1

1

Fighting Corruption:Fighting Corruption:ParliamentParliament’’s Roles Role

Rick Rick StapenhurstStapenhurstWorld Bank InstituteWorld Bank Institute

September 17, Canberra 2008September 17, Canberra 2008

2

What is Corruption?What is Corruption?

Short DefinitionShort Definition

““The abuse of public office for private The abuse of public office for private gaingain””

2

3

Process of Fighting CorruptionProcess of Fighting Corruption

Successful antiSuccessful anti--corruption strategies need:corruption strategies need:

Political leadershipPolitical leadership

Coalition BuildingCoalition Building

Rigorous DataRigorous Data

4

3

5

0%

10%

20%

30%

40%

50%

60%Si

ngap

ore

Hon

g K

ong

Tai

wan

Mal

aysia

Chi

le

Phili

ppin

es

Tha

iland

Hun

gary

Chi

na

Bra

zil

Indo

nesia

Rus

sia

Kor

ea

% of respondents that report strong difficulty

Difficulty in Starting a Business

6

T.I. Corruption Index and Regulatory Discretion

ARG

AUS

AUT

BEL

BRA

CAN

CHE

CHL

CHN

COL

CRI

CZE

DEU

DNK

ESP

FIN

FRA

GBR

GRC

HKG

HUN

IDN IND

IRLISR

ITA

JPN

KOR

LUX

MEX

MYS

NGA

NLDNOR

NZL

PHL

POL

PRT

RUS

SGP

SWE

THATUR

TWN

USA

VENVNM

ZAF

r=0.76

Regulatory Discretion (GCS97)

T.I.

Cor

rupt

ion

Inde

x

High Corruption

Low Corruption

LOW HIGH

Even more important (than Regulatory Interventions) in understanding Bribery and Corruption is the degree of Regulatory Discretion.

4

7

S&P-DRI Corruption Index and Rule of Law

ZWEZMB

ZAR

ZAF

VNM

VEN

USA

URY

UGA

TZA

TWN

TUR

TUN

THA

SYR

SWE

SVK

SGP

SAU

RUS

RO M

Q AT

PRT

PO L

PHLPER

PAN

PAK

O MN

NZL

NORNLD

NGA

MYS

MMR

MEX

MAR

LKA

LBY

KWTKO R

KEN

JPN

JO R

ITAISR

IRQ

IRN

IRL

INDIDN

HUN

HKG

GRC

GHA

GBRFRA

FIN

ESP

EGY

ECUDZA

DNKDEU

CZE

CRI

COLCMR

CIV

CHN

CHL

CHECAN

BWA

BRA

BO L

BHR

BGR

BGD

BEL

AUTAUS

ARG

ARE

AGO

r=0.82

Rule of Law (ICRG, average 1990s)

S&P-

DR

I C

orru

ptio

n In

dex

LOW

HIGH

LOW HIGH

The absence of good Rule of Law institutions is a key factor associated with corruption.

8

Bribery and Civil Liberties

AGO

ARG

AUSAUT

BEL

BFABRA

CAN

CHECHL

CHN

CIV

CMR

COL

CRI

CZE

DEU

DNK

EGY

ESP

ETH

FIN

FRA

GBR

GHA

GRC

GTM HND

HUN

IDN

IND

IRL

ISL

ISR

ITA

JOR

JPN

KEN

KOR

LSO

LUX

MAR

MEX

MOZ

MUS

MWI MYS

NAM

NGA NIC

NLD

NOR

NZL

PER

PHL

POL

PRT

RUS

SGP

SVK

SWE

SWZ

THA

TUN

TUR

TWN

TZA UGA UKR

USA

VENVNM

ZAF

ZMB

ZWE

r=0.67

Civil Liberties (Freedom House)

Bri

bery

(GC

S97+

)

LOW BRIBERY

HIGH BRIBERY

LOW HIGH

Key message of the new empirircal research: even more important than political rights are civil liberties in understanding corruption.

5

9

AGOALB

AREARG

ARM

AUSAUT

AZE

!

BEN

BFABGDBGR

BHR

BHS

BIHBLR

BOL

BRABRN

BWA

CANCHE

CHL

CHNCIV

CMR

COGCOL

CRICUB

CYP

CZE

DEU

DNK

DOMDZA ECU

EGY

ESP

EST

ETH

FIN

FJI

FRA

GAB

GBR

GEO

GHA

GIN

GMBGNB

GRC

GTM

GUY

HKG

HND

HRVHTI

HUN

IDN

IND

IRL

IRN

IRG

ISL

ISR

ITA

JAMJOR

JPN

KAZKENKGZ

KOR

KWT

LBN

LBRLBY

LKALSO

LTU

LUX

LVA

MAR

MDA MDGMEX

MKD MLI

MLT

MMR

MNG

MOZ

MUS

MWI

MYSNAM

NER

NGA NIC

NLDNOR

NZL

OMN

PAKPAN

PER PHL

PNG

POL

PRK

PRT

PRY

QAT

ROMRUSSAU

SDN

SEN

SGP

SLESLV

SOM

SURSVK

SVN

SWE

SWZ

SYRTCD

TGO THA

TJK TKM

TTO

TUN

TUR

TWN

TZA

UGA

UKR

URY

USA

UZBVEN

VNM

YEMYUG

ZAF

ZAR

ZMBZWE

r = 0.68-2.5

-2

-1.5-1

-0.50

0.51

1.5

22.5

0 0.2 0.4 0.6 0.8 1

Corruption and Freedom of the Press

High

Low

Low High

r = .68

Freedom of the Press (Freedom House)

Con

trol o

f Gra

ft

10

The The ““Bribe Fee ListBribe Fee List””: Unofficial Payments by Enterprises : Unofficial Payments by Enterprises for Licenses and Servicesfor Licenses and Services

UkraineRussia

"Unofficial fee": type of license/"favor"Average "unofficial" fee

required for “favor”

$ 176$ 288Enterprise registrationEach visit by fire/health inspector $ 42$ 67Tax inspector (each regular visit) $ 87$ 250Each phone line installation $ 894$ 1,071Lease in state space (sq. meter per month) $ 7$ 26Each export registration/consignment $ 123$ 643

Each import registration/consignment $ 278$ 133

Domestic currency loan from bank (preferential terms)

4%8%

Hard currency loan (preferential terms) 4%23%

6

1158

Corruption

Policy Reforms:•Privatization•Deregulation•Tax simplification

Individual Departments:•Focus on Key Revenue,

Expenditure and RegulatoryAgencies

AA MultiMulti--pronged Strategy forpronged Strategy forCombating CorruptionCombating Corruption

Core Systems:•Accountability Institutions•Civil Service Reform•Public Expenditure

Management and Procurement

•Legal and Judicial Reform

ECA and Associates

Political System:•Campaign finance•Public Service Boards•Roles and Responsibilities

Public Oversight:•Public Involvement

•“Power of data”/Surveys•Civil society/Media

•Parliamentary Oversight•Parliamentary Safeguards

12

Combat Corruption Combat Corruption by Changingby Changing

Policies and InstitutionsPolicies and Institutions

PoliciesPolicies InstitutionsInstitutions

CorruptionCorruption

7

13

Think of the Problem onThink of the Problem onFour LevelsFour Levels

Corruption and theCorruption and thePolitical ProcessPolitical Process

Core Core SystemsSystems AgencyAgencyof Governmentof Government SpecificSpecific

CorruptionCorruptionLink with ParliamentLink with Parliament

and Civil Societyand Civil Society

14

Think of the Problem onThink of the Problem onFour LevelsFour Levels

Corruption and theCorruption and thePolitical ProcessPolitical Process

Core Core SystemsSystems AgencyAgencyof Governmentof Government SpecificSpecific

CorruptionCorruptionLink with ParliamentLink with Parliament

and Civil Societyand Civil Society

8

15

Corruption and the PhilippineCorruption and the PhilippinePolitical SystemPolitical System

Vibrant democracy with approximately Vibrant democracy with approximately 353,000 government positions up for 353,000 government positions up for electionelectionElections are often expensive:Elections are often expensive:–– P3 billion for presidencyP3 billion for presidency–– P100 million for congressP100 million for congress–– P5 to 10 billion to support a slate of national P5 to 10 billion to support a slate of national

and local candidatesand local candidates

16

Corruption and the PhilippineCorruption and the PhilippinePolitical SystemPolitical System

Elections are often expensive:Elections are often expensive:It doesnIt doesn’’t stop there...t stop there...–– Weddings, funerals, natural disasters, etc.Weddings, funerals, natural disasters, etc.–– Strong cultural norms of kinship and Strong cultural norms of kinship and

reciprocityreciprocity

9

17

As a Result...As a Result...

Political system generates tremendous Political system generates tremendous demands for demands for moneymoney and and patronagepatronage

18

The Supply of Money:The Supply of Money:Where Does It Come From?Where Does It Come From?EmbezzlementEmbezzlement (estimated $150 million to (estimated $150 million to support Marcos reelection in 1986)support Marcos reelection in 1986)Access to offAccess to off--budget revenue sourcesbudget revenue sourcessuch as Philippine Amusement and such as Philippine Amusement and Gaming CorporationGaming CorporationAllowancesAllowancesSpecial legislative projectsSpecial legislative projects

(analogous to (analogous to ““Peoples ProgramPeoples Program””))

10

19

Corruption and the Corruption and the Political SystemPolitical System

These problems are fundamental, and These problems are fundamental, and their resolution will require: their resolution will require: –– Campaign finance reform Campaign finance reform –– Strengthen Public Service BoardsStrengthen Public Service Boards–– Redefine roles for politicians and civil Redefine roles for politicians and civil

servantsservants–– Changes in political cultureChanges in political culture

20

Think of the Problem onThink of the Problem onFour LevelsFour Levels

Corruption and theCorruption and thePolitical ProcessPolitical Process

Core Core SystemsSystems AgencyAgencyof Governmentof Government SpecificSpecific

CorruptionCorruptionLink with ParliamentLink with Parliament

and Civil Societyand Civil Society

11

21

Need for Strong, Independent Need for Strong, Independent Accountability InstitutionsAccountability Institutions

Parliament, Auditor General, Parliament, Auditor General, Anticorruption Agency, Ombudsman, Anticorruption Agency, Ombudsman, Civil Service CommissionCivil Service CommissionIndependent in their:Independent in their:–– BudgetBudget–– StaffingStaffing–– Work programWork program–– Reporting relationshipsReporting relationships

22

Hong Kong Independent Hong Kong Independent Commission Against Commission Against Corruption (ICAC)Corruption (ICAC)

Established in 1974Established in 1974Currently has 1,336 staff, 72% in Currently has 1,336 staff, 72% in OperationsOperationsThree main functions:Three main functions:–– OperationsOperations–– Corruption PreventionCorruption Prevention–– Community RelationsCommunity Relations

12

23

ICACICAC

Full powers of arrest, supplemented with Full powers of arrest, supplemented with search and seizuresearch and seizureProsecution under Department of JusticeProsecution under Department of JusticeWork scrutinized by four independent Work scrutinized by four independent committees comprised of leading citizens committees comprised of leading citizens

24

Philippine OmbudsmanPhilippine Ombudsman

Established in 1987Established in 1987Constitutionally independent, with power Constitutionally independent, with power to investigate and prosecuteto investigate and prosecuteStaff of around 200Staff of around 200

13

25

0123456789

Hong Kong Philippines

Number of Corruption Cases Successfully Prosecuted

(per 10,000 civil servants)

8.24

0.25

26

Why the Difference?Why the Difference?

ICAC practices more robust triage up ICAC practices more robust triage up front, moves forward selectively and winsfront, moves forward selectively and wins–– ICAC investigates only about 50% of the ICAC investigates only about 50% of the

allegations it receivesallegations it receives–– Moves forward with sanctions in about 10% Moves forward with sanctions in about 10%

of the casesof the cases–– Wins 4 out of 5 cases it prosecutesWins 4 out of 5 cases it prosecutes

14

27

Why the Difference?Why the Difference?

Ombudsman practices limited triage up Ombudsman practices limited triage up front, moves forward broadly and losesfront, moves forward broadly and loses–– Recently implemented initial screening procedures Recently implemented initial screening procedures –– Moves forward with sanctions in about 28% of the Moves forward with sanctions in about 28% of the

casescases–– At best wins about 12% of cases it prosecutes, At best wins about 12% of cases it prosecutes, –– Sanctions often arbitrary; significant numbers Sanctions often arbitrary; significant numbers

overturned on appealoverturned on appeal

28

Anticorruption Effort is Anticorruption Effort is Fragmented AdministrativelyFragmented AdministrativelyOmbudsman Ombudsman Commission on Audit (COA)Commission on Audit (COA)Department of JusticeDepartment of JusticeNational Bureau of Investigation (NBI)National Bureau of Investigation (NBI)Civil Service CommissionCivil Service CommissionPresidential Commission Against Graft and Presidential Commission Against Graft and Corruption (PCAGC)Corruption (PCAGC)Presidential Commission for Good Governance Presidential Commission for Good Governance (PCGG)(PCGG)

15

29

Think of the Problem onThink of the Problem onFour LevelsFour Levels

Corruption and theCorruption and thePolitical ProcessPolitical Process

Core Core AgencyAgencyAccountabilityAccountability SpecificSpecificInstitutionsInstitutions CorruptionCorruption

Link with ParliamentLink with Parliamentand Civil Societyand Civil Society

30

Much Corruption is Much Corruption is Agency SpecificAgency Specific

Perversion of the unique tasks and Perversion of the unique tasks and missions of a given organization missions of a given organization Concentrated in Key Departments (Top Concentrated in Key Departments (Top 10 account for 95% of complaints)10 account for 95% of complaints)Typically involves agencies with signifiTypically involves agencies with signifi--cant revenue and/or expenditure assigncant revenue and/or expenditure assign--ments, or enforcing rules in key areas ments, or enforcing rules in key areas ((““wetwet”” versus versus ““drydry””))

16

31

Top 10 AgenciesTop 10 Agencies

Dept Public Works Dept Public Works and Highwaysand HighwaysDept of Env. and Dept of Env. and Natural ResourcesNatural ResourcesDept of EducationDept of EducationBureau of CustomsBureau of CustomsNational Irrigation National Irrigation Admin.Admin.

Bureau of Internal Bureau of Internal RevenueRevenueDept of HealthDept of HealthDept of Interior and Dept of Interior and Local GovernmentLocal GovernmentNational Power CorpNational Power CorpBureau of Bureau of ImmigrationImmigration

32

Think of the Problem onThink of the Problem onFour LevelsFour Levels

Corruption and theCorruption and thePolitical ProcessPolitical Process

Core Core AgencyAgencyAccountabilityAccountability SpecificSpecificInstitutionsInstitutions CorruptionCorruption

Link with ParliamentLink with Parliamentand Civil Societyand Civil Society

17

33

3%

4%

4%

4%

7%

8%

18%

4%

48%

0% 10% 20% 30% 40% 50%

Not Worth It

NGOs Alone

Int'l Experts

Legislative

Enforcement Agencies

Executive Alone

Civil Society Alone

A-C Agency

Broad Coalition

Percentage of Respondents

Who Should take the lead in a National Governance/Anticorruption Program?

A-C: Anti-Corruption

34

Public InvolvementPublic Involvement

SurveysSurveys–– Technical, but publicTechnical, but public

Civil Society, NGOsCivil Society, NGOsMediaMedia–– Investigative reportingInvestigative reporting–– Press freedom, access to informationPress freedom, access to information–– Media accountabilityMedia accountability

18

35

Parliamentary OversightParliamentary Oversight

Office of the Auditor GeneralOffice of the Auditor GeneralOmbudsmanOmbudsmanPublic Accounts Committee (Uganda)Public Accounts Committee (Uganda)–– Chaired by member of oppositionChaired by member of opposition–– Public hearingsPublic hearings–– Focus on strategic not administrative issuesFocus on strategic not administrative issues

36

Conclusion : Political WillConclusion : Political Will

ThailandThailandUganda (now)Uganda (now)

PhilippinesPhilippinesKenyaKenya

WeakWeakPolitical WillPolitical Will

Hong KongHong KongSingaporeSingaporeUganda (formerly)Uganda (formerly)

South KoreaSouth KoreaRwanda (?)Rwanda (?)

Strong Strong Political WillPolitical Will

CordinatedCordinatedAA--C StrategyC Strategy

UncordinatedUncordinatedAA--C Strategy C Strategy

19

37

30/3042/4235/35

39/5019/23

29/3616/2114/2031/436/35

6/326/22

20/2747/50

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Georg

ia (19

98)

Cambodia (2

000)

Sierra

Leo

ne (20

03)

Honduras (

2001

)

Romania

(2000)

Paragu

ay (1

999)

Latvia (

1999)

Bolivia

(1999)

Guinea (2

004)

Slova

kia (200

1)

Ecuado

r (199

9)

Peru (

2001

)

Guatemala

(200

4)

Colombia (2

001)

Rank of Parliament within country, by Public Servants

Source: WBI diagnostics and survey data; various countries; 1998-2004. Paraguay figure comes from the first governance diagnostic 1999. http://www.worldbank.org/wbi/governance/Note: The chart shows percentage of respondents reporting that Parliament is dishonest institution. The number at the topof each bar reflects the ranking of Parliament relative to other government institutions.

Parliaments: Misgoverned or Honest Institutions?

Relatively good Relatively bad

% w

ho believe that Parliament is corrupt