Monday, June 12, 2006

"Designing Corruption Out"Without Locking Us In!

By John A. Akec
16 Feb 2006

It is to be recalled that in his first address everto Southern Legislative Assembly in September 2005,the GOSS President Salva Kiir Mayardit declared thathis government was going to make fighting corruptionin all its form a priority. I am not expert on the subject, but as the managementguru Charles Handy once said in his excellent book TheElephant and the Fleas that the best way to learn anew subject is to teach it to others. In many ways itis a question of observation and applying commonsense.

So what is this "C" word or corruption that isbothering every politician in both the industrialisedand developed economies of the North and thedeveloping or underdeveloped countries of the South?

Corruption includes a wide range of financialmalpractices and dealings aimed at self-enrichmentthrough illegal means. It ranges from routine briberyand petty abuse of power by the authorities (policeand security agents, tax and custom officials, visaand immigration officials, and other governmentofficials), to embezzlement of public funds byministers and top civil servants on a grand scalethrough fraudulent payments to receivingmultimillion-dollar in the so-called “kick backs” frommulti-national companies in order to win businesscontracts on favourable terms.

Petty corruption turns what should be a smoothday-to-day living for great majority of citizens intonear hell experience as well as raising the cost ofdoing business in a country. However it is corruptionat vast scale involving top civil servants, ministers,politicians and the multinational corporations that isbeing blamed for undermining development progress inmany poor nations where it is responsible foraggravating poverty by concentrating national wealthin hands of few, undermining democratic structures,encouraging the sales of arms, fuelling civil strives,destruction of the environment, and increasingnational debts.

It is approximated that money spent on bribery peryear is about US$ 80 billion, which is equal to thefigure needed by the UN to eradicate poverty in thedeveloping countries and achieve MillenniumDevelopment Goals. It is reported that in 1999 alone,US companies won 294 contracts worth US$145 billionall of which corruption was a factor. German companiesspent US$ 3 billion to secure business contracts. In1994, French export credit agency (a government fundedorganisation that insures national companies secureforeign and protect them against losses) paid bribesto the tune of US$ 2 billion to foreign purchasers ofdefence equipment, according to a report by a Frenchown secret service.Multinational companies are said to pay "commissions"to authorities in foreign countries (many of which arethe so called underdeveloped or developing) to wincontracts.

However, these "commissions" are added tothe costs of contracts, therefore inflating the costof projects to three folds in some occasions. Forinstance, in the beginning of 1970 WestinghouseElectric Cop. (a US company) paid president FerdinandMarcos of Philippine a sum of US$ 80 million in kickbacks to win a contract to build a nuclear power plantin Bataan costing US$ 2.3 billion (paid for by loans).The money was spent and the plant was never operatedas it was wrongly built too close to a volcano andsite of earthquake active fault lines (showing thelack of environmental impact assessment). Until year2018 the Filipino taxpayers will be spending about $170,000 a day to service the interest of the debtincurred by this bungled project; money that couldhave gone into provision of education and healthservices to millions of Filipinos. Such is theeconomic damage of grand corruption to the poor in thethird world countries.On the other hand, the leaders and the media of therich countries of the North are often engaged in aculture of blaming the problem of corruption in poorcountries on the lack of "good governance","democratic structures”, and “accountability".

However, human rights organisations, environmentalgroups, and NGOs active in the field of povertyalleviation in the Third World countries call this a“gross hypocrisy” by the developed nations whosecompanies are accused of “exporting” corruption to thedeveloping nations in order to steal their resources.And more worryingly still, the World Bank and the IMF,despite anti-corruption slogans, have also been blamedfor devising loan approval policies that give a blindeye to bribery by Western companies and whicharm-twist the governments that are hard on Westerncorporations involved in corruption. Western banks areaccused of profiteering in money laundered byauthorities in poor countries (estimated at US$ 20billion from African nations alone). The argumentcontinues to no end. However, one must concede that developing countriescan take measures that at the very least can minimisecorruption if not eliminate it all together. I believeit is a tall order for anyone to claim that corruptioncan be defeated over night. This is because it tendsto be subtle and those involved in it are getting moresophisticated by the day, according to reports byWestern rights and social justice advocacy groups suchas The Corner House in the UK.

It is believed that government can "design out"corruption by adopting administrative structures thatmakes it hard to conduct business with multinationalsin secrecy.

The question is what can our government inSouth Sudan do to lock out corruption without lockingus in?For once, creating an elaborate bureaucracy andadministrative fortresses around government machineryand civil service will have equally destructiveconsequences on a nation. Think of a very “secure”house where no burglar can enter, but so secure thatthe owners cannot escape in the event of emergency. Asystem that is too perfect to be useful for thepurpose it was built to serve. I say this because,when I hear that amongst President Kiir’s floated ideas is the philosophy of “keys-and-no-cash-to-state”projects. By which is meant no state government willbe allowed to handle cash but only keys to completedprojects. Which means the GOSS's authorities will beresponsible for handling and executions of projects.This would be tantamount to creating a new problem inorder to solve an existing problem. In this case thestates would be dis-empowered. Freedom means allowingpeople to do things for themselves with the law andthe guidelines.

Fighting corruption is not impossible but one needs toacknowledge that it will take time to reduce itminimum. It will still happen, but it can be made muchharder for the perpetrators. Some of simple themeasures that will go a long way in keeping corruptionat bay include the following.

You can’t get very far in fighting corruption withoutpolitical will and commitment at the highest level.Luckily for South Sudan, we have a man at the top,president Salva Kiir, who has declared a“zero-tolerance” policy on corruption. However, wewill have a lot to learn lessons from President MwiaKibaki’s new war on corruption which went pear shapeof late, resulting in mass resignations of ministersand flight of Kenyan anti-corruption Commissioner, John Gothingo, to exile in UK. Could that beattributable to a lapse in commitment by the Presidentor National Rainbow Party or both? If so, do we havewhat it takes to succeed whereas others have failed?

Good accounting systems can go a long way tominimising embezzlement of public funds. Also salariesshould be paid into personal accounts in Banks wherepossible which will allow tractability.

Without proper regulation, no one will be accountableand anything will be permissible. Financialregulations will need continuous review and revisionin the light of changing business and economicenvironment and evolving sophistication in thepractice of corruption. Establishment ofAnti-corruption Commission.

This is where great efforts are needed. Transparencymeans among other things: advertising the call fortenders in international papers such as Wall Street,Dow Jones Journals, and Financial Times for asufficient length of time. Following“best practice” inapplication for and award of contracts. Publicationsof the results of the tendering including all theoffers made and how the decision was rich to selectthe winning bid. Provision of opportunities to makefile complaints in the event of irregularities to anindependent body not party to the selection process.Imposition of bans on companies found guilty ofattempts to pay bribes in order to buy favour.

Search blacklists held by international organisationssuch as Information Coordination Group (ICG). And barout previous offenders from applying for contracts.I

Possession of big houses, big cars, expensiveholidays, and live of extravagance which areunjustifiable in the light of known income should be asubject of investigation.

Using statistics and well designed indicators tomonitor the levels of corruption and to measureprogress in reducing corruption.ECONOMIC MEASURESPoor pay of top civil servants and officials who makehuge financial decisions involving very large sums isputting them under temptation to embezzle public fundsor be bribed. Good pay will not stop the greedy, butit will keep maintain dignity of a hard workingtechnocrat and put a high cost on loosing theprivileges once caught while involved in financialmalpractices. Setting up of a minimum wage that canguarantee a living above poverty line.

Training of staff about best practice, education ofthe public through mass media about the causes, sources, and consequences of corruption on the well beingof the whole society, so as to change culturalattitudes regard to public property, there is no doubtthat great strides can be achieved in minimising thedamage caused by corruption to our own society. The above steps are just a few of many measures thatcan be taken to fight corruption in South Sudan.

Fighting corruption is not a job of a singledepartment. It has to be taken as a total systemoverhaul demanding fight at different fronts.The implications of winning the fight againstcorruption are huge for our economy. It means projectswill cost much less if given to the highest bidder andnot the highest briber. There will be more money tobuild roads, schools, and hospitals. Our environmentwill be protected. Donors will have confidence thattheir money will be used for the purpose for which itwas intended. Investors will come knocking at ourdoor. The gap between the rich and the poor willshrink. It will trigger a virtuous circle in place ofvicious circle. That is, less corruption means moreeconomic development. Which means better control overour resources and less corruption.

Freedom will, at long last, come to have real meaning:creating a difference in people's lives. In order tofight corruption we need to be conscientious,realistic, flexible, and persevering.


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