International
Corruption
Trillion Dollar Scandal
Guest blog post from EG Justice’s Tutu Alicante:
I spend each day of my life fighting corruption. I’ve seen friends beaten and jailed for highlighting fraud and abuse. There are many people like me across Africa. But we can’t win this fight alone. Corruption is a global problem. That’s why I’m writing to ask you to add your voice.
Right now, a few of the world’s biggest oil, gas and mining companies are fighting hard to keep some very big secrets. They are lobbying against proposed laws supported by major European leaders that would lift the lid on trillions of dollars paid to governments across Africa – secret payments which can sometimes get into the wrong hands. This money should be going into vital services like schools, health clinics and roads that could help lift hundreds of millions out of poverty, not into the pockets of a few.
Government ministers from across Europe meet in less than two weeks to discuss this legislation. It could save lives in Africa and help build a future where nobody needs to rely on aid. But some corporate lobbyists have swung into action and are trying to kill this effective legislation. Don’t let them win.
Please stand with me and sign the petition telling European leaders not to give in to corporate lobbying
The full petition reads:
Dear European Leaders,
Please stand up to corporate lobbying against proposed EU laws requiring oil, gas and mining companies to publish payments to foreign governments. Pass strong laws that will help citizens spot corruption and ensure the money is used to lift millions of people out of poverty.
Over the last decade, multinational companies have paid trillions of dollars to African governments in exchange for their natural resources. This is set to continue well into the future, providing a massive opportunity to lift hundreds of millions of people out of poverty. When African citizens like me can see what our governments are paid, we can make sure money is being spent on vital services.
Corruption deprives nations of their future. If enough of you join with me we can help put an end to this trillion dollar scandal.
Tutu Alicante,
ONE member and Executive Director of EG Justice
EG Justice is an African organization that campaigns for human rights, the rule of law, transparency and citizen participation in Equatorial Guinea.
Paul Collier backs European transparency law
Guest post from Paul Collier, author of ‘The Plundered Planet: How to Reconcile Prosperity With Nature’ and member of ONE’s Africa Policy Advisory Board.
The ‘resource curse’ is one of the most persistent paradoxes of international development. For decades the natural resources of poor countries have been plundered: the few expropriating what should benefit the many, and the current generation squandering what should also benefit future generations. The current global boom in commodities provides many poor countries with an unprecedented opportunity to escape poverty, yet the default option is for history to repeat itself. One of the most pressing issues in the fight against global poverty is how to prevent this repetition.
Repetition is not inevitable. For example, Germany learnt from hyperinflation. But to avoid a repeat of the resource curse the pressures for plunder must be faced down. Some of the necessary actions must be taken by the governments of resource-rich countries, but we ourselves need to take complementary actions.
Fortunately we are now at a moment of opportunity, and Germany’s support will be crucial. The European Commission has published proposals that would oblige all European extractive industry companies to become more transparent in their operations abroad. If enacted, these companies will have to publish the payments they make to the governments of every country where they operate. The legislation aims to go at least as far as ground-breaking US legislation that was passed in 2010. This means that a global standard for legally binding transparency in the extractive industries is within reach for the first time. The French President is in full support of this initiative. Even Britain, where more extractive companies’ are headquartered than in any other EU-member state, used a G20 finance ministers meeting to express unequivocal backing. It is unsettling that the German government, a champion of extractive transparency in years past, is silent at this historic moment.
The draft disclosure requirements will provide the perfect complement to actions taken within the poor countries themselves. Citizens need the data that would be made available by these companies to better hold their governments accountable for the money they receive for the country’s natural resources. Over 600 civil society organisations worldwide have signed up to the ‘Publish What You Pay’ coalition. Citizens, many of whom have risked arrest to fight embezzlement, will be newly empowered with the tools they need to force positive change. As the Arab Spring so ably demonstrated, ordinary citizens care deeply about transparent and accountable governance.
Of course transparency is only a means to an end. The prize is the better use of huge resource revenues, enabling a dramatic improvement in social and economic development. In 2008 exports of oil, gas and minerals from Africa were worth roughly nine times the value of overseas aid ($393-billion versus $44-billion), creating considerable government income through licences and taxes. In many countries those revenues account for the vast majority of government revenues – more than 80% in the case of Angola. Even if enhanced transparency were only to improve the efficiency of natural resource revenue spending incrementally, it would easily yield more than Germany’s entire aid program for sub-Saharan Africa.
In a time of economic austerity across Europe policies like these which help African governments to mobilise their own resources for development are even more important. Aid budgets are now under pressure. In the long-run, fostering greater reliance on taxes can help develop cohesive states and reduce aid dependency.
The discussions on the detail of the new European legislation are now critical. For the new legislation to effectively empower citizens in situations like this, it needs to include the disclosure of financial information at the project level. Only these disaggregated figures give citizens and local communities the information to hold government accountable. In addition, financial information only at the country level will not help citizens curtail the official under-pricing of national assets, such as the case of the Democratic Republic of Congo where contracts have officially been sold for a sixteenth of the market price – an indication that kick-backs are taking place.
Project-level disclosure is also a way to improve the functioning of the natural resource market and therefore makes good business sense: wide discrepancies in the valuation of assets can be hidden by aggregating data at the country-level. A more efficient market system can operate if this secrecy ends. It is no coincidence that major investors successfully joined hands with civil society to have project –level disclosure included in the ground-breaking US legislation.
The good news is: the current draft of the European Commission includes project-level disclosure and both the French President Sarkozy and the British Premier Cameron support this critical detail.
Germany has been a strong champion for extractive transparency ever since the Heiligendamm G8 summit. This is evidenced by the long-standing support Germany gave to EITI, a voluntary multi-stakeholder transparency initiative that has worked well in resource rich countries that showed the will to improve their transparency. However, it is for those countries which ignore EITI that the new legislation is needed and Germany can reinforce its role as an international leader on extractive transparency by supporting the new law.
But while the German government has indicated its general support for this EU legislation some European partners have noticed that a number of German ministries remain sceptical of the key feature described above: project-level disclosure. In line with its excellent track record on improving extractive transparency, Germany should now endorse the current strong legislation. Improved accountability in the natural resource sector leads to more stability in resource rich countries and better markets – both central aims of the German resource strategy.
We are now at a rare moment: we know that some legislation will be enacted. But as with all legislation, the devil is in the detail. Lobbyists for the interests of continuing plunder and irresponsible business practices are attempting to dilute key features while paying lip-service to noble objectives. If we permit the lobbyists to win we become complicit in frustrating change: remember, the default option is for the current resource booms to be the biggest missed opportunity for poverty reduction in history. Germany needs to decide now whether it is happy to be complicit in frustrating this chance for change or if it wants to join the fight against a repetition of the hugely destructive resource curse.
This post first appeared in the Handelsblatt newspaper.
What’s ahead in 2012
2012 is a huge year in the fight against extreme poverty. There’s no other way to put it. And I wanted you to be the first to know our plans for the year.
You’re a core part of all that we do as ONE, and we’ll be in touch over the months ahead to ask for your support in:
- Fighting corruption and empowering African civil society, by supporting a European law forcing oil, gas, and mining companies to publish what they pay to governments in developing countries;
- Asking the UK government to keep their promise of spending just 0.7% of national income on international aid by 2013, and enshrine this in law;
- Making sure that our governments deliver on short and long-term solutions to help break the cycle of famine, and
- Stepping up our campaign to see the beginning of the end of AIDS by 2015.
Last year you helped persuade world leaders to fund vaccinations against two of the biggest killers of children under 5 – saving 4 million more children’s lives in 5 years.
Not only that, but G20 leaders heard your voices in calling for short and long-term agricultural solutions to help break the cycle of famine in the Horn of Africa. And that’s only some of what we achieved, together as ONE. Thank you.
Now in this even bigger year, you can do something today to help make our movement even stronger. Please watch our video, share it with friends online and invite them to join us too:
Thanks very much.
Putting young people in the driving seat of development
The Africa Youth Trust (AYT) is the last of our five finalists to reveal before we announce the winner of the 2011 ONE Africa Award!
AYT was founded by a group of five young people in 2005, all working in different sectors, but with a common interest to profile the youth agenda. They recognized that scattered initiatives, which they were all individually involved in, were not going to be powerful enough to bring about change. With this understanding, they combined their efforts and today their model promotes partnerships between the younger and older generation with a focus on economic empowerment and governance. Three of the original founders are still involved with AYT today.
AYT staff and Network Members
The bulk of their programs are carried out by young people and builds in a research component, in order to assess change and impact, capacity building for sustainability, as well as an advocacy component, driven by youth and targeting policy-makers. They have produced a guide to youth action against corruption and have used this guide to train 96 young people to date. AYT is also involved in employment training as a way to engage young people in entrepreneurship. African youth are very active users of twitter and facebook, and especially in Kenya, and this medium has allowed AYT to more effectively engage young people and encourage discourse.
At the onset of AYT’s activities, they found that so many of the youth population were involved in corrupt activities without realizing they were complicit in corruption, simply because of their lack of knowledge. In order to address this they collaborated with the Kenya Anti-Corruption Commission (KACC) to train youth about what corruption meant and organized them to monitor and report acts of corruption. With the support of a USAID funded program, AYT also organized young people to conduct audits of Constituency Development Funds, which are designed to channel resources to youth programs. These funds have been notorious for the misappropriation of funds, but with the AYT’s organizing capacity, young people started to ask questions about the funds that were meant to aid their development and monitor their disbursement.
Beneficiaries of AYT’s empowerment programme
While there are other youth organizations in Kenya, very few are engaged in the promotion of an inter-generational discussion that allows a platform for young people to engage in policy. The culture of civil society in Kenya is known to be primarily confrontational, a defensive reaction to the previous governments hostility to civil society. But since 2002, the new government has been much more receptive to civil society. So rather than become a watchdog of the Kenyan government, AYT’s approach has been to promote dialogue between policy makers and young people. Their non-confrontational approach is really one of the key strategies that have enabled them to be successful. In adopting such an approach they are also cautious to safe guard against becoming “yes-men” and instead demonstrate value to the government by proposing alternatives to perceived systemic problems that promote corruption.
The Africa Youth Trust has been doing amazing work! We commend their efforts and congratulate them for joining the list of 2011 ONE Africa Award finalists!
Beyond aid to open development
I came away from Busan feeling a bit queasy. Not because of the week-long jet lag and lack of sleep, or because Busan has been desperately disappointing for aid effectiveness. It has not, although it remains to be seen whether it will be remembered as the last whimper of the aid effectiveness agenda or the first hurrah of a global partnership for effective development cooperation.
Neither is my queasiness about donors not being held to account for their failure to meet previous commitments, nor about the fact that the aid effectiveness agenda remains somewhat poorly linked to evidence about development outcomes. Nor is it about the fact that there’s little honest discussion of the risks that are involved when investing in development, particularly in places with challenging governance environments. The queasiness comes from the fact that there remains a sense that “we” -– aid industry insiders, with money and power -– know best; as if having money and power necessarily means that one has relevant expertise. However, an antidote to my queasiness may be at hand.
Discussions at Busan briefly highlighted the Open Government Partnership (OGP) and its role in pushing forward greater transparency and accountability among both developed and developing countries. At a joint Busan event with Tony Blair’s Africa Governance Initiative, USAID played the opening video from the OGP event in September. By making the link between OGP and the aid effectiveness agenda -– a link noted by Owen Barder, too -– USAID made clear that making development cooperation more effective is not just about providing better services and vaccinating more children, but is also about providing people in developing countries with the information that they need to make good choices and to hold their governments to account.
So, while I left Busan feeling queasy, I also have a sense of optimism. Beyond aid, through open governance, there is the promise of open development -– a democratic development where people, not “experts,” have the power. As Rakesh Rajani puts it, “The purpose of development should not be to create and apply expert solutions, but rather to help enrich the conditions in which people can do more of what they already do well — by making it easier for people to get, compare and share information; to learn from each other and outsiders about how they have made things work; to search, experiment with and craft solutions; and to team up to get things done” (World Bank, Open Development report, September 2011).
The 2011 Corruption Perceptions Index: Demanding better government
Transparency International (TI) defines corruption as the abuse of entrusted power for private gain. This definition includes corrupt practices in both the public and private sectors. In an aim to quantify and compare perceived corruption levels across different countries, TI created the Corruption Perceptions Index (CPI) which ranks countries according to perceptions of corruption in the public sector.
TI has released the 16th annual index, which ranks 183 countries according to perceived levels of corruption. The 2011 CPI is an aggregate indicator that combines different sources of information about corruption and scores countries on a scale from 10 (very clean) to 0 (highly corrupt). The CPI is determined by expert assessments and opinion surveys which include questions about the bribery of public officials, kickbacks in public procurement, embezzlement of public funds and questions that probe the strength and effectiveness of public- sector anti-corruption efforts.
Public outcry at corruption, impunity and economic instability sent shock waves around the world in 2011. Protests in many countries quickly spread to unite people from all parts of society. Their backgrounds may be diverse, but their message is the same: more transparency and accountability is needed from our leaders. According to Huguette Labelle, chair of TI, “This year we have seen corruption on protesters’ banners be they rich or poor. Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government.”
No region or country in the world is immune to the damages of public-sector corruption and the vast majority of the 183 countries and territories assessed score below five on a scale of 0 to 10.
Key Findings
Overall, two-thirds of the 182 countries scored this year were given scores less than 5, which mean they are considered significantly corrupt. New Zealand, Denmark and Finland top the list with scores of 9.5 and 9.4 respectively, while North Korea and Somalia are tied at the bottom with a score of 1.0.
African states that performed comparatively well include Botswana with a score of 6.1, Cape Verde with 5.5 and Rwanda with 5.0. All three appear among the 50 “cleanest” countries. These three countries have consistently improved in the CPI rankings since 2008.
“Arab Spring” countries performed worse than in 2010 and all rank in the lower half of the index with scores below 4. Tunisia dropped from 4.3 to 3.8, Egypt from 3.1 to 2.9 and Libya from 2.2 to 2.0. South Africa has dropped consistently in the CPI rankings from a score of 4.9 in 2008 to 4.1 in 2011.
The rankings show that public sector governance that puts the interests of its citizens first is the most crucial aspect in countering perceptions of corruption. Governments must respond accordingly by increasing transparency in service delivery and resource allocation. For their part, citizens need to engage with their governments and continue demanding better performance from their leaders.
Corruption in Context
Today sees the publication of the first reports from the UK’s new Independent Commission on Aid Impact (ICAI). ICAI was set up to ensure that UK aid maximises effectiveness and value for money, and to provide an independent counter-balance to the Department for International Development’s own internal reporting systems. It counts ONE Africa Policy Advisory Board member John Githongo as one of its four commissioners.
Of their four reports it is inevitably the one focused on corruption that has picked up the most media coverage. The rising proportion of UK aid being spent in fragile and conflict states presents an obvious challenge to DFID officials: how to operate effectively in higher risk environments? That is not a task to be taken lightly, but it would be a mistake for the UK to only spend aid in benign governance environments.
The UK has made strides on designing aid delivery mechanisms that are appropriate to different parts of the world. As the ICAI report on corruption points out, in Nigeria – a country where the risks of corruption are deemed to be high – only 0.04% of DFID money is in the form of government budget support, while the figure is 72.4% in Zambia. There is also now a greater focus on transparency over DFID spending and the UK has been a prominent supporter of the International Aid Transparency Initiative which seeks to create a common reporting standard for all donors – making it easier for citizens to see what money is coming into their country and where it is being spent. In addition, DFID recommends that in countries where budget support is used around 5% of the value of that aid is used to strengthen domestic accountability – i.e. to help local civil society organisations to hold their government accountable for money spent. Indeed ICAI makes strong additional recommendations on how DFID can assist partner countries fight corruption through improved transparency and accountability mechanisms.
Of course fighting corruption in many of the countries where UK aid is spent is not just the responsibility of DFID. The new Bribery Act lays out a zero tolerance framework for UK companies operating abroad. The UK has also been at the forefront of European countries supporting new transparency legislation that will require all listed and large unlisted oil, gas, mining and forestry companies to publish the payments made to governments on a project-by-project basis.
Clearly badly spent aid money should not be tolerated but it is also inaccurate to suggest that corruption can be eradicated overnight (we struggle enough in this country), or that inefficiency and human error can be prevented. Nevertheless, ICAI’s report makes clear that DFID has a key role to play in building up the structures and local systems that in the long-run will help transform fragile and conflict states prone to corruption into places that prioritise citizens’ development needs.
Europe proposes new transparency law to fight corruption
The campaign for transparency in the oil, gas, mining and forestry industries was given a big boost today with the publication of European Commission proposals for a new law guaranteeing all company payments to governments will be published. This country-by-country and project-by-project reporting will give citizens the information they need to hold their leaders and companies accountable. ONE and the Publish What You Pay coalition have been working hard for this change and have warmly welcomed the proposed law.
ONE’s co-founder Bono had this to say on the move:
“This is a serious step forward by Barroso and Barnier, who have thrown their weight behind the fight by the citizens of poor countries to ensure their natural resource wealth turns into actual wealth for the people – and doesn’t line the pockets of dodgy dictators or distant exploiters. The next step is when the great activist himself, Bill Gates Jnr, presents the case for these legally binding measures to the world leaders of the G20, along with other historic proposals on financing the fight against poverty.”
Our Brussels Director Eloise Todd explains what needs to happen next to get the proposed law onto the statute books:
“President Barroso and Commissioner Barnier have shown real leadership. It is now the responsibility of the Council of Ministers and the European Parliament to ensure that these proposals are implemented in full, which we trust will happen given the strong support from the French, British and the European Parliament. In some areas we will look to the Council and Parliament to tighten up the regulation, for example in removing the exemption for countries that would rather keep information secret. It is also essential that the provisions on project-level disclosure are strengthened. The murky deals between extractive companies and despots must become a thing of the past. The EU and its companies will now have to decide which side of history they want to be on.”
The issue of extractive industry transparency is crucial for development prospects in Africa. Huge flows of money are coming into the continent for natural resources ($246 billion in 2009) and yet far too much of it is not being spent on reducing poverty and strengthening public services. Transparency over individual projects gives citizens and activists the information they need to hold their governments accountable for money coming in.
The move by Europe complements ONE’s campaign for section 1504 of the US Dodd-Frank Act which ensures all US listed extractive industry companies will shortly be publishing their payments to governments. We are now moving towards a global standard of mandatory transparency, which was endorsed by the G8 and we hope to see progress on at the G20 next week.
Now for Action: Governments make commitments to openness, transparency and accountability
At 7.00 New York time, Brazil, Indonesia, Mexico, Norway, the Philippines, South Africa, the UK and the USA – the countries on the steering committee of the Open Government Partnership – published their Action Plans. They contain a wide range of exciting measures to enhance transparency and accountability and to make governments more open and responsive to their citizens. Efforts to tackle corruption feature heavily in many of the plans, including those of Brazil, Indonesia, Mexico and South Africa. Initiatives to enhance budget transparency and to improve the delivery of public services feature in the plans of Brazil, Indonesia, the Philippines and South Africa. And welcome moves to enhance aid transparency feature in the plans of the UK and the USA. On transparency about natural resource revenues, Norway has signalled a commitment to consider passing legislation that would require multinationals to publish tax information on a country by country basis. And by signing up to the Extractive Industries Transparency Initiative, the USA has continued the leadership it showed last year in passing legislation on extractives transparency.
The Open Government Partnership (OGP) looks set to be an important forum for sharing experience, encouraging and assisting governments to become more open. Africa’s involvement is currently limited with just three African countries – Ghana, Kenya and Tanzania – joining South Africa within the OGP. However, the partnership has great relevance for Africa and for ONE: the ability of African citizens to hold their governments to account is shaped by the actions of the USA, the EU and other countries that provide aid to Africa and whose companies operate in Africa; African governments can share experience with other emerging economies as regards transparency and accountability; and, over time, we hope that many more African countries will choose to take the path towards more open, transparent and accountable government.
We know that in 2012, Brazil will continue to lead the way on the open government agenda, hosting meetings of the Open Government Partnership, the Global Initiative on Fiscal Transparency and the International Anti-Corruption Conference, and perhaps joining with the USA in requiring its oil companies to publish what they pay to the governments of the countries where they operate. And we trust that Mexico will pick up the baton of transparency and accountability as it takes over the leadership of the G20 from France.
For ONE’s introduction to OGP and a link to our policy pitch see here.
Or check out ONE’s full analysis of the Country Action Plans from a development perspective
Opening Government to Accelerate Poverty Reduction
By shining a light on the ways in which governments in developing countries invest aid, natural resource revenues and other public resources, transparency can turbo-charge accountability, helping ordinary citizens to hold their governments to account. This can play an important role in reducing corruption, improving the delivery of essential public services such as health and education, enhancing the climate for growth and investment, and accelerating countries’ progress along the road out of poverty, towards prosperity and beyond aid dependence.
Transparency and accountability provide, in effect, a boost to the quantity and quality of resources available for development. To maximise this “resource dividend” it is essential that there is transparency and accountability for the use of all public resources, including aid, climate finance, taxes, and natural resource revenues, and that budget processes are open, with room for citizen engagement. The Open Government Partnership (OGP) – to be launched today (Tuesday 20th September) by President Obama of the United States and President Dilma Rousseff of Brazil – provides an important opportunity for governments to take a real step forward in enhancing transparency and accountability for the use of all public resources.
(OGP logo)
OGP is a new international initiative which aims to encourage and enable governments, in partnership with civil society, to promote transparency, increase civic participation, fight corruption, and harness new technologies to strengthen governance. By taking advantage of this moment of opportunity, governments can empower citizens with the information that they need to take greater control of their own development and make an important contribution to accelerating progress on poverty reduction.
At the OGP launch, the founding governments – Brazil, Indonesia, Mexico, Norway, Philippines, South Africa, United Kingdom, and the United States – will endorse an Open Government Declaration and announce national action plans. The founding governments will also be joined by another 38 governments, including Ghana, Kenya and Tanzania, who will commit to developing and delivering their action plans at a follow up meeting in March 2012 in Brazil. The official launch of OGP event will be live streamed at www.whitehouse.gov/live
As well as participating in the launch, we will be analysing countries’ action plans to assess whether governments’ commitments – on aid, on budgets and on natural resource revenues – will empower people in developing countries with the information they need to hold governments to account. See our recent policy pitch for more information about the commitments that we believe governments should make to promote the transparent and accountable use of public resources. Over the coming months and years we will be working closely with a number of partner organisations to build a global movement on transparency and accountability, to keep transparency and accountability high on the agenda at the G20, the Fourth High Level Forum on Aid Effectiveness in 2011, and in meetings of the G8 (US), G20 (Mexico) and the International Anti-Corruption Conference (Brazil) in 2012, and to make sure that governments meet their commitments to become more open.
Transparency alone will not deliver the accountability that is needed to ensure that resources are invested effectively in poverty reduction. Politics is key. But without transparency, political choices are poorly informed and there can be no accountability. With the demands of people across the Arab world for better governance fresh in our minds, now is the time to open government in order to accelerate progress on poverty reduction.
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About the Blog
The International ONE Blog is a daily log of the anti-poverty movement. The site is operated by ONE staff, with guest contributions from ONE volunteers, members and allies.
The content of each post and each comment represents the views of that author and does not necessarily reflect the views of ONE. ONE does not support or oppose any candidate for elected office, and any post expressing support or opposition for a candidate is not endorsed by ONE.
TAGS: Africa, Corruption, Equatorial Guinea, Transparency