corruption standards international anti - europe 7 general ...romania, serbia, sweden, tanzania, the...

Anti-Corruption Network for Eastern Europe and Central Asia

7th General Meeting, 25-27 June 2008, Tbilisi, Georgia

53

ANNEX 1: PRESENTATIONS FROM PLENARY SESSION 1

Monitoring Anti-Corruption Efforts in Europe

Mr. Drago Kos, President, GRECO; Chairman, Commission for Prevention of Corruption, Slovenia

Slide 1

Monitoring anti-corruption efforts in

Europe

Drago KOS

President of GRECO

Chairman of the C. for the Prevention of Corruption

Slovenia


Tbilisi, 25-27 June 2008

Slide 2 International anti-

corruption standardsThe Twenty Guiding Principles for the Fight against

Corruption (1997)

The Criminal Law Convention on Corruption (1999)

The Civil Law Convention on Corruption (1999)

Codes of Conduct for Public Officials (2000)

Funding of Political Parties (2003)

Convention on the fight against corruption involving

officials of the EC or officials of Member States of the

European Union

Convention on the protection of the EC financial interests

+ protocols

OECD Convention on combating bribery of foreign public

officials in international business transactions

UN Convention against corruption (UNCAC, 2003)



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Slide 3

The 20 Guiding Principles forthe Fight against Corruption

A catalogue of measures to be included in comprehensive national strategies against corruption :

Awareness of corruption, transparency in public administration, independence and specialisation of authorities, criminalisation of corruption, proceeds of corruption, legal persons, immunity, media, research etc.

Monitoring: GRECO

Slide 4

Criminal Law Conventionon Corruption

Wide scope to combat corrupt practices throughcriminal law

Provides for :- co-ordinated criminalisation of a wide range of corruption related offences; including private corruption, trading in influence and acccounting offences- complementary criminal law measures, including corporate’s liability- international co-operation

Monitoring: GRECO

Slide 5

Civil remedies, compensation for damage

resulting from corruption

Validity of contracts

Civil law measures

Protection of whistleblowers

Monitoring: GRECO

Civil Law Conventionon Corruption



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Slide 6

Ethical climate in public administration

Ethical conduct expected from public officials

Information to the public on conduct to be expected

Monitoring: GRECO

Model Code of Conductfor Public Officials

Slide 7 Recommendation 2003/4 on common rules against corruption in the funding of political parties and electoral campaigns

Transparency

Supervision

Sanctions

Monitoring: GRECO

Slide 8

Group of States against Corruption

(GRECO)

Partial and Enlarged Agreement of the Council of Europe



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Slide 9 GRECO

Group of States against Corruption

International monitoring mechanism

Established in 1999 by the Council of Europe

46 members (without Liechtenstein, San

Marino, Belarus)

Open to member and non-member States of the Council of Europe

TASK:

- Monitoring the observance of Council of Europe’s international legal instruments on corruption

Slide 10

GRECOWorking methods

Mutual evaluation and peer pressure

Follow-up mechanism

Slide 11 GRECO Evaluations

Procedure: Evaluation rounds

Specific provisions selected

Questionnaire

Evaluation teams

Country visits

Evaluation reports

Recommendations

Compliance procedure

Publication



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Slide 12 GRECO

First Evaluation Round

1 January 2000 - 31 December 2002

Evaluation themes:- Principle 3 : independence and autonomy of persons in charge of the prevention, investigation, prosecution and adjudication of corruption offences

- Principle 6 : to limit immunity from investigation, prosecution or adjudication of corruption offences

- Principle 7 : promotion of the specialisation of persons or bodies in charge of fighting corruption

(“20 Guiding Principles”)

Slide 13

GRECO findings of the first evaluation

round

Three main fields of necessary improvements:

substantive law

implementation of adopted legislation

general topics important for the fight against

corruption

Slide 14 GRECO

Second Evaluation Round

1 January 2003 – 31 Dec. 2006

Evaluation themes:- Proceeds of Corruption

- Public Administration and Corruption

- Legal Persons and Corruption

(“20 Guiding Principles” and Criminal Law Convention on Corruption)



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Slide 15

GRECO findings of the second evaluation

round

Main fields of necessary improvements:

Effectivenes of ML mechanisms

Conflicts of interest

Pantouflage/revolving doors

Whistleblowers‟ protection

Responsibility of legal persons

Slide 16 GRECO

Third Evaluation Round

1 January 2007 – 31 Dec. 2009

Evaluation themes:- Criminalisation of corruption (ETS 173, 191)

- Transparency of party funding (Rec.2003/4)

Slide 17

GRECO findings of the third evaluation

round

?



59

The UN Convention against Corruption and its Review Mechanism in the Making

Mr. Giovanni Gallo, Anti-Corruption Expert, UNODC

Slide 1

The United Nations

Convention against Corruption

and its review mechanism in the making

7th Meeting of the Anti-Corruption Network for

Eastern Europe and Central Asia Tbilisi, Georgia, 25-27 June 2008

Slide 2

2

2

13

24

37

54

80

93

117

108

0

20

40

60

80

100

120

140

Dec

-03

Mar

-04

Jun-

04

Sep-0

4

Dec

-04

Mar

-05

Jun-

05

Sep-0

5

Dec

-05

Mar

-06

Jun-

06

Sep-0

6

Dec

-06

Mar

-07

Jun-

07

Sep-0

7

Dec

-07

Mar

-08

Adopted by General Assembly Resolution 58/4 of 31 October 2003

Entered into force on 14 December 2005

117 Parties, 140 Signatories

Status of ratification

14 December 2005

30 ratification

entry into force



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Slide 3

3

Status of ratification by region (total: 117)Western

European and

other States: 16

(14%)

Group of Latin

American and

Caribbean

States: 23 (20%)

Group of Eastern

Europe States: 19

(16%) Group of Asian

States: 21 (18%)

Group of African

States: 38 (32%)

Slide 4

4

COSP 3

The Conference of the States Parties

2009 Qatar

10-14/12/2006, Jordan

COSP 228/1 – 1/2/2008, Indonesia

COSP 1

Meetings of the Working Groups on:

Technical assistance

Asset Recovery

Review of Implementation

Slide 5

5

1st Conference of the States Parties

Review of Implementationmechanism necessary

Technical AssistanceInformation Gathering

self-assessment checklist

Asset Recovery

Amman, Jordan

December 2006

The first session of the CoSP held

in Jordan in December 2006,

adopted 8 resolutions and 1

decision.

I would like to focus on what

emerged as the three key areas at

the Conference: which were

Review of Implementation, Asset

Recovery and Technical Assistance.

Related to these, the Conference

also adopted a resolution on how it

wants the Secretariat to gather

information both on the

implementation of the Convention

and on technical assistance needs.



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Slide 6

6

2nd Conference of the States Parties

Review of implementation – parameters of the review mechanism

Asset recovery

Technical assistance

Appeal to implement provisions of UNCAC

Bribery of officials of public international organizations

Venue of COSP 3

Slide 7

7

Towards the establishment the UNCAC review mechanism

A two-pronged approach:

The horizontal review - all States Parties

The pilot review programme - 28 volunteer countries

Slide 8

8

The horizontal review

Horizontal review

covering all

chapters

Prevention (art. 5, 6, 9)Criminalization

(art. 15, 16, 17, 23, 25)

Asset Recovery

(art. 52, 53, 54, 55, 57)

International Cooperation

(art. 44, 46)

UNCAC self-assessment checklist

strong emphasis on technical assistance needs and donors’ coordination

As a tool to facilitate the provision

of information, the Conference

decided to use a self-assessment

checklist.

It requested the Secretariat to

finalize and distribute the self-

assessment checklist which was

done by 15 June.

The checklist is aimed at a

horizontal review of the

Convention, covering provisions

from all chapters of the Convention.



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Slide 9

9

8 9

15 1612

2

4

30

124

7

411

1

African Group Asian Group Eastern

European Group

GRULAC WEOG

Reporting parties Reporting signatories Non reporting parties

Response to the UNCAC self-assessment checklist

Slide 10

10

UNCAC adherence by ACN members

Not signed

3Signatories

1

Parties

16

UNCAC self-assessment reports submitted by

ACN members

Yes

13

No

3

ACN participating countries

Slide 11

11

The voluntary pilot review programme

28 participating Countries:

Argentina, Austria, Bolivia, Burkina Faso,

Colombia, Croatia, Dominican Republic, Fiji,

Finland, France, Greece, Indonesia, Jordan,

Mexico, Mongolia, the Netherlands, Norway,

Pakistan, Panama, Peru, Philippines, Poland,

Romania, Serbia, Sweden, Tanzania, the UK,

USA

Main features:

Strictly voluntary

Limited in scope

Limited in duration

16 countries representing all

geographical regions are

participating in this pilot

programme. The main features of

the programme are that it is:

strictly voluntary,

limited in scope - it reviews 8

articles from all chapters of the

Convention,

and it is limited in duration – for the

time being its first phase is

expected to end with the report

back to the 2nd

session of the

Conference.



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Slide 12

12

Voluntary pilot programme: strategy

Methodology

combined self-assessment / group / expert review method

identify implementation gaps and needs for technical assistance

recommend concrete measures to implement the Convention

Aims and expected outcomes

assist participating countries

test effectiveness and efficiency of the approach

provide information to the CoSP on lessons learnt and experience gained

suggest possible elements of a full-fledged review mechanisms

facilitate decision on the review mechanism at 3rd session of the Conference

Slide 13

13

CoSP 2, the review mechanism should

Assist States parties in their implementation efforts

Be transparent, efficient, non-intrusive, non-adversarial, non-punitive, inclusive and impartial

Not produce any form of ranking

Provide opportunities to share good practices and promote collaboration

Complement existing international and regional review mechanisms, cooperate with them and avoid duplication of efforts

Slide 14

14

Working Group on Review of Implementation to hold 4 meetings,prepare TOR for a review mechanism for consideration, action andpossible adoption by CoSP3

UNODC to assist Group by submitting background information,incl. TORs of existing review mechanisms and States to submitproposals for TOR for consideration by Group

UNODC to continue pilot review programme

UNODC to expand and States to complete the self-assessmentchecklist, to create a comprehensive information-gathering tool

Relevant decisions by the Conference



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Slide 15

15

Extended Pilot Review

Programme

Expanded self-assessment

checklist

Road to Doha 2009 – likelihood of review mechanism and…

Implement other resolution

adopted by CoSP2

Parliamentarians,

private sector, media

Education, awareness raising

“play fair in sports & life”

Slide 16

16

For further information:

United Nations Office on Drugs and CrimeVienna International Centre

PO Box 500, A-1400 Vienna, Austria

Tel: +43-1-26060-5179Fax: +43-1-26060-7 5179

http://www.unodc.org/unodc/en/crime_convention_corruption.html

[email protected]

THANK YOU FOR YOUR

ATTENTION



65

ANNEX 2: PRESENTATIONS FROM PLENARY SESSION 3

Role of Business in Fighting Corruption

Mr. Francois Vincke, Chairman, Anti-Corruption Commission, ICC

Slide 1

Member of the Brussels Bar

Chairman of the ICC Anti-Corruption Commission

Tbilisi, Georgia, June 26, 2008

Slide 2

Program (I)

PART I :

A.- Introduction

Corporate development and ethical goals, are they opposed?

A business case against corruption

Corporate action

B.- Ethical organization : the people

Ethics officers

Ethical standing/reporting



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Slide 3

Program (II)

C.- The documents

Self–regulation

Who carries the colors?

D.- The processes

Reporting /Whistle-blowing

Helping with dilemma‟s

Slide 4

Program (III)

PART II : PRACTICE

A.- Availability of Ethics Officers

B.- Basic Reflexes

C.- “Tone from the top”

Slide 5

1.- Corporate development and ethical

goals, are they opposed?

Is there a conflict between enhancing a corporation’s

development and pursuing ethical goals?

There are dilemma‟s: for a business person a non-ethical

solution may appear as a way out, but to where?

Maybe, if one is lucky, it works in the short term

In the medium and long term, experience shows that

fraud - and in particular bribery - runs against corporate

efficiency and corporate prosperity

There is a business case against corruption



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Slide 6

2.- A business case for not bribing (I).-

Eight good reasons for not bribing.

1. A bribe may be totally inefficient

What is the capacity of the (candidate) bribee?

Will he ever reach the goal you have in mind

Shareholders‟ money well spent?

Risk assessment/risk management problem

2. The “bribe market” is opaque

Paying too much or too little?

There are no listed prices or quotations

Costing/purchasing/pricing problem

Slide 7

3.- A business case for not bribing (II).-3. Your accountant‟s nightmare

How do you enter a bribe in your accounts?

No entry or a false entry: false accounting, false reporting

Accounting policy problem

Financial reporting problem

4. Your lawyer‟s headache

The “bribery contract” is either unwritten, or, if written, is

null and void

It cannot serve as evidence in court

One cannot uphold the contract in arbitration

Slide 8

4.- A business case for not bribing (III).-

5. “Hidden treasures in the islands”

Slush funds in far away countries

No or limited knowledge by the executives

Money laundering risk

Control policy problem

6. “Thou shalt not serve two masters”

Bribee (often) makes kickbacks

Divided loyalties among co-workers

Corporate governance problem/HR problem



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Slide 9

5.- A business case for not bribing (IV).-

7. Bribery undermines free competition, based on fair

pricing, quality of goods and services, motivation of

staff, expertise, talent, continuous research and

development and is based merely on the generosity of

obscure payments

8. Criminal/civil law risk:

1. high fines, jail sentences

2. debarment

3. civil damages

Slide 10

6.- Corporate Action

Many companies have resorted to self regulation and self

discipline

They define their values and establish their norms

The corporate codes of conduct are then translated into

integrity programs

Directors, executives, managers and employees are to

contribute, each in their capacity, to the implementation

substantiation of the integrity program

Slide 11

7.- Ethical organization: the people

Endorsement and review by top-level (Audit Committee)

An adequate and adapted compliance structure is the

backbone of an ethical organization:

Guarantee of continuity and consistency in compliance

Availability should be such that no ethical question remains

unanswered

Monitoring of the respect for the corporate values and compliance

with the corporate rules

For SME‟s: same objectives but through appropriate means



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Slide 12

8.- Ethical standing: reporting

Professional investors assess ethical standing (i) either to

include only corporations qualified as ethical (e.g. the ethical

funds) (ii) to exclude companies with a negative integrity

record (e.g. Norwegian Pension Fund) or (iii) to integrate

integrity performance in their ratings

Ethical reporting to stakeholders: projecting an image of

ethical performance (e.g. Global Reporting Initiative or GRI)

Ethical standing is essential to be considered investment

grade (bench marking, certification)

Slide 13

9.- The documents

Self–regulation: some reference documents

International Chamber of Commerce

Business Principles of TI

Business Principles of PACI (WEF)

Tenth Principle of the UN Global Compact

Who carries the colors?

Those who can cause reputational damage

Employees, subsidiaries, affiliates, joint venture partners, agents

and intermediaries, subcontractors …

Slide 14

10.- The processes Training and information

Not a one time shot, but a continuous process

Information to be relevant

Dissemination of the code of conduct (also to the outside world)

Sensitive processes

Selection and remuneration of agents

Reporting of (other) sensitive agreements

Request for advice/whistle-blowing?

Answering all ethical and other questions

Good faith blowing of the whistle with protection of anonymity

and job

Whistle blowing is efficient

ICC Guidelines



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Slide 15

12.- In practical terms Availability of Ethics Officers

Listen carefully to even the “silly” questions and give good answers

Give directions for solving the ethical dilemma‟s

Be fair, consistent and rational

One should convince and not bully

“Tone from the top”

Rules applicable to the “simple” soldiers as well as to the generals

When there is a rule, there should be no exception, unless duly and formally motivated

Transparency and “business secrecy”

Appropriate sanctions in case of infringement

Alleviations for companies with a genuine integrity program



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ABB - to the ”straight and narrow”

Mr. Gunnar Björkenor, Senior Vice President and General Counsel, ABB

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ABB - to the ”straight and

narrow”

Anti-Corruption Network for

Eastern Europe and Central Asia

Gunnar Björkenor

Tblisi June 26, 2008

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Outline

Introduction

Compliance - why?

Common values

Tone at the top

Resources

Training of employees

Screening of business partners

Business Ethics Hotline

Enforcing our rules



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Presentation

Gunnar Björkenor

General Counsel ABB Sweden

Regional Counsel ABB Northern Europe

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ABB Group

Power & Automation

Orders received 2007: 34 BUSD (+27%)

EBIT: 4.000 MUSD (+57%)

Employees: 112.000

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Compliance focus

WHY?



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ABB:s track record

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Compliance focus

We had reason to act due to own history

We had reason to act due to new legislation

We had reason to act when legislation was enforced

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Common values

Code of Conduct (Oct 2006)



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Code of conduct

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Code of conduct

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Code of conduct



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List of Code of Conduct translations

Arabic

Bulgarian

Chinese

Croatian

Czech

Danish

Dutch

English

Estonian

Finnish

French

German

Greek

Hebrew

Hungarian

Indian languages: Gujarati, Hindi, Kannada, Marathi

Italian

Japanese

Kiswahili (for Tanzania and Kenya)

Korean

Latvian

Lithuanian

Macedonian

Norwegian

Polish

Portuguese

Romanian

Russian

Slovakian

Slovenian

Spanish

Swedish

Thai

Turkish

Vietnamese

etc

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The tone at the top

The Message from the CEO:

1. We don’t want unethical business behavior at ABB

2. We don’t need unethical business behavior at ABB

3. Unethical business behavior is illegal

4. Unethical business behavior does not pay - it is highly

uneconomical

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Resources

Accept that compliance activities take time

Acknowledge that compliance work costs

Identify the costs of the compliance workc

Allocate monetary resources in budgets



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Training of Employees 2006-2007

E-learning/Face to face

Code of Conduct (all)

OECD Anti Bribery (all LN-users)

FCPA (all, face to face)

Working with Agents & Intermediaries (selected)

Global Competition (selected)

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Training of Employees 2008-2009

Integrity Leadership (all managers)

Conflict of Interest (all employees)

Financial Integrity (selected employees)

Code of Conduct refresher (all employees)

E-compliance (all employees)

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Training of new employees

All new employees receives Code of Conduct together

with employment contract

All new employees automatically enrolled in training

programme, receives e-learning on Code of Conduct

upon receipt of e-mail address

Receives rest of e-learnings periodically



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Screening of business partners

DD on new JV partners

Compliance Certification from JV partners and JV itself

DD on consortium partners

DD on certain suppliers

DD on business structures

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Business Ethics Hotline

Hotline and Web submission report

All stakeholders with a business relationship with ABB are able to make a report by telephoning the ABB stakeholder hotline or submitting a Web report

Telephone the ABB stakeholder hotline

on + 41 43 317 33 67

This service is provided by an independent third party and is available 24 hours a day, 7 days a week

Make a Web submission report Click on the following link to submit a Web report. Once the report is received by the ABB Group compliance office, you will receive an e-mail response to confirm receipt

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Enforcing our rules

We investigate

We follow up

We terminate people for non compliant behaviour

Incentivise compliant behaviour



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Enforcing our rules

ZERO TOLERANCE

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Enforcing our rules

Everyday compliance is not a project

Everyday compliance is a way of life

Slide 26



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Applying International Standards to Private Sector Operations

Mr. Michael Davey, Director for Caucasus, Moldova & Belarus, EBRD

Slide 1

European Bank for

Reconstruction and Development

Applying International

Standards to Private Sector

Operations

Michael Davey

Director for Caucasus,

Moldova & Belarus

Slide 2

What are the EBRD‟s objectives?

To promote transition to market economies by

investing mainly in the private sector

To mobilise significant foreign direct investment

To support privatisation, restructuring and better

municipal services to improve people’s lives

To encourage environmentally sound and

sustainable development



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Slide 3

Office of the Chief Compliance Officer

Independent from banking operations

Responsible for promoting integrity and

business ethics in EBRD and in EBRD

financed projects

Focal point for anti-corruption work

Slide 4

Prevention

Integrity procedures and approvals

Robust integrity due diligence

Independent integrity investigations

Slide 5

Integrity Due Diligence Procedures

Red flag checklists (Integrity and ML)

Integrity concerns brought to Credit and

CCO

Integrity Investigators (outside firms)

Discussion in Operations Committee



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Slide 6

Integrity Guidelines

New guidelines adopted in June 2005

Criteria to assist banking teams

Promotes greater transparency and

consistency

Does not substitute for exercise of judgement

Slide 7

Avoid Convicted Criminals

….and those under criminal investigation

However, take account of whether

investigations or convictions are politically

motivated or commercially driven

Tax convictions and investigations often

misused

Slide 8

Check “Blacklists”

…only take account of internationally

recognised checklists

Look especially to MDB blacklists (avoid

reputational risk)

World check good source

If previously on list, when and why removed?



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Slide 9

Past vs. Present

Credible evidence linking to current ties

to organised crime or criminal activities

What is credible evidence?

Tax evasion or tax avoidance?

Slide 10

Risk Based Approach: PEPs

Identify PEP

Get senior management approval

Determine source of wealth

Determine level of risk

Ensure continuous monitoring

Slide 11

EBRD‟s AML framework

Principles / Policies / Procedures and Guidance Notes in place

Training and awareness raising seminars delivered (approximately five per annum)

Banking and Credit (Risk Management) departments conduct specific screening on a project by project basis



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Slide 12

EBRD‟s AML measures (1)Know your customer

Know your customer

– Full responsibility of project teams

– Graduated response based on perceived risks

Completion of Red Flag Integrity and Anti-Money Laundering Checklists

– Retained in Project files

– Concerns raised with Credit (Risk Management) and Chief Compliance Officer

Slide 13

Public Procurement

Application of Bank’s Procurement Rules and

Procedures

Preventing abuses through open tenders

Addressing fraud and corruption in

procurement in EBRD funded projects

Slide 14

International Co-operation

In the fight against corruption, the EBRD

works with and supports:

– IOs such as OECD and Council of Europe

– Extractive Industries Transparency Initiative

– Financial Action Task Force

– IFI Task Force and MDB Investigators Forum

– Transparency International



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Slide 15

Conclusions

EBRD long experience for working in

challenging environments

Our fraud and corruption policies are based

on this experience but continue to evolve

Need to be part of international standard

setting

Need to be lock-step with other MDBs



86

Going Beyond Compliance in Relationship with Government

Mr. Archil Bakuradze, Deputy Secretary General, International Association of Business and

Parliament (London), Chairman, Anti-Corruption Commission of the International Chamber of

Commerce – Georgia

Chairman, Ladies and Gentlemen,

It is a great delight to attend and to be able to speak at this international meeting which brings

together exceptionally wide range of expertise on the subject of anti-corruption.

Objective of my presentation is to introduce two practical initiatives from Georgia, which will

illustrate the role of business in reducing, or to be more precise, preventing corruption, which is

the main focus of this session. Yesterday we have heard a lot about fighting corruption,

identifying and persecuting corruption-related crime, whereas this session will be more about

preventing corruption and what business can do in this direction.

I was thinking what should I call this speech and I decided it should be: “GOING BEYOND

COMPLIANCE IN RELATIONSHIP WITH GOVERNMENT”. In this speech I will try to

answer the following questions:

What companies can do about preventing corruption – is it enough just not to pay bribes,

facilitation payments, kickbacks etc.?

How good governance determines the operating framework for companies and at what

degree it reduces the risk?

What are the mechanisms which ensure transparency and effectiveness in public private

dialogue?

How this dialogue creates a basis to identify and tackle potential problems of corruption?

First example of business initiative which is oriented on anti-corruption is about the ICC Georgia.

The objective of the Anti-Corruption Commission, which has been created just two months ago, is

to contribute towards the achievement of ICC-Georgia‟s goal to create a corrupt-free business

environment in Georgia. Main directions are:

Regular assessment of the state of corruption and identification of policy areas,

legislation and gaps in public administration which contribute towards corruption;

Elaboration of recommendations on anti-corruption initiatives for the Government and

private sector;

Development of the Anti-corruption Code and Guidelines

Using international best practice from ICC to increase awareness among ICC Members

and wider business community on anti-bribery instruments, prevention, integrity

programmes, ethical reporting by companies and ways to resist various extortion

scenarios.

Support in ratification of the UN Convention against Corruption.



87

The role and responsibility of business community is immense. The challenge is making the

business active, engaged and interested in the issues of common concern, before these particular

problems affect the business itself. In Georgia we are observing a process of changing the

business culture where companies increasingly assume their share of responsibility in the policy

dialogue. Of course the dialogue is a two way process and commitment of both parties is

important.

It is worthwhile to mention that there is also a crucial political will on the side of the Georgian

Government to improve economic governance and policy dialogue with businesses. There is a

good realisation that economy should grow to be able to sustain the achievements and current

momentum of reforms. But it is not always easy to translate this “good will” on the top of political

establishment into the coherent action of entire body of public administrators, however drastically

you reduce their number and size. It is like a big ship. If you turn the wheel it takes miles upon

miles to change a course. Therefore, it is not an easy task to introduce changes at this level and it

certainly takes time.

The role of business is to act collectively on the issues of common concern and be an equal

partner with government in implementing reforms.

Another initiative which is a good example of transparent and effective pubic-private dialogue in

Georgia is the work conducted by International Association of Business and Parliament.

Economic legislation is becoming complex. It is not an easy task to legislate for rapidly changing

economies which are not only complex due to new areas of business and development of

technology but also interdependent in result of globalisation.

Government has a task to be ahead of competition and develop a policy which will be beneficial

for economy and had minimum unintended consequences for other groups in society. They should

also have to take into consideration employment, social, environmental and many other aspects of

their decisions.

On top of it government should make decisions very quickly as there are big and rising pressures

from voters, which are never satisfied as well as pressures from interest groups and international

community to reform at a very high speed.

In this situation for Government it is important to listen and communicate with these groups,

including the business. This is not an easy task as it requires professional, systemic

communication as well as resources, people and a planning of the efforts.

There is another hurdle which both government and business should think about. This is a public

perception that any dialogue or cooperation between business and politicians is corrupt. Therefore

the dialogue should take place within the platforms or with the help of mechanisms which have a

strong element of transparency to ensure enough safeguards and insurance policies for both

government and businesses against such suspicions.



88

By their nature politicians not always see business from business point of view and due to their

lack of experience do not understand the business realities. Although we have number of

prominent politicians in Georgia who came from successful business career one can hardly agree

that whole government, civil service, Parliament and judiciary knows modern business and have

full understanding of challenges confronted by companies.

From another side, businesses do not fully understand how government works while dealing with

very distinct expectations from different groups in society.

In result, there is a degree of alienation, distrust and misconceptions towards one another.

Majority of politicians think of business in terms of tax payers without fully appreciating other

dimensions of it. Soviet legacy of administrative command economy is unfortunately still has an

impact even 17 years after the collapse of the Soviet Union.

Therefore it is obvious that new mechanisms are needed to ensure continuous, effective and

transparent policy dialogue between business and Government. Without this cooperation the anti-

corruption and many other policies will not be developed and effectively implemented.

The question is: How we achieve such a dialogue and ensure transparency and integrity of

it?

Before I answer this question I would like to highlight another aspect of governance, which has

crucial importance for young democracies like Georgia.

I would like to elaborate on the division of power between branches of government and namely

between executive and the legislature. This division, greater autonomy of Parliament from

executive and institutional strength has still to come. Parliaments as elected bodies have

responsibility to legislate on behalf of voters and various interest groups in society. Also

Parliaments are there to oversee the work of executive. This is a powerful mechanism within the

constitution for the system of checks and balances. Sometimes we try to reach accountability and

transparency of government by many other mechanisms, ignoring a significant one which is right

there, in the Constitution.

Parliaments have their unique role in governance including in the area of fight against corruption.

Unfortunately Parliaments are always perceived as too political, sometimes too incompetent, very

short-term oriented and unreliable.

International development assistance has traditionally marginalised Parliaments and usually

cooperation has been implemented more in „executive to executive‟ mode.

Yet, Parliaments are elected bodies which on behalf of society oversee the actions of the executive

and should be the guarantors of the integrity and effectiveness in executive.

However successful the government is, if system of checks and balances is absent, we cannot

claim that government has achieved its goals. There is a need in greater accountability and

openness within the system of government first of all towards the Parliament.



89

Businesses should also understand better the role of Parliament, utilise its powers, learn about its

culture and how it operates. This mutual understanding is the basis on which the effective policy

dialogue can be built on.

Business knows all about the shareholder value, employee relations, community investment and

even global warming. Yet businesses frequently ignore or do not do anything about a very

important stakeholder – the government and Parliament, which can overnight change entire

operating environment for the business.

That‟s why there is a need for business to be pro-active and engage in a regular, transparent and

long term relationship with government and Parliament.

Coming back to the questions How to achieve such dialogue and ensure transparency and

integrity of it? I would like to tell you more about the business and Parliament concept.

It is essentially an integrity exercise which allows the effective and transparent platform for

dialogue between businesses and Parliament. On the basis of this cooperation it is possible inter

alia to eliminate areas of policy, legislation or deficiencies in public administration which are

conducive to corruption.

The business and Parliament concept was devised 30 years ago in the UK Parliament. Now it

operates within 15 national Parliaments as well as the European Parliament. IABP fosters

transparent and effective relationships between businesses and legislators to address all

considerations I have mentioned earlier.

The Code of Principles guides all activities implemented within our national Business and

Parliament Schemes. It defines the scheme as being neutral, independent, non-lobbying, non-

sectoral and apolitical.

There are structures, policies and processes which ensures the integrity of the operation.

The role of the International Association is to accredit on the annual basis the national business

and Parliament schemes, help them through exchange of knowledge and information and support

creation of new schemes worldwide.

Georgia was the first country among „emerging democracies‟ which adopted the concept and

makes a good use of this mechanism even today. IABP Georgia play significant role in

maintaining a transparent and productive dialogue between businesses and the legislature. This

model also successfully operates in Armenia and Moldova.

In conclusion, it is worthwhile mentioning that good governance and corrupt-free business climate

cannot come with one policy or a single structure installed within the government. It should come

from the variety of initiatives both from government as well as a business community. The work

of ICC and the International Association of Business and Parliament in Georgia are good

examples of such successful initiatives.

Thank you very much for your attention!



90

Fighting Corruption Through Collective Action

Mr. Michael Jarvis, Business, Competitiveness, and Development Programme, World Bank

Institute

Slide 1

Fighting Corruption Through

Collective Action

Aim of this PPT is to give introduction to topic. Focus is to highlight big

picture and why corruption matters for everyone.

Slide 2 Corruption remains a significant problem for business (2005) …

0 10 20 30 40 50 60 70 80 90 100

EU-comp

Arm

BiH

Bul

Cro

Geo

Mac

Mol

Rom

Ukr

Question: “Can you tell me how problematic are these different factors for the operation and growth of your business.” Percentage of firm managers who answered corruption is a moderate or major problem.

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why? (Washington, DC: The World Bank, 2007)



91

Slide 3

State capture by private interests

0

1

2

3

4

Geo Ukr Cro Rom Bul Mol SAM Mac Alb BiH

sta

te c

ap

ture

in

dex

Source: Anticorruption in Transition 3 – Who is Succeeding … and Why? (Washington, DC: The World Bank, 2007)

State Capture, 2002-2005

State Capture Index measures the extent to which private

payments/gifts to parliamentarians to affect their votes, or

to government officials, to affect the content of

government decrees, had a direct impact on their

business.

Slide 4

Project Level

Combating corruption in

World Bank Group operations

Country Level

Helping countries build more capable

& accountable states

Global Level

Working with development partners, sharing experience &

addressing transnational issues

Key elements of World Bank‟s GAC strategy

Key Instruments:

• Investment climate

• Engaging private sector

on anticorruption

• „Demand-side‟

Key Instruments:

• Risk mapping

• Procurement

• INT Investigations

• Debarring corrupt firms

Key Instruments:

• Support global

conventions (OECD,

UNCAC)

• StAR

Instruments for Private Sector Role

CORE SLIDE

Key messages:

• the strategy is not only about anticorruption in Bank projects

• it is about helping countries strengthen governance to enable

development

as well as transnational issues, such as asset recovery and the role of

multinationals from developed countries in corruption



92

Slide 5

Public Management

Public financial management & procurement

Administrative & civil service reform

Governance & Service Delivery

Transparency, participation, accountability in service provision (health, education,

transport)

Sector-level corruption issues (EITI, forestry)

Civil Society, Media & Oversight Institutions

State oversight institutions (parliament, judiciary, SAI)

Transparency & participation (right to information, user

participation)

Civil society & media

Local GovernanceCommunity-driven development

Local government transparency

Downward accountability

Private Sector

Competitive investment climate

Responsible private sector

Helping countries improve governance Different entry points across countries

Coalition building across stakeholders

CORE SLIDE

Key messages: to clarify that

• there are many entry points for governance reform, and the choice

depends on country context

• while there are many examples of good work in all these areas, the Bank

has historically focused within governance primarily on public

management

• The Bank wants to scale up work in the other four areas, as appropriate

and in partnership with other donors: these are the frontiers

building multistakeholder constituencies for reform are a critical aspect of

managing the reform process

Slide 6 Fighting corruption collectively with all

stakeholders increases the impact of

individual action

”Collective Action”:

Is a collaborative and sustained process of

cooperation between stakeholders.

Increases the impact and credibility of individual

action.

Brings vulnerable individual players into an alliance

of like-minded organizations.

Levels the playing field among competitors.

May complement, or temporarily substitute for and

strengthen, weak local laws and anti-corruption

practices.

BUT: Collective Action is not easy or quick, and

requires patience, hard work and expertise.

Key characteristic

Companies

GovernmentCivil society

Collective action usually

involves various

stakeholders

Collective

Action

Why should companies also engage against corruption collectively - as well

as individually?

Collective action is a proven method of fighting corruption. Mexico,

Indonesia, Ecuador and Germany (among many others) are locations where

business and other stakeholders presently use various forms of collective

action.

It is used in:

variety of industry sectors



93

conditions (emerging and developed markets)

variety of different forms – from project-specific integrity pacts to long

term business initiatives

Operationally, collective action can be incorporated into a company‟s

project management, corporate risk management, and compliance activities.

Strategically, using collective action is a tangible demonstration of a

company‟s commitment to many of the principles underlying corporate

social responsibility and “effective” compliance program activities.

Slide 7

Implementing collective action: options

Integrity pact Anti-corruption declaration

Formal, written contract between

customer and bidding companies

Bidding and implementation

processes monitored by external

monitor

Sanctions apply in case of violations

Ethical principles bind

signatories to not engage in

corruption in the daily business

Public commitment leads to

enforcement 'by honor‘

Initiative can advocate anti-

corruption with government

Anti-corruption principles bind

signatories to not engage in

corruption during project

Public commitment leads to

enforcement 'by honor' and

peer pressure

Compliance-related

prerequisites for membership

Adoption of membership

requirements checked by external

audits

Members get certified or will be

excluded

Principle-based initiative Certifying business coalition

External enforcementEthical commitment

Collective

Action

Degree enforcement

Project / transaction

based agreement

Long-term initiative

Business coalition

Organi-

zation A

Company

C

Company

A

Independent

facilitator

Applications

There are different types of anti-corruption collective action programs – and

while they all help achieve a common goal – lower levels of corruption –

each works differently depending on the country environment, human and

financial resources available, etc.

Within the guide, we outline four different types of initiative – it doesn‟t

mean there aren‟t others – but these four capture the essence of what

collective action against is all about. The four types of programs are:

•Transparency International‟s Integrity pacts

•Anti-corruption declarations

•Certifying business coalitions

•Principles-based initiatives

This web portal provides additional resources on how these different

initiatives work, and helps users to determine which might be most

applicable to their situations.



94

Slide 8

Selected success stories

Customer /

Principal

Project description Main achievements

Pakistan

International

Airlines (PIA)

Integrity pact

MOU between PIA and TI-P for transparency in

procurement systems under recommendation of

Government of Pakistan

• Development of PIA "Procurement

Manual" for all SBD's on

procurement of works, goods and

services based on international

standards and recommendations by

the National Accountability Bureau

• Best practice model for anti-

corruption initiatives across Asia

Code of

Pharma-

ceutical

Manufacturers

Sectorial code of conduct for members of

IFPMA*

Includes more restrictive provisions on travel,

gifts and events, code complaint procedure and

code compliance network

• Anti-corruption declaration can be

created in a sector-wide effort

• Brings together companies from

developed and developing countries

Paraguqy

Pacto Etico

Commercial

Certifying business coalition

Business principles, ethics principles, quality

management

Includes certification process, random audits,

and trainings/workshops.

• 150 members signed pact, currently

100 applicants

• PEC seal is becoming a branding

tool in Paraguay which is perceived

to be one of the most corrupt

countries in LAC

* International Federation of Pharmaceutical Manufacturers and Associations Notes on each case example in guide book

Slide 9

Demand for tools and guidance

• Joint effort of Companies, NGOs and Multi-laterals;

• Guide and Portal on Collective Action;

• 25 case studies, 50 country profiles, 15 industry profiles;

• Implementation guidelines.

Joint effort of:

World Bank Institute; United Nations

Global Compact; Center for International

Private Enterprise; Global Advice Network;

Grant Thornton; Siemens; Transparency

International.

To help companies design and implement collective action initiatives, WBI

together with a coalition of companies, NGOs and multilaterals developed

implementation resources to give companies an impetus to make real change

as to how they go about doing business in high risk environments.

Specifically, we developed a guide and accompanying interactive web portal

that provide business leaders with multiple tools to combat corporate

corruption that have already been piloted in different countries including

Mexico, Ecuador, Pakistan and Germany.

With the guide and portal we are not trying to reinvent the wheel – many

anti-corruption tools already exist that business leaders can consult -, but we

are trying to give companies better understanding of the value of collective

approaches and how to access these existing tools and select those that are

most appropriate for their specific needs.

We did not start with the proposition to develop a tool and then match it to a

problem. Rather, with the guide and portal we are trying to help you to

identify your problem and based on your problem, we help you to chose the



95

right tool to solve your problem.

We have been lucky to have been able to work with leading companies and

business-oriented NGO and multilaterals representing crucial expertise in

this process: UN Global Compact, Center for International Private

Enterprise, Global Advice Network, Transparency International, Grant

Thornton and Siemens. Many of our partners from this initiative are here

with us today and I will introduce them later.

Furthermore, the guide was reviewed by many companies and business

groups, such as BDI (Bundesverband der Deutschen Industrie e.V.,

Germany), Haylide Chemicals (India), Microsoft (US), Pacto Etico

Comercial (Paraguay), Sanlam Limited (South Africa), the Prince of Wales

International Business Leaders Forum (UK), and ThyssenKrupp AG

(Germany).

Of course, we also could not have developed these resources without the

help of our colleagues here in the Bank. This is a true World Bank GROUP

product, as we received input from PREM, SDN, IFC, INT and several

regional departments.

Slide 10

Guide: “Fighting Corruption through

Collective Action”

Page 39 January 2008

Involve third

party to

promote

collective

action to

customer

Decision tree helps to design the approach for project related

collective actions

Decision tree

1

1

Are tender

documents

already finalized

/ released?

Is customer willing to

fight corruption 2)

Are third parties

available to influence

customer?

(e.g. anti-corruption

offices of government,

multilateral donors)

1) Decision has to be made by internal compliance / risk assessment team in headquarters. Various sources for country specific assessment

are given on slides 81 - 83 2) For details: see slide 87

No

No

Yes Promote

collective

action to

customer via

facilitator

Yes

Prerequisites for project-related collective action not met – go to decision tree 2

to evaluate possibility of principle – based / Certified association

Yes 1.1

1.2

Does your

company

perceive

corruption as

major barrier to

do business in

respective

country? 1)

No

No need for collective

action – consider other

ways to continue doing

business with integrity

No

Yes

Integrity Pact / Anti-corruption declaration


How to get started?

Initiate business coalition (1/2)

2.1

IO: International Organization MDB: Multilateral Development Bank

Source: Interviews

Facilitator

(NGO / IO)

Company

For details please

refer to slide 55

1

2

…

4

43

Establish

contacts to

facilitator

Create

concept

Approach

government

Concept

note

1st meeting with

facilitator

Present

company

profile,

compliance

policy and

concept for

collective action

(one may use

material from

chapter 4 of this

manual)

Ask for

feedback /

recommen-

dations

Identify

appropriate

facilitator

Create list of

potential partners

Companies

NGOs

Religious

groups

MDBs

Prioritize: which

companies / other

stakeholders

need to take part

to ensure

sufficient

attention /

credibility?

Assess the

potential

oversight role of

government (e.g.

anti-corruption

bureaus)

Conduct workshop to

evaluate business

situation, risk of

corruption, benefits

of anti-corruption

activities and best

practice examples

Summarize intention

and objective of

initiative in concept

note

Facilitator to send

out concept note to

potential partners

and follow-up

1 2 3 4

Certifying business coalitionPrinciple-based initiative


Four Integrity Pact contract examples provided – however contracts

have to be adjusted to specific prerequisites of country and project

Integrity Pact contract examples

IP: Integrity Pact

Source: Internet, Interviews

IP from project "Berlin

airport"

Seen as best practice

example

Available in German only

IP contract from project

"Hydroelectric power plant",

Ecuador (English translation)

No "Social Witness"

Detailed description of

Arbitration Tribunal

IP template from

Transparency International

Specifically designed for

contracts in the defense

industry

IP contract used by ONGC

India

Based on contract of Berlin

airport

Classification and definition

of Collective Action

Decision trees

Process steps

Highlighted topics and

issues to consider

(e.g. anti-trust)

Contract templates

Profiles of initiatives

Contact list

Basis

Find the right approach

for your situation

Benefit from various real

life examples and

templates

Follow detailed

process steps

Examples

XXXX ProjectName MM/YY – FileName.ppt

Definition of corruption, dangers of corruption

Overview on various ways to fight corruption

As already mentioned, our fighting corruption through collective action

resources consist of two parts, a guide and accompanying web portal.

The guide helps business leaders to better identify the corruption challenges

and to select, adapt and implement a collective action tools that fits their

specific problem.

Catering to our main target group, companies, we tried to make the guide

and portal as business friendly as possible – hence the familiar Power Point

format.



96

Slide 11

Finding the right solution to specific anti-

corruption problems

SpecificS

ollution

Project

Do you face

corruption risk in a

particular project

or in general?*

START

Country

Sector

Prerequisites for collective

action not in place

(refer to slide 57 for suggestions

how to deal with this situation)

Do any appropriate

business coalitions

already exist?

Yes

No

Did major companies

express their will to

fight corruption in

respective country /

sector?

Yes

Are any potential

facilitators available?

How to get

started (refer to

slide 38)

No

No

Join coalition and

setup anti-

corruption

initiative

(refer to slide 55)

Project / transaction

based initiative

Long-term initiative

Are tender documents

already finalized?No

Is customer

willing to fight

corruption?

Yes

Yes No Try to implement a long-term

initiative

* high-risk country or

high-risk sector

The decision trees in the guide, such as this sample, help in this process of

identifying the appropriate path to take, and whether the conditions exist for

any form of collective action initiative.

Slide 12

Web Portal: www.fightingcorruption.org

Country Profiles

Industry Profiles

Implementation

Steps

Country and

industry profiles

Case Studies

Events and

WorkshopsLaunched on June 19 in

London

The portal offers country and industry profiles, as well as more information

on how to implement collective action program. The additional resources on

the portal complement the guide and are designed to help firms adapt the

tools to their country and sector. The portal will also sever as a platform for

anti corruption practitioners to exchange their experiences on collective

action. We invite everyone to give us feedback and to help us to expand this

portal. We are already pleased that additional members, beyond the core

group that developed the guide, are contributing to the portal‟s ongoing

development. We hope that this can become the center for a community of

practice to update – an “open source” platform.



97

Slide 13 Strengthening collective action efforts:

capacity building and open source

approach

Need to build understanding of collective action options and to strengthen business action on corruption.

Need for organizations, including World Bank, to champion and facilitate collective action initiatives with business: workshops on the opportunity for both internal and external audiences

offer best practice resources and guidance to private sector led initiatives, including country/industry pilots

encourage and support collective action components in operational initiatives (e.g. small grants; operations components)

capacity building

Continue global level advocacy and outreach on collective initiatives on integrity with the private sector

In addition to expanding the portal and disseminating the guide, we also

plan:

-Country pilots: workshops, capacity building assistance and working with

industries, but also relevant government officials, potential civil society

partners

-To investigate how to incorporate collective action components in lending

projects: encourage and support collective action components in WBG-

supported operational initiatives.

We see a need to work to build the capacity of individual firms and business

associations to promote and adopt collective action measures. A new report

suggests that companies are increasingly recognising the risks of corruption

and doing more to combat it, and more than half of companies are increasing

training on corruption, but we hope that such training can include

components to cover collective action options (source: Ernst and Young).

Slide 14

Thank You!

Michael Jarvis

World Bank Institute



98

ANNEX 3: PRESENTATION OF THE TRANSPARENCY INTERNATIONAL 2008 GLOBAL

CORRUPTION REPORT - CORRUPTION IN THE WATER SECTOR

Mr. Manoj Nadkarni, Communications Coordinator, Water Integrity Network (WIN)

Slide 1

The Global Corruption Report

2008

Corruption in the Water Sector

Manoj Nadkarni

Communications Coordinator

The Water Integrity Network (WIN)

Slide 2

• Annual TI flagship publication

• Systematic assessment of the state of

corruption around the world

• 3 sections:

• Thematic: in-depth analysis of one key issue

• Country reports: institutional changes and key developments in 30 countries

• Research: overview of latest research findings

• English version published by Cambridge University Press

What is the GCR?



99

Slide 3

Example of GCR reach:

Impact of GCR 07

• Launch in May 2007, events in 23 countries

• Over 30 country case studies

• Distributed globally: 2800 policy-makers, high-court judges, lawyers, other judiciary stakeholders

• Extensive media coverage: hundreds of news articles, interviews with BBC, CNN, CNBC

• 11,000 plus online hits for press material in six weeks after launch

Slide 4

GCR 08

• Launched in New York and in Washington DC

Water section covers 4 sub-topics

• drinking water and sanitation

• agriculture and irrigation

• environmental sustainability

• Cross-border water issues

• hydro-electric power and dams

• Case studies from all regions, diagnosis of causes and

consequences, policy recommendations

Slide 5

Why the water sector?

Hydropower, irrigation, industry, environment & IWRM, watsan,

•Agriculture & food security

•Power

•Health

•Water and sanitation

•Gender

•Education

•Urbanization and slums

•Environmental resource

management

•Equity: upstream -

downstream

Water is closely linked with development. Investing in water is investing in:



100

Slide 6

Water sector has a high potential for corruption

Fundamental characteristics:

• low institutional capacity or dysfunctional institutions

• low salaries

• large infrastructure investments

• large-scale procurement

are common to delivery of many public services in the developing world but also

…the Water sector is often also part of the construction sector, globally thought to be the most corrupt of all sectors

Slide 7

Several other dimensions making it particularly

susceptible:

A partial list…

• Large flow of public money

• Uncoordinated donor, national, and local funds

• Political interference in, and discretion for, investment decisions

• Monopolistic nature of service delivery

• Failure of sector financing and cost recovery

• Problematic tariffs and subsidies

• Watsan: Increasing role of the informal market

• The cost of sector assets

• The asymmetry of information between user and provider

• The complexity of sector stakeholders, systems, levels of service,

and institutional roles and functions

Slide 8

Water and sanitation

• Context: 1.2 billion people without access to affordable, safe water; more than 2.6 billion without sanitation

• Corruption rampant - from policy design to infrastructure building to operations and service delivery

• embezzlement of water budgets (Paraguay)

• distorted distribution of water points (Malawi)

• inflated costs of infrastructure (India)

• local water mafias control supply (Ecuador, Bangladesh)

• water jobs awarded through patronage or bribery (Mauritania)

• bribery and extortion in bill collection, repair works (Kenya, Zimbabwe)



101

Slide 9

Irrigation

• Irrigated agriculture accounts for 70% of water

use, 40% of world food production and is key to

rural poverty reduction

• Corruption in irrigation contracts up to 25% of

contract volume (India)

• Distorted subsidies: largest farmers collect

disproportionate share (Mexico, US)

• Unchecked groundwater exploitation:

unsustainable pumping race (India, China)

Slide 10

Hydropower

Hydropower provides more than half of the electricity supply in 60 countries

• Highly complex, large-scale projects with significant corruption risks in design, planning, implementation and operation stages

• 50 to 60 $ billion annual investments

• Distorted environmental impact assessments (India)

• Embezzlement, bribery, bid-rigging in construction (Argentina, Paraguay)

• Fraud and manipulation in resettlement and compensation programmes (China, Indonesia, Zambia)

• Poor ethnic minorities most affected, political acceptance of hydropower undermined

Slide 11

How much does corruption cost?

Classic figure: 20–35 percent provided by Davis (2004) for water service delivery in South Asia

• Provides a sectoral, not a regional, indication

• this estimate is limited to petty corruption and does not account

for high-level abuse or diversion of resources.

• Non-revenue water

• Measuring corruption is an urgent area of future work.

Davis. J. (2004).

Corruption in public

service delivery:

experience from South

Asia's water and sanitation

sector. World

development, vol. 32, no. 1

; p. 53-71.



102

Slide 12

Grand corruption

• Kickbacks for inflated bills, unit costs and material quantities.

• Rigging competition in building water infrastructure, Corruption in awarding water contracts

• Corrupt procurement: many forms,

• tailoring project specifications to a corrupt bidder, providing insider information, limiting bid advertising, shortening bid periods and breaching confidentiality, Contractors may provide entertainment in exchange for certifying their work or turning a blind eye to construction shortcomings

Corruption favours large-scale, capital-intensive projects because they are more likely to involve and benefit actors with deep pockets

In Australia, suppliers of

valves and fittings used for

water systems were fined a

total of A$2.85 million in

2000 for engaging in price-

fixing, tender-rigging and

market-sharing. 2002 two

years later three Swedish

suppliers of water and

sewage pipes were

convicted of price-fixing

and market-sharing.

The cost of the joint

Paraguayan–Argentinian

Yacyretá Dam, started in

1983 and completed only

in 1994, ballooned from

US$2.7billion to 11.5

billion. It is widely cited as

a „monument to

corruption‟.

Slide 13

Public or private?

• Does business or government do a better job supplying water to the people and keeping corruption in the sector low?

Slide 14

Privatisation

• Effective water provision depends more on the quality of governance, both for the provider and the sector, than on the ownership structure.

• Even if water infrastructure is financed and managed by the public sector, the system will still depend on products and services delivered by private entrepreneurs.

Public Private PartnershipsBut we need to harness the private sector’s expertise and

capital for a specific local context



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Slide 15

OECD Principles for Private Sector Participation in Infrastructure

• Principle 6: infrastructure projects should be free from corruption at all

levels and in all project phases. Public authorities should take effective

measures to ensure public and private sector integrity.

• Principle 20: private sector participants in infrastructure should

observe commonly agreed principles and standards for responsible

business conduct.

• Principle 22: private sector participants, their subcontractors and

representatives should not resort to bribery.

• Principle 23: Private sector participants should contribute to strategies

for communicating and consulting with the general public, including

consumers, affected communities and corporate stakeholders.

Slide 16

Key Lessons from the GCR

• Procurement practices must be strengthened

• Accountability must be improved

• Integrity measures must be applied across the

board

• Participation must be enhanced

Slide 17

GCR solutions

• Transparency

• mapping pollution (China), water points (Malawi),

corruption risks

• performance indicators, citizen report cards (India)

• transparent budgets, expenditures, tendering, contracts

• Accountability

• effective water and information rights (Argentina, India)

• independent regulators

• institutional reform for water utilities: (Senegal,

Cambodia)



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Slide 18

GCR solutions

Participation

• participatory budgeting and spending reviews (Brazil)

• water user associations to manage irrigation systems

• social audits (India), participatory project monitoring

(Philippines), social witness in tendering (Mexico)

Collective action

• integrity pacts (Colombia, Argentina)

• integrated water resources management: involve all

stakeholders

Slide 19

Water specific lessons

• Climate change makes fighting corruption more urgent than ever

• The costs of corruption are disproportionately borne by

the poor

• Anti-corruption efforts must focus on the poor. Marginalised groups must be engaged so

their voices are heard; The poor’s access to information must be improved

• Work to prevent corruption before it happens, as cleaning it up

after the fact is difficult and expensive – or even impossible.

• Understand the local water context, otherwise reforms will fail.

One size never fits all.

• Build pressure for water reform from above and from below.

Slide 20

One tool to fight corruption…



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Slide 21

What is the WIN?

Formed to support anti-corruption activities in the water sector worldwide by forging coalitions that can take action in ways that individuals or single organisations cannot.

The complexity of multiple geographical and institutional levels typical of water sub sectors makes coalitions essential.

Slide 22

Network membership: inclusiveness

• Individuals

• Civil Society

• Research organizations, Universities

• International and Regional Policy Organizations (incl. UN Agencies)

• Public Utilities

• Regulators

• Private Sector/ Private Operators

• Media

• Donors, multilateral development banks

Slide 23

Founding organizations:

• IRC International Water and Sanitation Centre,

• Stockholm International Water Institute (SIWI),

• Swedish Water House (SWH),

• Water and Sanitation Program-Africa (WSP-Africa),

• Transparency International (TI)



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Slide 24

Initial network activities

• The GCR 2008 Corruption in the Water Sector

• Knowledge building and dissemination (e.g. Policy Briefs, Licensing Study)

• Small grants for civil society/ NGOs

• Case studies & documenting use of tools

• Connecting people: Network website with community functions

• Capacity building (workshops)

Slide 25

What WIN can do in the region

• Capacity building workshops

• Help identifying experts

• Adding a water dimension to existing work on public

procurement, transparency initiatives, replicate sectoral

integrity pacts, environmental work…?

• Identify priority areas for your anticorruption focus

The GCR message: The time for action is now

corruption standards international anti - europe 7 general ...romania, serbia, sweden, tanzania, the...

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