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Businesses band together to target graft-seekers

Source: Thomson Reuters Foundation - Tue, 18 Jun 2013 07:32 GMT
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A cashier holds Ukrainian hryvnia banknotes at a shop in Kiev, on Feb. 22, 2010. REUTERS/Konstantin Chernichkin
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WASHINGTON (Thomson Reuters Foundation) - Leaders in anti-corruption are teaming up with business, government and civil society to find new ways to combat graft in the public sector by targeting the bribe-seekers.

Mark Pieth, chairman of Working Group on Bribery at the Organisation for Economic Cooperation and Development (OECD), said the focus needs to broaden from penalising the bribe-payer - the approach used over the past 30 years with limited success and modelled after the U.S. Foreign Corrupt Practices Act which targets corporations.

Now corporations are starting to band together in voluntary compacts with government and civil society, and pledging not to pay bribes. If a public official solicits illicit payments, the coalition members agree on a mechanism for reporting the act to a high-level official who would intervene quickly, Pieth said.

Such an informal public-private partnership could strengthen the arsenal for combating corruption by offering a speedy response outside the direct channel of the public agency or ministry that might be colluding in the corruption and unwilling to enforce anti-bribery laws.

Colombia and Ukraine have agreed to pilot projects as complements to their existing structures, he said.

“This is part of an emergence of a holistic system for addressing corruption,” Pieth told a meeting hosted by the World Bank on Monday.

He called this a “collective action” approach, designed to supplement but not replace the swathe of anti-bribery acts and anti-corruption commissions set up over the past 30 years. Given the failure of many countries to implement or enforce those laws, graft busters need alternative methods, he said.

Public-private partnerships - known as multi-stakeholder groups - are gaining momentum in the field, witness the Extractive Industry Transparency Initiative and a similar drive in the construction industry. Such initiatives help fill the gap, when reforming a legal system or a government bureaucracy in countries such as Ukraine, where corruption is deeply embedded and might take a generation to weed out, he said.  

“We don’t have the luxury to wait that long,” Pieth said.

QUIETLY ADDRESSING PROBLEMS

The OECD, the government-backed non-profit group Basil Institute on Governance and the B-20, a group of international business leaders who advise G20 leaders from the world’s major industrialized and developing nations, have drawn up a proposal for how such a programme could work.

Dubbed a High-Level Reporting Mechanism, it would be voluntary and informal, tailored to each country and designed to circumvent the lengthy investigative process of an anti-corruption agencies and the court system.

Pieth said a complaint about a bribery solicitation would be taken to an independent ombudsman, who would have a quiet word with a high government official in hopes of quickly addressing the problem.

A speedy response would reduce the incentive for a business to pay a bribe in instances when time is of essence to remain competitive, such as getting goods through customs or during a public tender process.

PITFALLS

Anti-corruption experts welcomed the idea as potentially useful, although it did raise some questions on legality and functionality.

Peter Costello, former treasurer of Australia, said businesses could face charges of anti-competitive behaviour or attempts at bid-rigging if they formed coalitions to complain about public procurement processes.

Nancy Boswell, professor at American University Washington College of Law and former president of Transparency International USA, said she was concerned that this was a stop-gap measure to address the shortcomings of the supply-sided approach to tackling corruption, and that it fails to offer an integrated approach.

Nicola Bonucci, OECD’s director of legal affairs, said appointing the right ombudsman would be crucial. It needs to be someone who is independent, trusted and who does not become captured by business interests, turning into a lobbyist.

However, he supported the overall concept as one of a number of tools in the battle against corruption. “There is no magic recipe... It is a marathon,” Bonucci said of the anti-graft movement.

The B-20 group is taking up the idea, using the Basel Institute as its hub to assist in developing projects in individual countries.

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