m1 The World Bank Ges ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ N E ly, Ai ~NUMBER 24 PUBLIC SECTOR Fostering institutions to contain corruption How can institutions ofaccountability be developed to control endemic corruption? Corruption is bad for development. Leav- Implementingsuch sanctions againstcor- ing aside the morality of bribe taking, influ- ruption requires an institutional framework ence peddling, embezzlement, and other to control corruption. But endemic corrup- abuses of power for personal or narrow group tion is a systemic disease that can only be con- gain, corruption impedes investment and trolled with a systemic cure: a single growth and exacerbates poverty and inequal- institution, such as an anticorruption com- ity. mission, will not do. Effective and durable Implementing Human beings are prone to self-seeking corruption control requires multiple, rein- behavior. Whatconstrains individual behav- forcing, and overlapping institutions of sanctions against ior and makes it conform with larger col- accountability. And where corruption is lective ends includes the laws that form the endemic, these institutions need to be of three corruption requires core of norms and institutions. Corruption kinds: horizontal accountability, vertical can never be completely or permanently accountability, and external accountability. institutions to eliminated. The question is, how can it be controlled? How can a country move from Institutions of horizontal control corruption a situation where corruption may be the accountability norm to a situation where corruption is The primary institutions of horizontal morally intolerable and behaviorally rare? accountability are the law, anticorruption bodies, the ombudsman's office, public Why focus on institutions? audits, and the judicial system. Endemic corruption cannot be controlled with moral crusades. People respond to incen- The law tives, not moral appeals. Officeholders will The law must prohibit all forms of bribery, not abstain from corruption unless it no nepotism, and misuse of public funds. Com- longer appears in their interests to behave prehensive anticorruption legislation is nec- corruptly. To control corruption, the expected essary but insufficient. benefit-cost ratio for an individual office- Effective corruption control requires that holder of obeying the law must be higher than high-level elected officials, political ap- the expected benefit-cost ratio of behaving pointees, civil servants, military officers, and corruptly. In particular, the expected costs of police officers declare their assets upon tak- engaging in corruption-which are low or ing office and everyyear thereafter, and when- near zero in an endemically corrupt society- ever their assets change in some significant, must be dramatically increased. Public offi- definedway (as through a major sale or stock cials must perceive a substantial risk that if transaction). These declarations should be they enage in corrupt conduct they will lose filed publicly with the anticorruption com- __ 9"4! their offices, forfeit illegally acquired wealth, mission. To ensure public confidence in the A and even go to prison. process-and facilitate the overlapping arena . _ i{ FROM THE DEVELOPMENT ECONOMICS VICE PRESIDENCY AND POVERTY REDUCTION AND ECONOMIC MANAGEMENT NETWORK of vertical accountability-these declarations should be exercised only by thejudiciary. But mustbewvidelyavailable,ideallythrough pub- it makes sense to enable an anticorruption lication in newspapers. institution to impose civil penalties-including forfeiture of office and assets-through due Anticorruption bodies process even if the judicial system is able to The second institution of horizontal account- do this as well. ability is a body charged with scrutinizing the conduct of public officials and assessing their Ombudsman 's office asset declarations. This body must be charged The ombudsman's office receives and inves- it makes sense not only with receiving but also monitoring tigates public complaints of abuse of office. and verifying the asset declarations of the Members of the public or the press should to enable an president or prime minister, ministers, mem- have a right to-indeed, be encouraged to- bers of parliament, state or provincial gov- bring evidence to the anucorruption com- anticorruption ernors, state legislators, and other elected mission if they believe that a public official and appointed public officials. The com- has misrepresented his or her assets or institution to mission must also have the staff to investigate abused his or her office. annually, on a random basis, some significant But there needs to be a supplementary impose civil portion of these asset declarations and, on channel of public access to government a systematic basis, the declarations of the authority if power is being abused and the country's highest officials. anticorruption commission does not seem Scrutiny must be comprehensive if it is to to be doing its job. If the system is working be effective and if the threat of detection is well, the ombudsman may occasionally come to be credible. This requires a lot ofresources: across evidence that the anticorruption com- accountants, investigators, and lawyers trained mission does not have, or that reinforces inves- in the ways thatwealth is moved, accumulated, tigations the commission has already opened. and hidden, backed up by computer special- Ideally, these offices would cooperate. But ists and other support staff. In addition, an where corruption is systemic, mutual suspi- anticorruption commission needs to pay its cion may be a functional (if not ideal) sub- staff enough to deter temptation and estab- stitute for cooperation. Members of the lish an esprit de corps. anticorruption commission should know that Scrutiny, however, is not enough. If cred- they could be exposed to public outcry if they ible evidence ofwrongdoing emerges, there fail to move aggressively on evidence of cor- milst be the institutional means to try the sus- ruption. And the ombudsman's office should pected offender and impose punishment on know that it has to meet the same standards the guilty. The most common-and crip- of public conduct as all other officials, or it pling-flaw in systems that control corrup- will be held accountable. tion is an inability to enforce this function free from interference by the highest levels Public audits of government. The anticorruption com- Independent, systematic audits of public mission should be able to independently pros- accounts are a highly specialized field of ecute officials who have violated ethics laws. public administration. It is not enough sim- One of the most important changes intro- ply to monitor the personal accounts of pub- duced by Thailand's 1997 democratic lic officials. A dense, overlapping system constitution was to grant the National Counter- of accountability also requires that all major Corruption Commission independent pros- government bureaus, agencies, and min- ecutorial authority, even if it means overruling istries have their accounts regularly audited. the attorney general. Critics may argue that To conduct these checks, each major agency trying public officials outside the normaljudi- or bureau should have its own auditing office cial process undermines the rule of law. And and inspector general. Finally, the govern- in a democracy the power to deny someone ment should have an office of the auditor- his or her freedom through imprisonment general with the authority to conduct PREMNoTE 24 external audits on a periodic or random scrutiny from below and from outside. And basis, and audit any agency when there is where corruption is systemic, these addi- evidence of wrongdoing. tional sources of pressure and scrutiny must be massive and sustained-or horizontal The judicial system accountability will be gutted and left to rot. Like the other agencies of horizontal account- ability, the judiciary must be independent if Electoral accountability it is to be effective in controlling corruption. A competitive and transparent electoral An effective judicial system requires well- process is a vital, though imperfect, means trained, capablejudges, clerks, prosecutors, of controlling corruption. One of the most Where corruption and defense attorneys-and enough of them common motives for political corruption to keep caseloads to a level consistentwith vig- is to amass the campaign war chests needed iS Systemic orousjustice and dueprocess. These staffneed for reelection. But an ability to throw out i s the support of law libraries, computerized the worst offenders is one vital means for additional sources information systems, professional bar asso- containing corruption. And the most ciations, lawschools, andjudicial traininginsti- extreme forms of corruption often extend of ressure tutes. All of this takes money. into the electoral process, using any means If these horizontal institutions are the to win elections (including buying not only and scrutiny nerves and muscles of corruption control, votes but also electoral officials) because whywouldpoliticiansletthemfunctioneffec- so much is at stake in controlling power. If must be massive tively?Whatensurestheiroperationalauton- vertical accountability is to be real, then, omy? Answering these questions is crucial an instrument of horizontal accountabil- and sustained in designing institutions to control corrup- ity is needed in the form of an independent tion, and itbegins with the power to appoint. electoral commission. This institution also If a country cannot get high-quality profes- needs resources-human, technical, and sionals in these positions, all is lost from the financial-and a lot of training. start. This seemingly modest problem-who will appoint, if not guard, the guardians-is An independent mass media fundamental, and there would be much value An independent mass media is another crml- to exchanging ideas among developing cial entity of vertical accountability. Trans- democracies. parency, virtually by definition, requires free Thailand offers fresh thinking on this issue. and open flows of information. Without a Its new constitution provides for a nonpar- free and pluralistic press, transparency is tisan upper chamber ofparliament, the Sen- not possible. Controlling corruption ate, whose members are elected for six-year requires a press that is free from intimida- terms and are forbidden from holding any tion and restraint, a press that has the party membership or political appointment. resources to investigate rumors and evidence The nonpartisan Senate is responsible for of corruption, and a press that has the matu- appointing members of independent agen- rity, restraint, and professionalism to eschew cies mandated by the constitution to promote sensationalist charges based on any whisper transparency and accountability-such as the of malfeasance. This third point requires Constitutional Court, the National Counter emphasis, because if the press is constantly Corruption Commission, the Election accusing without credible evidence, it will Commission, Ombudsmen, the National discredit itself and the quest for account- Human Rights Commission, and the State ability. For many developing and transi- Audit Commission. tion economies, it will take many years to Institutions of vertical develop the needed press pluralism, capac- accountabitity ity, and responsibility, even if a climate of freedom exists. Investigative reporting Horizontal accountability needs to be stim- requires training and resources that few ulated and reinforced by pressure and newspapers and magazines can afford. JUNE 1999 Nongovernmental organizations mation, if not investigate it. Now that the Vertical accountability also requires non- Organisation for Economic Co-operation governmental organizations in civil soci- and Development (OECD) has adopted a ety building new practices of good convention banning bribery in international governance. A variety of civic associations- business transactions, the time is ripe. bar associations, women's organizations, stu- dent groups, religious bodies, election Support monitoring groups, human rights groups- Donors should reassess their involvement may form coalitions to lobby for constitu- in states that do not show a serious interest tional changes to improve governance, while in controlling corruption. For states that also working to monitor the conduct of pub- appear serious about implementing a com- Donors should lic officials. Transparency International has prehensive institutional agenda to control demonstrated the vital and creative role that corruption, there will be huge resource needs. reassess their international civil society can play in form- These stateswill have tostaff, equip, train, and ing coalitions with domestic constituen- remunerate anticorruption commissioners involvement cies for good governance and accountability. and investigators, auditors,judges, public pros- ecutors, electoral commissioners, and in states that do External accountability ombudsmen. Private newspapers and civil Two significant gaps remain in the system society organizations interested in holding not show a outlined above. One is generating the incen- these structures accountable and helping to tives to put these institutions in place. The make them work will also need resources. serious interest other is finding the resources to enable these This amounts to an expensive institutional institutions to function effectively. For most apparatus, in human and financial resources. in controlling developing countries where corruption is In situations of systemic corruption and widespread, if not endemic, these problems an institutional vacuum, this apparatus can- corruption require extensive international scrutinyand not be constructed overnight. These insti- support. tutions, along with independent central banks and effective bureaucracies more gen- Scrutiny erally, constitute the real, indispensable infra- International donors and even corporate structure for development. Funding actors need to monitor systematically the socioeconomic development without hav- conduct of the governments and public offi- ing these institutions in place is like build- cials with whom they do business. Effective ing a gravel road on a treacherous cliff. Open monitoring requires coordination and infor- and accountable political institutions mat- mation sharing. Businesses and donors terasmuchforeconomicgrowthasforviable should have a central international agency politics. to which they can report demands for bribes and other improper conduct by public offi- This note is a summary of a presentation made cials. Because bribery is an exchange that by Dr. Larry Diamond (Senior Research Fellow,, requires a giver as well as taker, an honest Stanford University) at the World Bank inNovem- public official should also have an interna- ber 1998. tional agency to which he or she can report Ifyou are interested in similar topics, consider an offer of a bribe from an international joining the Anticorruption Thematic Group. Con- firm. AnI institution that is universally tactJohn Heilbrunn, x87754, or click on The- respected should at least gather this infor- matic Groups on PREMnet. 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