tag:theconversation.com,2011:/fr/topics/public-sector-corruption-27341/articlesPublic sector corruption – The Conversation2022-07-07T03:28:15Ztag:theconversation.com,2011:article/1864702022-07-07T03:28:15Z2022-07-07T03:28:15ZA new report from Queensland offers guidance on integrity to all Australian governments<p>Peter Coaldrake’s report to Queensland Premier Annastacia Palaszczuk, <a href="https://www.coaldrakereview.qld.gov.au/assets/custom/docs/coaldrake-review-final-report-28-june-2022.pdf">Let the Sunshine In</a>, is a clear and frank assessment of culture and accountability in the Queensland public sector today. With one exception, it also offers refreshing guidance to jurisdictions across Australia showing signs of complacency about integrity.</p>
<p>First to the important exception: Coaldrake’s proposal that all cabinet submissions and their attachments, all agendas and all decision papers be published online within 30 days of cabinet decisions.</p>
<p>While the report acknowledges some of the risks associated with such a change – including the possible compromising of frank and fearless advice – it claims that New Zealand’s experience with early disclosure has worked well. As it points out, the NZ system explicitly omits:</p>
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<p>exploratory advice, “blue skies” thinking or advice generated in the early and formative stages of a policy development process and intended to ensure the free and uninhibited exchange of ideas that is necessary for the development of robust policy advice […]</p>
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<p>Coaldrake believes NZ takes a “measured approach” to redacting small sections of documents where free and frank advice is offered. He also firmly endorses NZ’s principle that </p>
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<p>the possibility of a cabinet paper being proactively released must not undermine the quality of advice included in the paper, and therefore the quality of the decision ultimately reached by ministers.</p>
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<p>But it is important to recognise the context in which those rules operate:</p>
<ul>
<li>NZ’s voting system means that it doesn’t emulate Australia’s strongly adversarial political culture; indeed, governments tend to be coalitions and cross-party negotiation is common</li>
<li>NZ’s public service commissioner is the employer of departmental secretaries (and other agency heads), limiting their exposure to penalties if advice embarrassing to the government is released</li>
<li>NZ has far fewer ministerial advisers devoted to minimising political risks, including risks from public servants’ written advice.</li>
</ul>
<p>Even if governments move towards NZ practice on the latter two points, I wouldn’t support such early release of cabinet papers.</p>
<p>The cabinet system nurtures the important principle of collective responsibility. It requires cabinet ministers to consider fully and frankly all perspectives and expert evidence, enabling each of them to stand by the collective decision regardless of differences robustly debated.</p>
<p>It is likely that Australian governments would adjust their cabinet processes or papers if they knew these documents would soon be available to opposition members and journalists eager to find divisions within cabinet or failures to accept expert advice. </p>
<p>It would be better, in my view, to start at the other end: to go back to a culture in which departments undertake and publish more research and analysis, produce substantial annual reports and perform evaluations for public release. Governments would issue green papers and white papers; the definition of an “exempt cabinet document” would be tighter; attachments to cabinet submissions and memoranda would be released if they didn’t include direct advice or ministerial recommendations.</p>
<h2>The tone at the top</h2>
<p>A number of Coaldrake’s other recommendations echo the key proposals of David Thodey’s 2019 <a href="https://www.apsreview.gov.au/">Independent Review of the Australian Public Service</a> rejected by the Morrison government:</p>
<p><strong>On ministerial staff:</strong> “Development and continual reinforcement of a common framework to determine appropriate relationships among ministers, their staff and senior public servants.” Here, Coaldrake recognises that the tone set at the top – the attitudes of political and public service leaders that foster the culture of the system – is essential. For the Commonwealth, I would go further. A <a href="https://www.canberratimes.com.au/story/7801306/ministerial-staff-like-public-servants-should-be-accountable/?cs=14264">major overhaul</a> of the Members of Parliament (Staff) Act is long overdue, as is a cut in the oversupply of ministerial staff.</p>
<p><strong>On capability and the Public Service Commission’s role:</strong> “Rejuvenation of the capability and capacity of the public sector” to emphasise performance and integrity, with the Public Service Commission playing a key role. For the Commonwealth, I would go further towards the NZ model, with the Australian Public Service (APS) Commissioner as professional head of the APS.</p>
<p><strong>On consultants and contractors:</strong> “Departments [to] more robustly account for the benefits from engaging consultants and contractors with regular monitoring by the Auditor-General.” Hear, hear.</p>
<p><strong>On top appointments and tenure:</strong> “Stability of government and performance of public service [to] be strengthened by appointment of agency CEOs on fixed term, five year contracts, unaligned to the electoral cycle.” For the Commonwealth, I would further strengthen the merit basis of appointments and constrain terminations.</p>
<h2>Institutions matter</h2>
<p>Coaldrake’s recommendations about integrity bodies provide excellent guidance to the new federal government. As it develops legislation for a federal anti-corruption authority, Coaldrake’s proposed “single clearing house for complaints, with capacity for the complainants and agencies to track progress and outcomes” would be of enormous use.</p>
<p>This clearing house would help to ensure the new authority works with existing bodies such as the ombudsman and the Australian Public Service Commission (APSC) – and, indeed, with the departments and agencies complained about. It would also ensure it focuses on serious corruption and major crime.</p>
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Read more:
<a href="https://theconversation.com/sports-rorts-shows-the-government-misunderstands-the-public-service-130796">'Sports rorts' shows the government misunderstands the public service</a>
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<p>Coaldrake also recommends that integrity bodies’ independence be enhanced by involving parliamentary committees in setting budgets and contributing to key appointments. To some extent this already applies to the Australian National Audit Office. But it should apply more firmly not only to that body but also to the ombudsman, the information commissioner, the human rights commissioners, the electoral commission and, indeed, the APSC.</p>
<p>In essence, Coaldrake’s report is a reminder of the importance of institutions and the need to review their roles and performance regularly. Critical to their effectiveness is the tone at the top, a point also emphasised in NZ’s integrity system. That tone has been wanting not only in Queensland but also in the Commonwealth and a number of other states.</p><img src="https://counter.theconversation.com/content/186470/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Podger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With one exception, it offers refreshing guidance to jurisdictions across Australia showing signs of complacency about integrity.Andrew Podger, Honorary Professor of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1554882021-03-07T08:15:23Z2021-03-07T08:15:23ZWhy Buhari’s government is losing the anti-corruption war<figure><img src="https://images.theconversation.com/files/387707/original/file-20210304-19-25nfix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some public officials request bribes to render services for which they are paid salaries.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/cropped-hand-of-person-holding-paper-currency-royalty-free-image/1188415524?adppopup=true">Joseph Egabor/Getty Images </a></span></figcaption></figure><p>A major straw that broke the People’s Democratic Party’s 16-year rule in Nigeria was <a href="https://www.jstor.org/stable/26873445?seq=1">pervasive corruption</a>. Nigerians voiced their frustrations by voting in the All Progressive Congress (APC) presidential candidate, Muhammadu Buhari, during the <a href="https://www.bbc.com/news/world-africa-32139858">2015 general election</a>. Buhari promised to fight corruption, defeat terrorism and fix the economy. </p>
<p>However, Boko Haram terrorists continue to <a href="https://businessday.ng/opinion/article/massacres-in-the-age-of-covid-19-pandemic/">wreak havoc </a>while <a href="https://www.vanguardngr.com/2021/02/lori-iro-leadership-and-herdsmen-nationalism/">bandits kidnap for ransom and violent herdsmen clash</a> with farming communities threatening <a href="https://www.worldbank.org/en/country/nigeria/overview">food security and national unity</a>. Unable to grow the economy, <a href="https://www.globalhungerindex.org/nigeria.html">Nigerians are now poorer</a>. </p>
<p>Two years into the second term of Buhari’s presidency, corruption remains intractable. Buhari’s anti-corruption fight rests on a tripod: implementation of <a href="https://www.cbn.gov.ng/out/2016/bpsd/guidelines%20for%20the%20operations%20of%20tsa%20by%20state%20governments%20in%20nigeria.pdf">Treasury Single Account</a>, <a href="https://www.cbn.gov.ng/Out/2017/BPSD/Circular%20on%20the%20Regulatory%20Framework%20for%20BVN%20%20Watchlist%20for%20Nigerian%20Financial%20System.pdf">Biometric Verification Number</a> (BVN) and <a href="http://whistle.finance.gov.ng/Pages/default.aspx">‘Whistle Blowing’</a> policy. These have received commendations as seen in <a href="https://www.vanguardngr.com/2020/11/fg-saves-n45-billion-from-tsa-monthly-finance-minister/">increased savings</a>. However issues like “politicisation of the anti-corruption fight” and refusal to investigate accusations have cast doubt on the fight. </p>
<p>The <a href="https://statehouse.gov.ng/news/presidency-statement-on-the-suspension-of-mr-ibrahim-magu/">suspension</a> of Ibrahim Magu, the acting head of <a href="https://www.efccnigeria.org/efcc/">Economic and Financial Crimes Commission</a>, on corruption charges and the <a href="https://punchng.com/buhari-uses-deodorants-to-fight-corruption-in-presidency-shehu-sani/">alleged double standards</a> in Buhari’s treatment of those loyal to him are some examples.</p>
<p>Party politics is shielding the prosecution of persons loyal to power corridors. Buhari’s former party chair, Adams Oshiomole, had <a href="https://punchng.com/oshiomhole-once-you-join-the-apc-your-sins-are-forgiven/">asked defectors</a> from opposition parties to join the governing party and have their ‘sins’ forgiven. </p>
<p>By the end of 2019 when President Buhari <a href="https://www.bbc.com/news/world-africa-47380663">got a second term</a>, Nigeria had dropped to 146 and by 2020 ranked 149 by Transparency International.(<a href="https://www.transparency.org/en/cpi/2020/index/nga">2020 ranking</a>. </p>
<p>Transparency International <a href="https://www.transparency.org/en/cpi/2020/index/nzl">scores and ranks</a> countries based on how experts and business executives perceive that country’s public sector. Transparency International describes the rankings as a composite index, combining 13 surveys and assessments of corruption, collected by a variety of reputable institutions. </p>
<p>While the Buhari government has described the rating “<a href="https://www.premiumtimesng.com/news/headlines/439283-presidency-attacks-transparency-international-over-nigerias-poor-corruption-rating.html">as senseless and baseless</a>” data from the <a href="https://www.nigerianstat.gov.ng/">National Bureau of Statistics </a> unveils the experiences of corruption by Nigerians when they encounter public officials. The data on public encounters with corruption confirms that corruption remains a major problem.</p>
<p>The bureau collects data from Nigerians on:</p>
<ul>
<li>direct experiences of corruption events, as victims, by citizens</li>
<li>the experience of reporting corruption and other crimes to the public authorities</li>
<li>opinions and perceptions of citizens concerning recent trends, patterns and state responses to corruption.</li>
</ul>
<p>One of my studies investigated anti-corruption crusade of the Buhari government on <a href="https://www.jstor.org/stable/26873445?seq=1">implementation</a> of whistle blowing, biometric data verification and Treasury Single Account. The study shows how politically exposed persons looted the treasury and adopted different mechanisms to hide their loots in cemetery, isolated shops, septic tanks and abandoned some in airport.</p>
<p>The other paper examines <a href="https://www.routledge.com/Corruption-and-Development-in-Nigeria/Akanle-Nkpe/p/book/9781032014425">Nigeria’s encounter with corruption</a>. It uses National Bureau of Statistics data from a study conducted between May and June 2019 involving 33,000 households. The bureau’s study shows that three (North-East, North-West and South-West) of the six regions recorded small decreases in prevalence of bribery. However, the North-Central, South-East and South-South zones recorded more increases in the <a href="https://www.nigerianstat.gov.ng/elibrary?queries%5Bsearch%5D=corruption">prevalence of bribery from 2016 to 2019.</a> </p>
<p>Bribery, according to the bureau’s data, takes two forms. In the first, public officials ask, directly and indirectly, for bribes. The second form involves members of the public bribing officials to process their requests for public services. Of the acts of bribery covered by the study, 67% were initiated by public officials. These were overwhelmingly (93%) requests for cash payments. Less than six percent were for non-cash payments.</p>
<h2>Who takes bribes?</h2>
<p>Males in the Nigeria Police, Judges, Federal Road safety officers (FRSC) and Vehicle Inspection Officers (VIO), teachers and lecturers receive most of the bribes <a href="https://www.nigerianstat.gov.ng/elibrary?queries%5Bsearch%5D=corruption">between 2016 and 2019</a>.
Male officials take more bribes than their female counterparts in the police, vehicle inspection, federal road safety offices because they are most likely to be encountered on the roads than their female colleagues.</p>
<p>The payment of bribes is driven by two factors. First, citizen pay bribes to speed up the processing of their request. The percentage of people who paid bribes to speed up the procedure to get the services needed done increased from 32% in 2016 to 38% in 2019. </p>
<p>The second factor relates to the payment of a bribe to avoid payment of fine. This often happens when individuals are to be sanctioned for flouting a particular rule but in order not to pay the prescribed sanction, the public official in charge may sidestep the procedure. </p>
<p>Participants reported that public officials they encountered requested bribes to render services for which they are being officially paid. For instance, 34% percent of immigration officers collected bribes to speed up the issuance of international passports, and other immigration procedures. In the health sectors, 60% reportedly received bribes to speed up procedure usually to access health consultation.</p>
<p>Public officials requesting bribes directly were the police (67%), judges and prosecutors (67%), and customs and immigration officers (67%). The implication here is that when bribes are paid to these public officials, rule of law is undermined.</p>
<p>The average bribe paid for a government contract or public procurement was N31,955 ($68) in 2019, up from N17,136 ($36) in 2016. People also paid more bribes for a promotion in the public sector, medical visit and examinations.</p>
<h2>Buhari’s crusade</h2>
<p>Buhari’s anti-corruption crusade has had some achievements. These include <a href="https://punchng.com/buhari-policing-looted-funds-with-the-whistle/">recoveries of looted funds</a>, blocked treasury leakages through the <a href="https://www.premiumtimesng.com/business/340387-fg-saves-n10-trillion-from-tsa-agf.html">Treasury Single Account </a> and jailing some <a href="https://www.pmnewsnigeria.com/2019/12/11/meet-6-nigerian-ex-governors-who-have-been-to-prison/">corrupt former governors</a>.</p>
<p>Where the anti-corruption crusade has not delivered any results, it’s because of government’s failure to leave the fight against corruption to independent institutions. Doing so will separate genuine anti-corruption cases from politics. </p>
<h2>What should be done</h2>
<p>Mechanism must be put in place to reduce opportunities for corruption. Greater direct contact between government officials and members of the public ensures that the culture of bribe taking and paying continues. Government should therefore use technology more to reduce direct contact, where possible, between government officials and the public.</p>
<p>The fight against corruption also requires strong institutions. These must be free from undue executive, legislative and judiciary interference. The Economic and Financial Crimes Commission needs more teeth. A starting point would be to increase its budget. This would enable the commission hire more personnel. It must also be freed from political interference to allow it to fight corruption without fear or favour. This is important because of the role in corruption played by <a href="http://www.fatf-gafi.org/media/fatf/documents/recommendations/guidance-pep-rec12-22.pdf#page=5">politically exposed persons</a>.</p>
<p>In addition, government should create specialised anti-corruption courts to hasten trial of corruption cases. Judges to serve in the specialised court should be properly incentivised to mitigate judiciary corruption. Punishment for corruption must be certain and should equate the magnitude of offence committed.</p><img src="https://counter.theconversation.com/content/155488/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Oludayo Tade does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Buhari government has a long way to go in its anti-corruption battle as seen in the latest Transparency International rankings.Oludayo Tade, Researcher, Communication Consultant, Impact Evaluator, Safeguard Specialist, University of IbadanLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/874052017-11-28T05:43:21Z2017-11-28T05:43:21ZBusiness schools have a role to play in fighting corruption in Africa<figure><img src="https://images.theconversation.com/files/196097/original/file-20171123-17988-1bdoym3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Corruption pollutes the African business environment.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In 2002, the African Union reported that Africa lost about <a href="http://news.bbc.co.uk/1/hi/world/africa/2265387.stm">USD$148 billion</a> through corruption every year. This represented 25% of the continent’s combined GDP at the time. Nothing much has changed.</p>
<p>Last year, the global business advisory firm KPMG estimated that if South Africa reduced its corruption by one point, as measured by Transparency International’s <a href="https://www.transparency.org/cpi2015">corruption perception index</a>, it could add <a href="https://assets.kpmg.com/content/dam/kpmg/za/pdf/2017/03/Corruption-TL.pdf">R23 billion to its GDP</a>. </p>
<p>The thrust of these facts is that the lost monies could have been used to finance institutional development and reduce the <a href="http://www.doingbusiness.org/reports/%7E/media/WBG/DoingBusiness/Documents/Profiles/Regional/DB2018/SSA.pdf">constraints to doing business in Africa</a>.</p>
<p>In spite of the effects of corruption on the private sector, businesses in Africa are relatively silent about the menace. Efforts to combat corruption are largely championed by <a href="http://uncaccoalition.org/en_US/get-involved/africa-region-anti-corruption-platform/">civil service</a>, non-governmental organisations and <a href="https://www.uneca.org/publications/combating-corruption-improving-governance-africa">international development agencies</a>. </p>
<p>A new <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">study</a> has linked the private sector’s silence to the inadequacy of business education in the region. It notes that business schools can play a vital role in the fight against corruption. They can do this by nurturing business students to become <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">institutional entrepreneurs</a> – people who will bring about institutional change – not only in Africa’s economic domain, but also in the political arena. </p>
<p>Schools can equip students and managers with knowledge and expertise to advocate for public accountability and good governance, as <a href="https://www.weforum.org/agenda/2017/03/5-ways-universities-can-join-the-fight-against-corruption/">advocated</a> by the World Economic Forum. </p>
<h2>Why the private sector is silent</h2>
<p>There are several reasons why private companies often remain silent about corruption. One is that some of them indulge in and benefit from corruption. </p>
<p>In Ghana, for example, a <a href="http://www.myjoyonline.com/opinion/2017/May-29th/why-wont-we-be-poor-when-create-loot-and-share-is-the-new-norm.php">“create-loot-share”</a> model of corruption persists. Politicians, public officers and businesses collude to create and profit from <a href="http://www.myjoyonline.com/news/2015/July-11th/create-loot-and-share-agenda-confirmed-in-shocking-expos-on-woyome-scandal.php">fraudulent</a> acts, including <a href="http://www.myjoyonline.com/politics/2016/May-16th/smarttys-bus-branding-contract-awarded-before-procurement-process.php">inflated contracts</a>. This is also common in Nigeria, where between 2009 and 2014, about <a href="https://www.premiumtimesng.com/news/more-news/188972-contract-inflation-bpp-has-saved-nigeria-n659-bn-says-dg.html">USD$2 billion</a> was salvaged from inflated contracts by the government agency set up to vet procurement.</p>
<p>Even multinational companies from the <a href="https://www.transparency.org/news/feature/corruption_perceptions_index_2016">least corrupt</a> countries gain from Africa’s corrupt political elite. For example, in 2011, UK’s Shell and Italy’s ENI paid <a href="https://www.theguardian.com/sustainable-business/shell-nigeria-oil-payment-corruption-scandal">USD$1.1 billion</a> to Nigerian officials for access to an oilfield currently <a href="http://www.bbc.co.uk/news/business-39544761">worth USD$500 billion</a>. US tyre firm Goodyear paid more than <a href="http://www.bbc.co.uk/news/business-31610495">USD$3.2 million</a> in bribes to Angolan and Kenyan government officials in order to win supply contracts. </p>
<p>The <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">pressure on companies to indulge in corruption</a> is considerable in Africa. According to <a href="http://www.enterprisesurveys.org/data/exploretopics/corruption#sub-saharan-africa">data</a> from the World Bank, 71% of enterprises in Sierra Leone, 66.2% in Tanzania, 64% in Angola, 75.2% in Congo and 63% in Mali expect to give “gifts” to secure government contracts.</p>
<p>The ethical dilemma for business managers is that refusing to pay bribes can <a href="https://theconversation.com/can-businesses-succeed-in-a-world-of-corruption-without-paying-bribes-51777">cost</a> their companies contracts, licences and revenues. Essentially, good companies which do not yield to extortion <a href="http://www.corruptionwatch.org.za/wp-content/uploads/2015/12/Africa-survey-2015-Global-Corruption-Barometer.pdf">may lose out to bad competitors</a> who do. Consequently, most companies yield to corruption or stay silent. Speaking up can make them targets for political witch hunts and discrimination.</p>
<p>A much deeper reason for the private sector’s inactivity is that managers simply <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">lack the political skills</a> required to shape their business environments. This deficiency arises because the link between political institutions and economic markets has not received adequate attention in business schools. So the schools are turning out managers with good knowledge of business but <a href="https://www.mckinsey.com/industries/public-sector/our-insights/how-business-interacts-with-government-mckinsey-global-survey-results">inadequate understanding of public governance </a> and inability to influence public institutions. </p>
<p>Most people, including business managers, feel <a href="https://books.google.co.uk/books?id=yE55DQAAQBAJ&pg=PA131&lpg=PA131&dq=citizens++powerless+against+corruption+in+africa&source=bl&ots=6_16WK5c-o&sig=Fw90KBKtVP8pe8gEVsx_ZHg98xE&hl=en&sa=X&ved=0ahUKEwjLqYnw-rrXAhUDyqQKHQ1tCH4Q6AEIXDAJ#v=onepage&q=citizens%20%20powerless%20against%20corruption%20in%20africa&f=false">powerless</a> when dealing with corrupt government officials. They regard official institutions as too powerful to take on and see corrupt practices, such as bribery, as unchangeable. But with <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">good education and training,</a> this can change. </p>
<h2>African business schools can help</h2>
<p>Corruption is <a href="https://books.google.co.uk/books?id=wM6dBQAAQBAJ&pg=PA34&lpg=PA34&dq=corruption+is+a+multi+faceted+problem&source=bl&ots=INAbTqw9LW&sig=aZAKzdUdrUZ01WDMwVWpY4CPh8c&hl=en&sa=X&ved=0ahUKEwj74daH87nXAhWHyKQKHYiYAPkQ6AEIPDAF#v=onepage&q=corruption%20is%20a%20multi%20faceted%20problem&f=false">multi-faceted</a>. So there is <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2016.1275942?journalCode=rajm20">no simple solution</a> for it. It must be battled on all fronts. Business schools can do their part by developing competence to confront corruption. </p>
<p>Some in Africa have <a href="https://theconversation.com/africas-business-schools-must-champion-anti-corruption-education-44380">already done so</a>: three business schools introduced an anti-corruption programme sanctioned by the United Nations into their classrooms.</p>
<p>But much more can be done. Business schools should teach business-government relations, or corporate political activity. This is crucial because many business managers don’t know how to <a href="https://www.mckinsey.com/industries/public-sector/our-insights/how-business-interacts-with-government-mckinsey-global-survey-results">influence their political environments</a> even though they are affected by government policies. Students and managers may be taught ethics in schools, but ethical values are <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">difficult to uphold</a> in contexts where corruption is highly endemic, such as Africa. </p>
<p>If the fight against corruption in Africa is to <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">succeed</a>, business managers must learn to engage public officers differently. The ability to do this can be developed in business schools. </p>
<p>Students and managers need to learn about political strategies that can change the way institutions work. Techniques for ad hoc management of bribery are no longer enough. Companies can, for example, present a <a href="http://www.tandfonline.com/doi/abs/10.1080/23322373.2017.1379825?journalCode=rajm20">united front</a> against corruption so that none can be singled out for <a href="https://rsf.org/en/news/ethiopian-governments-witchhunt-against-privately-owned-media">“punishment”</a>.</p>
<p>The business community could also learn to self regulate by refusing to deal with corrupt companies, as was <a href="https://www.cnbc.com/2017/10/12/south-africa-firms-are-now-taking-a-stance-on-corruption-central-bank-governor-says.html">recently reported in South Africa</a>. Collective campaigns for public procurement transparency can also prevent politicians from using the private sector to plunder State funds. Inaction breeds corruption, as seen in Kenya’s <a href="https://www.ft.com/content/bf75a7ee-c7f9-11e4-8210-00144feab7de">USD$1 billion Anglo Leasing scandal</a>.</p>
<p>African business schools are valuable in the fight against corruption. They can take bold steps to review their curricula and promote active corporate citizenship. When they see what a difference they can make, the continent may begin to shake off a <a href="http://edition.cnn.com/2015/12/24/africa/africa-corruption-transparency-international/index.html">major hindrance</a> to its development.</p><img src="https://counter.theconversation.com/content/87405/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tahiru Azaaviele Liedong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Public sector corruption is a major challenge to doing business in Africa and players are mostly ill-equipped to deal with it. Business schools can teach the skills to tackle it.Tahiru Azaaviele Liedong, Assistant Professor of Strategy, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/719682017-02-03T02:10:39Z2017-02-03T02:10:39ZWhy Brazil is winning its fight against corruption<p>Last month, the respected Brazilian Supreme Court Justice Teori Zavascki died in a <a href="https://www.nytimes.com/2017/01/19/world/americas/brazil-judge-zavascki-petrobras-investigation-killed-plane-crash.html?_r=0">plane crash</a>. He was overseeing the largest corruption investigation in the country’s history.</p>
<p>Even if his recently selected successor, <a href="http://www.bbc.com/news/world-latin-america-38839301">Edson Fachin</a>, rises to the occasion, Zavascki’s death remains a tragic loss and a blow to Brazil’s fight against corruption. Especially since it comes on the heels of lawmakers <a href="https://www.nytimes.com/2016/12/04/world/americas/thousands-in-brazil-protest-gutting-of-anticorruption-measures.html">torpedoing</a> in late 2016 a widely popular effort to make it easier for prosecutors and judges to clean up government.</p>
<p>While these events make it easy to despair, the reality reveals much more reason for hope. In our 2015 book “<a href="http://www.e-elgar.com/shop/greed-corruption-and-the-modern-state">Greed, Corruption and the Modern State</a>,” we argue that societies must push back against the influence of powerful economic actors in order to safeguard the public interest. The network of Brazilians exposing, prosecuting and sentencing the corrupt politicians swimming in this mar de lama, or sea of mud, embodies that ideal. However, their effort would benefit from legal reforms that make it easier to fight corruption. </p>
<h2>From scandal to scandal</h2>
<p>Brazilians have long had to accept corruption scandals as a chronic part of their government. Graft was present under <a href="http://www.tandfonline.com/doi/abs/10.1080/01436599208420302">military rule</a>, despite what those hoping for the <a href="http://www.bbc.com/news/world-latin-america-38010060">return of authoritarianism</a> seem to believe. But corruption scandals have also plagued every <a href="https://www.jstor.org/stable/4490507?seq=1#page_scan_tab_contents">presidential administration</a> since civil order was reestablished in 1985.</p>
<p>Even the administration of the popular Luiz Inácio “Lula” da Silva, who governed Brazil during a period of rising prosperity from 2003 to 2010, coincided with several corruption scandals. They include <a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/09/29/AR2006092900891.html">Caixa Dois</a>, <a href="http://news.bbc.co.uk/2/hi/americas/3532239.stm">Bingos</a> and, most memorably, <a href="http://www.economist.com/blogs/economist-explains/2013/11/economist-explains-14">Mensalão</a>, a scheme in which coalition parties <a href="http://www.forbes.com/sites/andersonantunes/2013/11/28/the-cost-of-corruption-in-brazil-could-be-up-to-53-billion-just-this-year-alone/#622c59d7610b">accepted more than US$40 million</a> in clandestine payments to support Lula’s Workers Party (also known as the PT). </p>
<p>Yet even as the Supreme Court investigated the Mensalão case, the PT still won two presidential elections – one that reelected Lula and another won by Dilma Rousseff in 2010.</p>
<p>Rousseff’s administration began on a hopeful note for those battling corruption. <a href="https://www.washingtonpost.com/world/americas/in-her-first-year-brazil-president-dilma-rousseff-cleans-house/2011/12/12/gIQAOMnStO_story.html?utm_term=.1d29e4f5b2dc">She fired</a> five ministers linked to bribery, kickbacks and influence peddling and helped enact a major government <a href="http://www.freedominfo.org/regions/latin-america/brazil/">transparency law</a>. </p>
<p>But within a few years, the tide – and public support – turned against her as Brazil’s <a href="http://www.economist.com/blogs/graphicdetail/2016/04/economic-backgrounder">economic outlook</a> worsened and crowds protested continuing corruption and the billions that were spent on new <a href="https://www.theguardian.com/world/2013/jun/21/brazil-police-crowds-rio-protest">stadiums</a> for the 2014 World Cup.</p>
<p>As a result, the country soured on her at the same time that Brazil’s largest corruption scandal, known as Lava Jato, began to unfold. That scheme involved construction companies colluding with employees of the state-owned oil company <a href="http://www.coha.org/understanding-the-petrobras-scandal/">Petrobras</a> to win inflated contracts. Petrobras employees <a href="https://www.bloomberg.com/news/features/2015-05-08/brazil-s-massive-corruption-scandal-has-bitterness-replacing-hope">took bribes</a>, while politicians got <a href="https://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html">kickbacks</a> as personal gifts or campaign donations. </p>
<p>Meanwhile, Rousseff was accused of <a href="http://www.bbc.com/news/world-latin-america-36028247">spending public funds without congressional authorization</a> and was impeached in August, shortly after the 2016 Olympics. <a href="http://www.semana.com/mundo/articulo/destitucion-de-dilma-roussef-en-medio-de-corrupcion-y-clientelismo/492256">Although Rousseff herself was not accused of corruption, some argue that</a> she was essentially used as a scapegoat.</p>
<h2>Who’s changing Brazil</h2>
<p>But none of the bribes and kickbacks would be known today if the federal prosecutors had not doggedly investigated the Petrobras scheme allowing the judicial branch to take on the elite. </p>
<p>Brazilians themselves and an emboldened media also deserve credit for the gradual end of impunity. In the past three years, the public took to the streets on <a href="https://www.theguardian.com/world/2013/jun/21/brazil-police-crowds-rio-protest">multiple</a> <a href="http://www.reuters.com/article/us-brazil-protests-idUSKBN13T0O1">occasions</a> to protest waste and corruption. Local media coverage of the scandals was “<a href="https://www.washingtonpost.com/news/monkey-cage/wp/2016/05/05/corruption-is-not-new-to-brazil-so-why-is-it-threatening-the-presidency-now/?utm_term=.890a719ed8f3">scathing and unrelenting</a>.”</p>
<p>Authorities have made nearly <a href="https://www.ft.com/content/2ed33462-2d6b-11e6-bf8d-26294ad519fc#axzz4CERGbCFo">200 arrests</a>, and the lower courts have convicted over 80 people, including the ex-CEO of Odebrecht, Latin America’s largest construction group, which is also <a href="https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve">on the hook</a> for at least $3.5 billion in fines for bribing government officials. The Supreme Court, which is responsible for trying politicians, is processing over 100 <a href="https://www.theguardian.com/world/2017/jan/19/brazil-supreme-court-corruption-case-teori-zavascki-dies-plane-crash?CMP=share_btn_link.">additional cases</a>. </p>
<h2>10 measures</h2>
<p>Despite their successes, Brazil’s prosecutors and judges operate in a challenging legal and institutional environment that makes it difficult to achieve decisive results.</p>
<p>To remedy these problems, prosecutors have crafted the reform statute known as <a href="http://www.dezmedidas.mpf.mp.br/">10 Measures against Corruption</a>, presented to Congress last year as a public initiative endorsed by over <a href="http://agenciabrasil.ebc.com.br/en/politica/noticia/2016-12/rodrigo-janot-defends-10-anti-corruption-ballot-measures">two million</a> Brazilians.</p>
<p>The bill’s threat to vested interests provoked powerful opposition in the legislature, and lawmakers quietly weakened it by adding an <a href="https://www.nytimes.com/2016/11/30/world/americas/brazil-corruption.html">amendment</a> to undermine the effectiveness of prosecutors and judges. An effort by the president of the Senate, Renan Calheiros, to <a href="http://www.reuters.com/article/us-brazil-politics-corruption-idUSKBN13Q59F">rush</a> the weakened bill through failed. And the Supreme Court seemingly fired back by forcing Calheiros to <a href="http://www.wsj.com/articles/renan-calheiros-ordered-removed-from-senate-presidency-by-brazil-supreme-court-judge-1480978526">relinquish</a> the presidency while he faces corruption charges of his own.</p>
<p>The failure to pass a strong reform bill, coming on top of the massive bribery and bid-rigging revealed by the Petrobras scandal, has shaken the country’s political system. The dramatic cases against officials and private parties have also meant the public believes that corruption is getting worse.</p>
<p>Paradoxically, however, the flood of recent cases indicate to us that conditions are improving. They show that elements of the country’s system of accountability are working.</p>
<h2>Reforming the system</h2>
<p>But to consolidate these past gains, important reforms are necessary. </p>
<p>The 10 Measures against Corruption ought to be a starting point for more fundamental reforms. <a href="http://combateacorrupcao.mpf.mp.br/10-medidas/docs/executive_summary_english_version.pdf">This bill</a> aims to eliminate some of the practices at the heart of the Petrobras scandal, such as illegal campaign contributions to politicians who, if elected, are expected to reciprocate by awarding government contracts. The bill <a href="http://fcpamericas.com/english/brazil/ten-measures-proposed-brazilian-federal-prosecution-service-fight-corruption-part-i/">also</a> <a href="http://fcpamericas.com/english/brazil/ten-measures-proposed-brazilian-federal-prosecution-service-fight-corruption-part-ii/">seeks</a> to speed up criminal proceedings, ensure the confidentiality of whistleblowers, extend the statute of limitations and enhance asset confiscation capabilities. </p>
<p>However, prosecutorial zeal has also led to controversial tactics that have raised <a href="https://globalanticorruptionblog.com/2016/03/10/guest-post-brazil-must-fight-corruption-but-preserve-the-rule-of-law/">concerns</a> about due process. We, for example, question the use of pretrial detention absent clear evidence of flight risk. Others <a href="http://www1.folha.uol.com.br/opiniao/2016/10/1821713-desvendando-moro.shtml">question</a> the high proportion of cases targeting the PT and other left-leaning political parties. While these concerns need to be addressed, we believe prosecutors and judges are proceeding as best as they can under challenging conditions.</p>
<p>The next, more difficult step should be structural reform of the political system. Brazil has over two dozen parties that produce a chaotic legislature in which lawmakers compete for payoffs in return for votes. As evidenced by Mensalão, presidents have used questionable tactics in order to <a href="https://muse.jhu.edu/article/614517/summary">sustain</a> governing coalitions. Political corruption might seem the inevitable result of Brazil’s constitutional structure. </p>
<p>Shifting to a parliamentary system, with a prime minister from the winning coalition, would solve some problems, but seems presently unrealistic. Alternately, requiring a higher proportion of the popular vote before a party can participate in the legislature would be a less draconian reform.</p>
<h2>Looking ahead</h2>
<p>Controlling corruption in Brazil is possible, but the system requires new rules to make politicians more accountable in the country and to reduce the incentives for corrupt payoffs. Reformers can help by leveraging the political crisis generated by the Petrobras scandal. </p>
<p>For the sake of their country, and to honor Zavascki’s memory, the Congress should embrace this critical moment in history and enact legislation that may finally break with the cycle of corruption for the good of Brazilian democracy.</p><img src="https://counter.theconversation.com/content/71968/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul F. Lagunes receives funding from the International Growth Center. He is a Visiting Scholar at the Inter-American Development Bank.</span></em></p><p class="fine-print"><em><span>Susan Rose-Ackerman is affiliated with Transparency International-USA.</span></em></p>By exposing, prosecuting and sentencing Brazil’s corrupt politicians, prosecutors, judges and citizens are draining the swamp that has overwhelmed the country for so long.Paul F. Lagunes, Assistant Professor of International and Public Affairs, Columbia UniversitySusan Rose-Ackerman, Henry R. Luce Professor of Jurisprudence (Law and Political Science), Yale UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/588922016-05-10T04:28:40Z2016-05-10T04:28:40ZAfrica needs to develop new ways of stemming illicit financial flows<figure><img src="https://images.theconversation.com/files/121719/original/image-20160509-20584-12a59fk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Activists outside the European Commission show their disdain for existing measures against tax evasion and money laundering.</span> <span class="attribution"><span class="source">REUTERS/Yves Herman</span></span></figcaption></figure><p>Over the last 50 years African countries have lost about <a href="http://www.gfintegrity.org/wp-content/uploads/2015/12/IFF-Update_2015-Final.pdf">$1 trillion</a> to illicit financial flows. This equates to around $50 billion a year and is equivalent to all the official development assistance received by the continent over the <a href="http://www.uneca.org/iff">same period</a>. It is enough to wipe out Africa’s total external debt of around $250 billion and still leave $600 billion for poverty alleviation and <a href="http://www1.uneca.org/Portals/cgpp/2013/CGPP-3_Illicit-Financial-Flow-English_Final.pdf">economic growth</a>. </p>
<p>Illicit financial flows involve money that is illegally earned, transferred, or <a href="http://www.gfintegrity.org/storage/gfip/economist%20-%20final%20version%201-2-09.pdf">utilised</a>. The direct effects of illicit financial flows include lost investment in poverty reducing programmes such as health, education and job creation. The indirect effects include lower per capita investment and <a href="http://concernedafricascholars.org/wp-content/uploads/2012/11/caploss03-nkuru-14th.pdf">income</a>. These effects are so detrimental that in July 2015 African nations offered to forego international aid in exchange for western countries agreeing to close tax loopholes and <a href="http://www.dailymaverick.co.za/article/2016-04-05-analysis-the-panama-papers-are-the-tip-of-a-very-dirty-african-iceberg/#.VynXnfl97IV">shut down tax havens</a>. </p>
<p>But as significant as these statistics are, they do not capture the changing nature of Africa’s illicit flows. Over the course of the last 50 years these have gradually evolved. They have become more complex. </p>
<p>Centralised public sector corruption has transformed into decentralised private sector corruption. This change reflects Africa’s developmental progress away from donor reliance to trade-led economic growth. African officials no longer primarily siphon off aid into foreign accounts. Instead they act as intermediaries and gatekeepers between access to resources and markets on the one side, and mostly private sector companies on the other.</p>
<p>The changing nature of illicit flows was well illustrated in the leaked <a href="https://theconversation.com/panama-papers-remarkable-global-media-operation-holds-rich-and-powerful-to-account-57196">Panama Papers</a>. The documents offer a window into the activities of 128 current and former political leaders and officials, as well as criminals, terrorist organisations, corporations, billionaires and celebrities. The papers show that <a href="http://www.mossfon.com/">Mossack Fonseca</a>, the law firm from which the 11 million documents were leaked, helped clients launder money‚ dodge sanctions and evade tax using an array of mechanisms.</p>
<h2>The main sources</h2>
<p>Illicit financial flows typically arise from corruption, illegal exploitation, and <a href="http://www.cmi.no/publications/file/4248-extractive-sectors-and-illicit-financial-flows.pdf">tax evasion</a>. Thus they are primarily a <a href="http://www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_26feb_en.pdf">governance problem</a> arising from weak institutions and inadequate regulatory infrastructure. These include limited access to legal and financial expertise and misaligned domestic tax and trade reporting policies with global requirements. They also include outdated information gathering and sharing mechanisms, and a lack of political will. </p>
<p>Calculating the proportion of illicit financial flows that comprise corruption is difficult. But they have been estimated at around 5% of such global illicit flows. Some believe the figure for Africa may be much higher as the 5% does not include the role of <a href="http://www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_26feb_en.pdf">corrupt practises</a> in facilitating the trade and tax-related forms of illicit flows.</p>
<p>The Panama Papers also show that Mossack Fonseca facilitated the abusive system of transfer pricing. This entails the use of shell companies to move profits to low-tax or no-tax countries without leaving a paper trail. It also enabled trade misinvoicing. This involves under or overstating the price, quality or quantity of traded goods and services. Over the last 10 years African countries have lost between $242 billion and $407 billion from trade misinvoicing alone. This practice accounts for around 60% of illicit financial flows. About 35% arises from <a href="http://eu.wiley.com/WileyCDA/WileyTitle/productCd-0471644889.html">criminal activity</a>. </p>
<p>This shows that commercial activities are the largest component of illicit flows from the continent. It is followed by organised crime and then public sector corruption.</p>
<h2>Efforts to stop flows</h2>
<p>The regulatory implications of the Panama Papers are still gaining traction. But Oxfam’s Tatu Ilunga and Transparency International’s Craig Fagan argue that the leaked documents highlight the need for an overhaul of the <a href="http://allafrica.com/stories/201604130141.html">global tax system</a>. Africa has two significant endeavours aimed at curbing illicit flows and recovering the money stolen from the continent. </p>
<ul>
<li><p>the United Nations Economic Commission for Africa’s <a href="http://www.uneca.org/publications/illicit-financial-flows">High Level Panel on Illicit Financial Flows</a>, led by Thabo Mbeki, and</p></li>
<li><p>the <a href="http://www.africaprogresspanel.org/">Africa Progress Panel</a>, chaired by former UN general secretary Kofi Annan. </p></li>
</ul>
<p>Both initiatives are still at the policy formulation phase.</p>
<p>But much more needs to be done. Closing tax havens and loopholes will significantly benefit Africa’s economies. For example, South Africa was able to recover <a href="https://www.fic.gov.za/DownloadContent/NEWS/PRESSRELEASE/FIC_Annual_Report_2014-2015_lores.pdf">$2 billion</a> in taxes after tax authorities uncovered a multinational company engaged in abusive transfer pricing. </p>
<p>But there is also a need to deepen the anti-corruption and regulatory institutions. This will limit the capability of corrupt leaders and officials. Examples include the US Kleptocracy Asset Recovery <a href="https://globalanticorruptionblog.com/tag/kleptocracy-asset-recovery-initiative/">Initiative</a> and the World Bank’s Stolen Assets Recovery <a href="http://www1.worldbank.org/finance/star_site/about-us.html">Initiative </a> and the United Nations Office on Drugs and Crime. </p>
<p>Africa’s democracies can be strengthened by entrenching transparency and accountability. As noted by the United Nations Economic Commission for <a href="http://www.uneca.org/">Africa</a>, measures could include strengthening Article 22 of the African Union Convention on Preventing and Combating Corruption. It could also include a governance mechanism in the African Peer Review Mechanism. Combating Africa’s illicit financial flows will require a much closer and more active continental and global partnership than has historically been the case.</p><img src="https://counter.theconversation.com/content/58892/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sean Gossel receives funding from the University of Cape Town Graduate School of Business.</span></em></p>In Africa, commercial activities are the largest component of illicit financial flows. This is followed by organised crime and then public sector corruption.Sean Gossel, Senior Lecturer, UCT Graduate School of Business, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.