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Volume 14 Number 6

Declaring War on Corruption

01 December 2001

Michael Smith attends the world’s biggest anti-corruption conference in the Czech Republic.

At the west end of Wenceslas Square in Prague, a crowd gathers around mime artists who show how greed and graft make grasping animals of us all. Nearby, a marquee houses an ‘Art against Corruption’ exhibition of posters, photos and bitingly satirical cartoons. On the street near the top end of the Square stand armoured personnel carriers—not from an occupying power of the Cold War but to guard against terrorism. The Velvet Revolution was, after all, over a decade ago, and despite current fears Prague citizens enjoy sauntering in the autumnal sun, in this most elegant of central European cities.

Two metro stations away, inside the Prague Congress Centre, the world’s largest ever gathering of anti-corruption campaigners meets to discuss ways of combating the corruption that dehumanizes and impoverishes everyone in the global community. And which also, through drug trafficking, money laundering and security breaches, aids and abets terrorism. Some 1,300 people from 143 nations took part in the 10th International Anti-Corruption Conference, organized by Transparency International (TI) in October.

If you want to declare war on corruption you could announce your battle plans almost anywhere: Brussels, Washington, Moscow, Harare, Seoul or, indeed, in countless corporate boardrooms. The problem is so ubiquitous. Prague—the leading business centre of the old Austro-Hungarian Empire—was an appropriate enough choice. PriceWaterhouseCoopers reports that nearly 50 per cent of Czech companies perceive corruption to be widespread, compared with the European average of 23 per cent, though only five per cent of Czech firms admit to being victims of corruption.

The Western attacks on Afghanistan began just as the opening ceremony was being held at Prague Castle, hosted by President Vaclav Havel. No one was condoning the evil of the terrorist atrocities of 11 September. But an unspoken question hung in the air: if the West and the world had had the courage to address corruption, might such evils have been averted?

Corruption protected evil dictatorships and led to the ‘degradation of civilization’, President Havel said. Corruption had a thousand and one faces and ‘many of those who fight corruption risk not only a comfortable life but life itself’.

His Social Democrat Prime Minister, Milos Zeman, came to power on the back of a ‘clean hands’ election campaign and this ensured his place at TI’s top table. But veteran Czech journalist Jan Urban remains sceptical: Zeman, he said, has since surrounded himself with a ‘clientist clique’ of Nomenklatura cronies. He will not have missed the remarks of Maria Livanos Cattaui, Secretary General of the International Chamber of Commerce: ‘Political accountability has taken on even greater importance,’ following the terrorist attacks and their aftermath.

No one knows more about political accountability, and risk to life, than prosecuting judge Eva Joly. She has faced intimidation and death threats since her seven-year investigation into corruption at French state oil giant Elf-Aquitaine. Her investigation led to the conviction of former foreign minister Roland Dumas. Judge Joly was one of several honoured as anti-corruption heroes at the presentation of TI’s annual Integrity Awards. ‘The fish starts rotting from the head,’ she said. Corrupt leaderships from Chile to Italy had found loopholes to escape prosection and create barriers to investigation.

To emphasize the point, Peru’s Justice Minister, Fernando Olivera, made a dramatic call for the extradition from Japan of discredited former prime minister Alberto Fujimori to face corruption charges in Peru. ‘We have to win the war against impunity,’ Justice Olivera declared.

Interpol’s chief, Ronald Noble from New York, stressed that terrorism couldn’t be beaten on the battlefield alone. ‘If customs, police and security professionals are corrupt, no expense on high tech devices will provide our citizens with the security they deserve.’ The most sophisticated security systems and dedicated personnel would be useless if undermined from the inside by a simple act of corruption. ‘The strongest fortress will crumble if built upon sand.’ Corruption and terrorism had to be beaten ‘one person at a time’ by bringing individuals to justice.

Surprisingly, here too was Ann Pettifor, co-ordinator of the Jubilee 2000—now JubileePlus—debt remission campaign. Jubilee and TI have not always seen eye to eye and one maverick TI official had bad-mouthed debt remission as a sop to corrupt regimes. But Pettifor stressed that transparent debtor-creditor transactions were imperative. And civil society organizations were needed to deter regimes from corruptly incurring foreign debt. Debt, she said, was a cancer in the economies of developing countries. Pakistan, for instance, spent 56 per cent of its national budget on debt repayment and only 18 per cent on the development of its people. ‘This is a fertile ground for any form of fundamentalism,’ she warned.

Transparency, accountability (in both the public and private sectors), good governance, legislation and institutional reform—these were the catchwords throughout the conference. Next to venal politicians, big business graft is often seen as the greatest villain. But how to turn good intentions into practice?
Brazilian businessman Ricardo Semler, Chief Executive of the $200 million public services company Semco, said that his company was about a third of the size it might have been ‘had we accepted to play along with the (corrupt) rules of the game’. Instead they had acted as whistleblowers, and this had led to several arrests.

Once, government environment inspectors wanted paying off when they found that the company’s paint tanks were located in the wrong place. Semler refused. They told him: ‘You have a two-and-a-half year old son. Are you sure you want to do this?’ Despite the threat, Semler decided to fight the criminal indictment they were threatening him with. But he also decided not to expose the individuals threatening him. ‘I felt I could not take the risk in dealing with four or five people known to be extremely violent and who were telling us that they knew exactly where we walked every day, how my kid walked to school.’ And Semler had no desire to be a posthumous hero.

Recently his company found that a subcontractor was paying off people in the social security department, in negotiating a contract with them. Internal e-mails flew in from Semco’s staff saying that they should back out, even though it meant Semco lost a $1.1 million order. On another occasion, Semco was negotiating a contract with a Japanese trading company. The Japanese director told Semco that they would have to pay a three per cent ‘commission’: 1.5 per cent to him and 1.5 per cent to the company President. Ricardo Semler approached the President, who confirmed the demand. Semler refused.

Semler says that at the root of a lot of business corruption is the drive for success. What made billionaires go to work on a Monday morning? he asked. The answer had ‘more to do with Freud or Jung than with [management guru] Peter Drucker. Many of these people are in a game because this is how they gratify themselves, how they test themselves against the world.’

Mexico’s President, Vincente Fox, was fêted as he arrived for the last day of the conference. On his election on 2 July 2000, TI’s Mexico chapter had presented him with a 10-point plan ‘in favour of transparency and against corruption’. One of his first actions was to create an anti-corruption commission—unprecedented in Mexico, according to Government minister Francisco Barrio. Some 5,000 government officials have since been fired or fined. And civil society organizations have been invited to monitor the government’s achievements. Mexico’s electronic state procurement system, in the public domain on a website, is a first in Latin America. Ironically it led to a Mexican newspaper exposing a minor scandal, dubbed ‘towelgate’: President Fox’s residence was being stocked with exorbitantly priced towels. It only went to demonstrate the new commitment to transparency.

The financier and philanthropist George Soros admitted that fighting corruption felt like a losing battle. ‘But it is a battle that has to be fought.’ He would like to see TI’s annual index of the world’s most corrupt regimes developed to become a ‘score card’ to measure progress on a range of issues, from transparent government procurements to the voting record of legislators.

Conquering corruption may be like scaling a mountain, as Cheryl Gray, Public Sector Director at the World Bank, put it. But at the Bank too the culture has changed dramatically in the last five years, she claimed, with an emphasis no longer just on loans but on good governance, and ‘a systematic focus on poverty’. In a rural poverty alleviation project in Brazil, for instance, 94 per cent of resources go direct to the beneficiaries, some 7.5 million people. ‘The days are gone when economists say that corruption is good because it greases the wheels,’ she added.

She believed that reforming institutions would most likely change moral behaviour. But a workshop on the role of faith-based communities stressed the need to ‘enhance the moral fibre and spiritual understanding of individuals’, in the words of Thai Buddhist monk Mettanando Bhikkhu, of the World Conference on Religion and Peace. ‘You have to have core values which tell you what is right.’

Corruption is still perceived as being on the increase. But what most encouraged TI’s founder, Peter Eigen, was the coalition being built between governments, the private sector, international institutions and civil society organizations in the war against corruption. ‘It seems to break the pattern of violence and confrontation’ of the anti- globalization protests, he said. ‘You cannot but be startled at the contrast.’ Standing as a lighthouse against the rocks of corruption, TI, founded in 1993 and now operating in 77 countries, casts a beam of integrity across the world.

Michael Smith