The UK anti-corruption summit: First, strengthen domestic institutions
Owen Barder and Charles Kenny.
One of the ways China handles its convicted corruption officials is to execute them; we do not recommend this approach. It is far better to improve social institutions. The recent UK-anti-corruption summit is a good beginning. “For too long there has been a taboo about tackling [corruption] head on. The summit will change that.” That, at least, is the optimistic pronouncement from the leader of Her Majesty’s Government ahead of the UK anti-corruption summit in London this week. Led from the front by Prime Minister David Cameron, the event aims to “[step] up global action to expose, punish and drive out corruption in all walks of life.”
With the leaders of, among others, Afghanistan, Colombia, Nigeria and Norway in attendance, along with the heads of the World Bank and IMF and representatives from the business, legal and NGO sectors, the summit will aim to agree on a package of practical steps to expose and drive out corruption. It will be preceded by a day-long conference, Tackling Corruption Together, which features panels that will consider, among other topics, how the international community can work together to lift the lid on practices that allow the corrupt to act with impunity, and to ensure justice for those affected.
Summit attendees will be invited to sign up to the first-ever global declaration against corruption. But beyond the signatures, deliberations, and rhetoric, what concrete actions could come out of the summit that would help reduce corruption and the global poverty that it helps to perpetuate? We’ll hear from Owen Barder first, and then Charles Kenny.
There has been an important shift in the discussion about corruption. For much of the post-colonial period, Europe and America have talked about corruption as a problem that affects other countries – a sort of neglected tropical disease that western medicine can help to eliminate.
There is growing recognition that we in the west have been part of the problem (though by no means all). In 2012 David Cameron called for the developed world to “get our own house in order” and he used the UK’s presidency of the G-8 the following year to put a number of issues on the table that would help to do just that. Here’s what I’d like to see come out of the summit:
More countries joining the UK and Australia in establishing and publishing the true owners of each company they register (so-called “public registries of beneficial ownership”).
Companies being required to report publicly how much profit they earn, and how much tax they pay, in each country where they work (so-called “country by country reporting”).
The spread of these norms by denying access to our economies for anonymous shell companies – no anonymous company should be able to buy property in the UK, get a government contract, or use the British courts to uphold a contract.
I’d echo Owen’s welcome of the changed discussion around corruption, recognizing it is a global issue, not just a problem of poor countries. It would be good to see a further shift towards recognizing that for all of the challenges of corruption, many developing countries are seeing progress in wealth, health, and broader wellbeing that is historically unprecedented. The anti-corruption discussion should be about speeding that process, not reinforcing a toxic and inaccurate worldview that sees developing countries as suffering an incurable cancer, or as rat holes where taxes, investment and aid are simply wasted. But, beyond tone, here are three things I’d like to see in the summit communique:
More governments joining the lead taken by the UK, Slovakia, Georgia, and Colombia (amongst others) in routinely publishing the full text of government contracts with private firms. The key principle that countries should sign up to: open by default. And they should commit to make it easy to link those contracts with budget details and outcome details – using the Open Contracting Data Standard, for example. Finally on contracts, participants should commit to ensure that commercial secrecy isn’t used illegitimately to block information release (discussed in this report). Open contracting for power provision is a lot less valuable if we can’t figure out the price paid per kilowatt hour, for example. Similarly, open contracting in health should involve publishing the prices paid for drugs.
Results measurement highlighted as a key anti-corruption tool. My draft book (comments still very welcome!) discusses what happens if governments (and aid agencies) focus on tracking payments for goods and services to the exclusion of a proper emphasis on getting what they paid for in terms of outcomes. Tracking receipts over results can simply move corruption from inflated pricing or financial theft to skimping on delivery – which can be considerably more harmful in terms of development outcomes. We need accountants as part of an anti-corruption strategy, but we need engineers and survey specialists, too.
An explicit recognition that anti-corruption responses can have unintended consequences, and solutions to limit that problem. Know your customer (KYC) regulations might limit the flow of corrupt financing, but can also make it more difficult to send remittances to some of the world’s poorest people. Tax treaties might increase revenues in signatory countries, but could exclude less-developed countries that need the revenues most. Delivering aid through consulting firms based in donor countries might help reduce leakage, but also leads to less effective assistance overall. Corruption slows development. Anti-corruption tools shouldn’t slow development even more.