Tackling the foundations of corruption
For years, anti-corruption activists have concentrated on improving enforcement and transparency. But critics of this approach argue that more systemic change is required: Gavin O’Toole learns why the ACE programme takes a very different line into the problem
Tackling corruption is one of the biggest challenges facing many countries – and it’s a problem not just in the poorest parts of the world, but also in middle-ranking countries including Brazil and South Africa and wealthy nations such as South Korea.
Yet corruption most often hurts the weakest: both the least powerful within societies, and the countries facing the greatest struggles to address problems such as poverty, environmental degradation and poor security. Unfortunately, in many such places the battle against corruption is being lost.
The World Bank puts the overall value of paid bribes at $1 trillion annually, whilst the UN believes that corruption leads to the theft of $2.6 trillion – or 5% of global GDP – each year. And pressure group Transparency International suggests that in regions such as Latin America and the Caribbean, citizens believe that corruption is increasing.
What we are doing, it seems, isn’t working. For years, most anti-corruption initiatives have focused on improving enforcement and transparency: on detecting and prosecuting corrupt officials, and on shrinking the concealed spaces within which corruption thrives. But some campaigners are now questioning this approach, arguing that it is doomed to failure as long as system leaders still operate in a world where it’s almost impossible to be both honest and successful.
According to Professor Mushtaq Khan, the backers of traditional anti-corruption initiatives too often “want a ‘big bang’ social solution, when society isn’t ready for that transformation yet at the economic and political levels.”
A new approach
Khan is the executive director of the Anti-Corruption Evidence (ACE) programme: a new research consortium led by SOAS, University of London, and backed by the Department for International Development (DfID) with £6m (US$7.9m) over five years.
“The programme was set up because of a general perception within DfID, but also within international agencies and organisations working on anti-corruption – including the World Bank and others – that our standard approaches were patently failing to make progress,” he explains.
“Those standard approaches to anti-corruption try, at a general societal level, to improve the rule of law, promote greater transparency, improve enforcement through standard anti-corruption commissions, etcetera – but are failing to achieve any significant results. ACE is an attempt to attack corruption from a different analytical perspective that looks for effective interventions that have an impact on development and which are feasible”.
Approaches such as improving enforcement and improving transparency, Khan argues, “are important, and we are not saying that we should stop doing them – but this vertical enforcement strategy on its own has no chance of being effective.”
To create real change, he adds, “you have to create conditions where powerful organisations in society want the rule of law; and precisely because this is not the case, we are not making progress.”
Identifying the sticking points
The worldwide drive against corruption has been gaining force since 2005, when the United Nations Convention Against Corruption became the first international legal instrument to address the topic. Global efforts since then have been typified by the International Monetary Fund’s naming of four main pillars of effective anti-corruption strategies: transparency; enhancing the rule of law; economic reform; and bolstering institutions.
But in Khan’s view, this approach leans too heavily on the developed world’s understanding and experiences of corruption, and fails to take account of the differences between advanced and developing economies.
Advanced economies, for example, have large numbers of productive organisations that require an effective rule of law to do business. But developing countries inevitably have a smaller number, and powerful interests often benefit from violating rules – avoiding taxes or ignoring regulations, for example. So attempts to enforce the rule of law are likely to find much less support amongst key decision-makers in the developing world; and thus they will often fall flat.
Many campaigners argue that improving transparency helps to reveal corruption – and indeed, the threat of being unmasked may deter people from corrupt practices. But in developing countries, much of the population may already know where corruption lies; the problem lies in cleaning up organisations whose leaders both benefit from the corruption, and have reached the top by mastering and controlling a corrupt system. Powerful organisations and politicians may not want a strong rule of law or effective institutions that obstruct illegal behaviour.
The weaknesses of the enforcement and transparency approach are illustrated by its application to political donations – for even in many countries with supposedly low levels of corruption, vested interests are skilled at subverting the rules. The UK, for example, has seen a string of scandals revolving around attempts to avoid declaring political donations or payments to politicians. Where powerful groups wish to resist stringent regulation or to find ways around the rules, enforcement-based approaches can’t address systemic corruption.
Professor Mushtaq Khan, executive director of the Anti-Corruption Evidence (ACE) programme (Image courtesy: ACE).
The ACE approach
Instead of taking this conventional approach, the ACE programme attempts to understand the specific drivers and enablers of corruption within a particular sector of a specific society, and to find ways of changing the environment within which corrupt actors operate – identifying reforms that will find support amongst key players, whilst changing the incentives structure to reward honesty rather than corruption.
Khan’s team first ‘map’ the organisational structures in a particular field and the motives of key actors, then works to align their incentives, build coalitions between them, and resolve their conflicting claims to resources. Changes must ensure that individuals and organisations that want to obey the rules can do so and remain profitable, whilst improving the wellbeing of society as a whole.
“There isn’t a blueprint which you take everywhere,” he says. “The ACE approach is to break down this complex problem sector by sector and look at particular things – health services, education, skills programmes, power-sector investments, how regulation operates – and in each case ask if it is possible to find support by changing the rules and institutions.
“When you get a feasible intervention which has a developmental outcome and which has support from the players themselves – who can play by the rules yet be productive and profitable – you have an ACE anti-corruption strategy.”
ACE is currently undertaking research in Nigeria, Tanzania and Bangladesh, where the UK aid agency has existing programmes of work, and hopes to deliver its first research results within 18 months.
Applying ACE
As an example of an environment in which ACE’s approach might work well, Khan points to the case of Bangladesh’s clothes industry.
The collapse in 2013 of the nine-storey Rana Plaza building in Savar, killing 1,134 garment workers, caused an outcry by highlighting corruption in the links between politicians and the $19bn export-oriented clothes sector. Subsequent investigations indicated that a large proportion of factories were violating complex and time-consuming building regulations by using fake certification – but that most could, and wanted, to comply.
ACE research offers the basis of a solution here, says Khan, built on increasing the capacity of the regulatory authorities while reducing the complexity of the regulations and offering non-compliant factories an “exit strategy” to regulatory compliance.
In a system riddled with corruption, it’s simply not competitive to be honest: those obeying the regulations are simply undercut by their corrupt peers, whilst honest officials can never climb the career ladder as long as those above them owe their own success to conformity with a corrupt system. And whilst that system stands, Khan believes, transparency initiatives will simply push corruption into another dark space; enforcement will always run up against a brick wall of non-cooperation.
However, he believes that we can change the system itself; that once anti-corruption researchers understand the specific drivers of corruption within a particular field, they can often develop reforms that serve citizens and the public interest whilst giving corrupt officials and businesspeople a real incentive to change their ways. “Make it feasible for the majority who want to comply, and find ways of getting rid of some of the non-compliers,” he says. “Then you begin to build up support for your anti-corruption strategy at that sectoral level.”
About Gavin O’Toole
Gavin O’Toole is a freelance writer and editor in London. He has written for leading newspapers, magazines, wire services and business schools about financial markets, business and regulation around the world. He has a particular interest in international relations, and a specialism in Latin American affairs. He has conducted research on this region’s political economy and has also published a number of books about its politics and natural environment. His latest title, Environmental Security in Latin America, will be published by Routledge in September 2017.
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If the best possible service is made available to all citizens in all cases then bribery is no longer needed. Ways to didncentivise paying a bribe are needed. It’s both a supply and a demand issue.
Water Pump Corruption is killing people, especially children, at all levels. We experience that every day in trying to promote clean water in Africa. There are many NGOs that try to do good, but at the end of the day, they have to install water pumps that do not work for long.
Why?
Because there are many corrupt people that impose pumps on the poor that don’t work. In a normal business environment, this would not be possible; imagine that a car manufacturer would sell cars with breaks that are not reliable, people die because of accidents? They would be out of business soon, but in selling handpumps there is no regulator, you may sell any crap, as long as it is cheap or you just bribe the people…
And they get away with it because nobody really cares about helping the poor with clean water. The NGOs speak about it, but in reality, they just comply and buy anything as long as it brings them some advantage.