.

For TI, this will mean focusing on real cases of grand corruption and bringing those responsible before public opinion and many to court.

It also means, in my view, an emphasis on the ability of law enforcement agencies throughout the world and on the governments that fund them to make the laws work. This means prioritising and funding those agencies to detect, investigate, solve, charge and convict – not from time to time but as the norm in the same way that we in the UK would expect murder, violent crime, major robberies and other crimes to be resolved.

This will be a real challenge too – many countries in the world do not have effective judicial systems or effective law enforcement – much of which is corrupt.

That is partly why a move has been made to develop an International Anti-Corruption Court on the same basis as the International Criminal Court – notably by American Judge Mark Wolf.This is worth pursuing even if it will be hard to achieve.

Sometimes, you know that change is in the air. Corruption is now endangering whole nations – from Russia to Ukraine, from Mexico to Iraq, grand corruption is endemic. But, there is also a sense that the time is right for some action. Jose Ugaz showed that the approach can work and now leads an NGO that is fixed on the goals that he is now setting.

It was a great speech that was highly motivational. As we all know, words have to lead to actions – just as the words in all the laws that are in place in so many places now have to lead to enforcement and implementation.

 The writer is a Trustee of Transparency International – UK