SUMMARY OF THE GLOBAL REPORT Enhancing Government Effectiveness and Transparency The Fight Against Corruption This is a summary of the September 2020 World Bank report: “Enhancing Government Effectiveness and Transparency: The Fight Against Corruption”. A product of the Governance Global Practice and the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia, this report is a fresh assessment, through a compendium of case studies, of challenges faced by governments in tackling corruption. The full report is available for download at http://documents.worldbank.org/curated/ en/235541600116631094/Enhancing- Government-Effectiveness-and-Transparency- The-Fight-Against-Corruption Revised on October 3, 2020 EXECUTIVE SUMMARY Introduction News headlines over the last few years have been filled with global scandals involving corruption on an unprecedented scale. T hey touch virtually every continent, from Asia measures are often opportunistic, targeting specific to Africa, Europe, and the Americas. The areas of vulnerability where and when the political scale, magnitude, and sophistication of the space allows for actions to be taken. Though the actions operations has increasingly risen to levels that many initially may have limited impact, they could provide an had not considered possible before. Governments are important foundation for future actions. However, these forever in search of new approaches and tools that can impacts should be carefully assessed by public officials help identify loopholes and entry points for corrupt and civil society as many high-profile anti-corruption activities. While the containment of COVID-19 and its strategies have proven to be ineffective and only give a devasting human and economic impacts have more veneer of government action. recently been the focus of government actions, it is almost certain that huge amounts of spending in a short The purpose of this report is to equip public sector time, circumventing the standard operating procedures, officials and civil society with a modular set of will result in new corruption scandals in the post-COVID approaches, entry points and tools that can be years. There are already reports in papers regarding drawn upon and adapted to their specific country inflated food prices or favored medical contracts to firms context. It is informed by international experience in from a few countries. In drawing on the past and looking what is and is not working to address corruption and ahead to the future, the time is ripe for the World Bank to to enhance government effectiveness. Importantly, take a fresh look at the state of play in tackling corruption although the approach is modular, it is not a menu. and how countries are attempting to address this long- While the chapters and cases do not analyze the political standing scourge on development. economy of reform in each country or sector in depth, they do recognize the relevance of political context and The multi-faceted and complex nature of corruption elite bargaining that takes place to constrain options. has shown that while technical solutions and Rather, the report presents successful approaches and compliance measures are enablers, they are rarely policy responses in various country contexts for the sufficient in themselves to root out corruption. lessons they provide for reform-minded leaders and In many societies corrupt behavior is deeply rooted civil society. In so doing, it highlights the importance in the historical origins, social norms and political of ins titutions for implementing gover nment culture. It is not unusual to find strong inter-linkages policies, engaging civil society, and ensuring greater between power, politics, and money. Political parties transparency in government operations. and campaigns are often financed on the back of close links with business, which can be corrupt. Entrenched Given the wide scope of behaviors considered to be political elites are eager to maintain their grip on power corruption, and the diverse range of approaches, no and money. The scope for reformers to make changes single report can expect to address all the sources is therefore constrained by the limits of their political of corruption and approaches required to combat it. influence, and any significant impact on corruption The report examines the manifestations of corruption usually takes a long time. and efforts to address them from three perspectives: While corruption may be entrenched, the case I. Selected key sectors and functions of the studies in this report demonstrate that progress government is possible even in challenging contexts. By design, II. Policy tools and interventions used to control the report focuses primarily on developing countries, corruption where institutional capacities may be less established III. Institutions used by government for oversight than in advanced countries. Impactful anti-corruption and accountability Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 3 EXECUTIVE SUMMARY The key messages of this report are the following: • Progress is not linear and reforms could suffer due to political setbacks and/or institutional weaknesses, yet even basic efforts could provide a foundation on which to build. • The “how” of reform can be as important as the “what” of reform, as it requires an understanding of how key obstacles could be overcome in a particular context. • There is no single success factor; impactful reforms usually require a combination of several layered or sequenced interventions (described in the Conclusions chapter). For example, technology can be an enabler for transparency, but is not a full solution on its own. • Open government reforms can lead to a stronger relationship between government and citizens, increasing levels of trust and social capital. • Sector and function-specific interventions can be effective and complementary to broader government-wide efforts to enhance transparency, integrity, and good governance. • It is critical to look beyond the de jure of anti-corruption institutions and tools, to the de facto impact and to make course corrections so that national anti-corruption strategies and institutions are not mere window-dressing; but are tailored to the needs and contexts of countries. • Collaboration and information sharing across traditional agency boundaries, and across international boundaries are becoming increasingly important to address corruption. • It is important to factor the historical, social, economic, and political realities of a country into anti-corruption reform efforts. EXECUTIVE SUMMARY Part I of the report covers issues, challenges and The structure and format of the chapters vary by trends in five key thematic areas: public procurement; thematic area. In most instances, the chapter starts with public infrastructure; state-owned enterprises (SOEs); an overarching chapeau that highlights key issues and customs administration; and delivery of services in lessons learned, supported by case studies that focus selected sectors. These are intended to capture a on why and how specific actions were implemented. In small selection of high-value functions and sectors of some chapters, cases are in-built into the chapeau as public sector activity. Part II examines some of the they did not merit a detailed description and instead policy responses that government and civil society are cited as examples. The cases are intended to may employ for corruption prevention and detection, bring out the “how to” of the reform process, while while Part III assesses the role of three institutions also showing the influence of political economy and (Supreme Audit Institutions, Anti-corruption Agencies institutional capacity constraints. None of the individual and the Justice system) that oversee, implement or cases would be sufficient to demonstrate the broader contribute to anti-corruption efforts, and draws lessons lessons of international experience, but they do show about their effectiveness (see Figure below). The report how some experiences were adapted into a specific also features a brief country case study on Malaysia context. Moreover, the cases are often incomplete that traces the history of the country’s anti-corruption stories of reform – either because implementation is still efforts over the last few decades and the influences ongoing or because corruption remains an ongoing and on its development. It concludes with a reflection on significant challenge. By design, many of the examples several key reform characteristics or drivers that were are taken from countries and sectors where corruption common across the case studies. remains widespread but where public officials and civil society have not given up battling it. SELECTED THEMES Compendium of Cases PART I PART II PART III Functions government Selected policy tools Oversight institutions performs government uses government uses Procures goods and Open Government Anticorruption Agencies services Provides public goods GovTech Supreme Audit Institutions e.g. Infrastructure Runs Public Sector Asset and Interest Justice System Companies (SOEs) Disclosure Collects revenue, Beneficial Ownership prevents smuggling: Transparency Customs Provides services Exchange of Tax Information e.g. Ports, land management, and Identification of Tax health care Crimes Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 5 PART I Confronting Corruption in Sectors and Functions EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS Public Procurement forces in the private sector and civil society who have a strong interest in improving procurement outcomes are key. Often placed at the epicenter of discussions of corruption, public procurement has wide-ranging The three case studies from Somalia, Bangladesh, and Chile demonstrate ramifications for the economy and the country-specific anti-corruption delivery of public services. reforms in public procurement along a governance continuum. I t accounts for anywhere between 10%-25% of public spending globally.1 Corruption • The Somalia case explores an effort to in procurement is rampant, with estimates reduce corruption in a limited number of strategic high-value procurement contracts, of the cost of capital investment projects being using a specially designed mechanism consumed by corruption ranging from 10% to 30% 2, established jointly by development partners with repercussions that go far beyond the price tag of and the Government of Somalia. Success capital projects as it impacts the poorest sections of was achieved in restricting corruption in a society disproportionately. Corruption in procurement number of transactions and demonstrates creates the wrong incentives for firms and distorts the ability to achieve results in even the most competition and economic growth. challenging of environments. There is a vast literature providing guidance • The Bangladesh case explores an effort on the features of procurement systems that to reduce corruption as one dimension of operate with high degrees of integrity. While an overall reform of the country’s public increasingly, electronic government procurement procurement system featuring the adoption of an e-GP system. The reform has built (e-GP) is identified as a key platform for addressing momentum over a decade of implementation. corruption vulnerabilities, its impact on procurement While intensive work on monitoring progress has differed significantly in countries that have adopted has demonstrated a substantial reduction in e-GP systems. Variation in changes in the incidence corruption, as measured by key corruption of corruption reflects a combination of factors, indicators, it has also revealed cer tain including the overall governance environment, the aspects of procurement that are resistant to technical aspects of the specific e-GP system used, change. Recognizing corruption upfront as the capacity of staff responsible for procurement, and a key issue ensured that the e-GP program the strength of resistance to reform. The experience factored it in explicitly in the design of the with e-GP reflects the experience overall with reducing procurement reform. corruption in public procurement, where technical • In Chile, the reform program was driven by approaches to governance challenges have had a non-political task force that recommended sustained success only when they are understood as steps to improve the coherence of the public enabling change rather than as the primary driver of procurement system, within a larger program reform. While the success of anti-corruption reforms in of reforms aimed at restructuring the role and public procurement has varied greatly, the two factors transparency of private financing of political that have been consistently associated with declines in parties. The Chilean example demonstrates corruption in procurement across different jurisdictions how a well-performing state, with a relatively are transparency and increased frequency of audits. high degree of capacity and integrity, addressed corruption in public procurement Reducing corruption in public procurement requires by modifying the incentives and dynamics a country-specific approach. Focusing on incentives in an overarching system of governance, in order to confront the causes of corruption and the capabilities of the institutions; improving the and not just its symptoms. transparency and efficiency of the procurement system; overcoming opposition to change; and harnessing Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 7 EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS Public Infrastructure by the participants – as illustrated by the oft used term for corruption: the price of doing business. This chapter argues that if the political level commits to Studies show that the developing systematically implementing integrity measures across world’s infrastructure needs are the infrastructure cycle, it will have an impact at both a systemic and a project level. In addition, and crucially, huge and attracting quality private mobilizing citizens and stakeholders and strengthening sector investment is critical to their hand through greater project transparency and closing the gap. openness can build momentum, and change the political economy and cultural considerations that have allowed corrupt practices to happen. Through A s much as $3-4 trillion annually will be such a sustained and broad-based movement, country needed globally through 2030 to meet the examples demonstrate that change can happen at both infrastructure needs of the 1.2 billion people the project and society level. who lack electricity; the 663 million who lack adequate drinking water sources; the 1 billion who live more than two kilometers from an all-weather road; and the many millions who are unable to access work and educational opportunities due to the absence or high cost of transportation services.3 However, the size, complexity and long-run nature of infrastructure projects leaves them vulnerable to corrupt practices. The perception of corruption also has reputational risks for governments, undermining public trust and disincentivizing public- private cooperation from quality contractors. Every phase in an infrastructure project involves distinct combinations of institutions and stakeholders, each with their own vulnerabilities to particular types of misconduct. During project identification and selection, some stakeholders may seek to undermine merit-based procedures for project selection, while the subsequent procurement phase tends to be where the most entry points for corruption exist, and the biggest payoffs. The construction phase is vulnerable to ex-post renegotiation of performance requirements in the contract details, and the losses to the public purse can be significant. The estimates of losses to bribery in construction, i.e., downstream from procurement, are as high as 45 percent of construction costs.4 For integrity to overcome the forces of corruption, a broad and vigorous alliance is needed, using varied tools to foster transparency and openness. Corruption is a reflection of how things are currently done by certain officials, businesses and politicians in specific situations. This doesn’t happen in a vacuum; corruption is enabled by the conventions and approaches that have been allowed to develop over time. In some situations, these practices may not even be considered particularly harmful or wrong 8 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS Chapter 2 includes three case study examples of strategies to mitigate corruption risks in the acquisition of public infrastructure. • The Infrastructure Transparency Initiative (CoST) offers a multi-stakeholder approach to strengthening governance in the infrastructure sector through improved transparency, stakeholder engagement and accountability. The expansion of digital government and open contracting data has created a more enabling environment for multi-stakeholder approaches than would have been possible in the past. Three country examples are presented: Thailand shows the evolution of a multi-stakeholder working group. The Ukraine case examines the institutional foundations for actionable data disclosure. The Honduras example focuses on how international support has been combined with local leadership to strengthen transparency and accountability in infrastructure. Each case represents an evolving story, with no doubt significant hurdles and gaps in implementation yet to be overcome. • Public-private partnership (PPP) renegotiation of infrastructure projects has the potential for abuse, as evidenced in Brazil, which was the epicenter of one of the largest corruption scandals in history. PPPs are renegotiated much more often than similar private contracts. Dishonest contractors make lowball bids to win contracts, knowing that they can later reap windfalls during a less transparent contract renegotiation process. PPP renegotiations can also allow governments to elude spending controls and defer costs to future administrations, while companies can use renegotiations and bribery to build market share. While changes to a long-term PPP contract may be inevitable, this case study offers guidance to reduce the probability of opportunistic renegotiations that are motivated by corruption. • The third case examines how the Colombia Society of Engineers (SCI) began supporting Open Contracting, when they suspected that tender specifications were so narrow that they were being tailored to benefit particular bidders. The case highlights how the government acted upon the SCI findings by making standard documents mandatory for all state governments in 2019, and by updating the country’s e-procurement platform to publish data in the open, standardized, and reusable Open Contracting Data Standard (OCDS) format. Utilizing data analytics to assess these reforms, the government is already seeing increases in competition and better value-for-money for the public. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 9 EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS State-Owned used to benefit political groups and party finances in order to sustain the resource diversion over time. Risks Enterprises (SOEs) also arise from weak legal and regulatory frameworks; corporate governance weaknesses at SOE levels; a lack of transparency and disclosure over SOE finances Corruption in SOEs has gained compounded by poor financial reporting practices; prominence in recent years due to and limited effective government and citizen oversight. These risks are exacerbated by inadequate technology high-profile scandals in countries in SOE operations and weak citizen participation in like Brazil, South Africa, Angola, monitoring SOE performance. Corruption can be and Malaysia. detrimental to the SOE itself, to the economy, and to the people when SOEs fail to provide critical public goods and services. C orruption risks arise from various sources. SOEs in high-value sectors often enjoy monopoly Phasing or sequencing of SOE reforms based on or quasi-monopoly rights that provide an their political and institutional feasibility can opportunity for abnormal profit generation, a privileged help overcome entrenched interests and provide relationship with the government and state financial confidence to policy makers to take further steps. support. This creates incentives and opportunities to The Bank’s experience suggests several categories extract significant rents. Such mechanisms are often of actions that can contribute to enhancing integrity 10 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS in SOE governance: (a) opening up markets to The three cases presented in this chapter greater competition to reduce monopoly power are ongoing stories that highlight the and market share and incentivize financial and complex challenges that political leaders fiscal discipline; (b) strengthening SOE legal and and citizens face to improve SOE regulatory frameworks and practices; (c) building governance. a commitment to good governance and capacity of state-owned entities; (d) professionalizing the SOE board of directors and senior management; (e) • In Brazil, following the high-profile Lava Jato establishing effective internal controls, compliance, scandal, the government passed the Law on the and risk management functions in the SOE; (f) Responsibility of Federal State Companies to promoting transparency and full financial disclosure, strengthen the internal control environment in including of SOE debt; (g) digitalizing financial SOEs through the introduction of fiscal councils and service delivery information to improve the and internal audit committees. The law also aims accuracy of information available to the public; and to increase transparency around contracting (h) facilitating citizen engagement in holding SOEs and procurement, which was the main channel of kickbacks exposed by Operation Car Wash. to account for performance and providing feedback However, effective implementation of the law to management on issues of particular relevance and deeper sector reforms remain in question to them such as the quality of service delivery for and subject to the full support of the political water or energy utilities. leadership. Reforming governance of SOEs alone may not • In Angola, recent reforms of SOE governance are always be enough to prevent corruption and in the early stages, and like Brazil, are set against assure efficiency. Additional measures could a backdrop of massive scandals related to the state oil company. Since mid-2017, actions have include SOE restructuring, which may involve included reforming SOEs’ public procurement, breaking large SOE multi-layered enterprises into opening up the income and asset declaration smaller business units or bringing opportunities for system, implementing a divestiture of SOE greater private sector involvement in the operations, non-core assets, increasing the transparency management or even ownership of SOEs through of the privatization process, establishing a new PPPs or privatization, when the necessary conditions reinforced SOE unit in the Ministry of Finance to are being met. Such conditions include reduced or collect data and exercise more active oversight, replacing mos t SOE b oard of direc tor s, contestable market share and economic dominance; strengthening corporate governance in the transparency over ownership, operations and state oil company, and prosecuting suspected finances including SOE debts; increased capacity corruption cases. The implementation of the for monitoring and oversight; and improved privatization program is still unfolding. efficiency. Especially important is ensuring that transactions occur without special privileges for • Colombia stands out from the other cases, because insiders or other favored buyers, so that there is it reflects a proactive approach by an SOE to make itself accountable to citizens and shareholders a level playing field with potential competitors. through a series of transparency initiatives, Where privatization or private sector participation digitization, and customer-engagement practices. is not a viable option, SOEs can still be exposed With a robust legislative framework for corporate to capital market discipline through partial listings. responsibility set in place decades earlier, Empresas Públicas de Medellin (EPM) distinguished itself from other SOEs in the country and in the region by emphasizing public transparency and engagement as the core pillars of its integrity drive and of its corporate governance more generally. Citizens in the community are encouraged to see EPM as belonging to them, through the company’s approach to service delivery, customer feedback, and even share price. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 11 EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS Customs The two country cases show that Administration effective customs administration reforms are possible even in fragile states with limited capacity, when technical reforms Customs administration is vital are coupled with an understanding of for its role in trade facilitation and the local political economy surrounding protection of national borders, as customs agents. well as revenue collection. • Customs reforms in Madagascar are ongoing, but there have already been signs of significant C ollection of trade taxes (tariffs, excises and import progress to reduce corrupt practices, facilitate value added tax) account for a significant portion trade, and increase revenue at their major port. of government revenues – commonly 30-50% – Their performance-based pay program has helped in low-income countries and even more in fragile states. incentivize customs inspectors to curb tax evasion Corruption in customs can be a disincentive to foreign and expedite customs clearance. Importantly, the investors, especially those who intend to rely on smooth reform was accompanied by extensive data mining import of inputs and export of goods. A low capacity and monitoring to detect corrupt individuals and customs administration also presents challenges for practices. national security in an age of international terrorism. Yet the • Afghanistan’s government faced the daunting customs administration is highly vulnerable to corruption challenge to curtail the parallel or shadow customs because officials often enjoy discretionary powers over regimes that operated beyond government important decisions, and risk-based systems of control and control. For about 15 years now, the Afghanistan accountability are often absent or easily breached. The Customs Department has been progressively number of “success” stories in addressing corruption in implementing a countrywide computerization of customs is limited. Georgia and Rwanda traditionally stand customs clearance operations. The strategy has out; both countries’ reform efforts involved a dismantling centered around the automation of procedures to significantly reduce face-to-face contact and the of old, discredited agencies and replacement with new resulting informal negotiations. Though significant ones based on the principles of leaner bureaucracies and vulnerabilities exist, including adaptation to administrative simplification, and both were made possible “game” the system, Afghan authorities have by the emergence of new leaders who broke ties with the witnessed increased revenue, improved clearance old networks. time, and improved transparency of trade transactions. The chapter argues that legal and technical reforms are necessary but insufficient to disrupt corrupt behavior in customs administrations. Technical measures often include introducing an upgrade to the legal framework, simplification of processes and rate structures, automation, etc. But laws and regulator y reforms must also be supplemented with other approaches that take into account deeply embedded norms and expectations of political and social life. The report argues for two broad principles: (1) ownership of the reform among the officials involved in reforming the customs administration is a critical issue for sustainability, and (2) opportunities for corruption can be reduced by designing mechanisms that create appropriate incentives, limit discretion by public servants, and include enhanced controls. It concludes that understanding social normative pressures in a given context can help practitioners design interventions to relieve those pressures, allowing collective behavior to change. Reformers should target the informal networks of patronage and social domination, which often determine the behavior of customs officers. 12 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART I CONFRONTING CORRUPTION IN SECTORS AND FUNCTIONS Service Delivery The case studies describe reforms in Sectors (Land, to address these issues and improve service delivery. Health, Ports) Corruption in public services • Rwanda’s reform of land mapping and titling aimed to modernize the entire takes many forms and sector through enhanced transparency, imposes significant costs on thus increasing the cost of malfeasance and reducing corrupt incentives in the government, citizens, and ser vice deliver y. It was focused on businesses. good management practices in land administration, including the digitization of records. E stimates of the magnitude of dollars lost to corruption vary widely across • Ukraine’s ongoing health system reform countries and sectors. While these is focused on changing the incentives of healthcare providers to improve estimates rely on various assumptions, and are outcomes. The reforms initiated so far subject to critiques, they point to the significant have included capitation financing in magnitude of the monetary costs of corruption in primary care; raising health professionals’ public services. remuneration; designing transparent, merit-based medical staff appointments; Unpacking sector-specific issues is crucial and initiating an eHealth digital record- to diagnose the root causes of corruption keeping system. These reforms aim to in public services and design appropriate lower out-of-pocket expenditure, reduce interventions. Even within a sector, a reform could the number of acute medical events, be narrowly focused on rooting out a particular and increase patient satisfaction with issue, such as bribery in surgery waiting lists, or their care providers. This is an example of a true “ecosystem reform,” in which adopt a multi-pronged approach to focus on the changes to legislation went hand-in- entire service. The correct diagnostics also allows hand with executive implementation and reformers to assess the feasibility of the program, strong civic engagement to serve as a as well as to identify the loci of leadership and feedback loop. how to build stakeholder coalitions. • Nigeria’s reform program in ports is an Corruption in the three distinctive service attempt to address corruption in service deliver y sectors of he a lthcare , land delivery with the help of a pro-reform administration, and port services impacts the coalition. Such a coalition in Nigeria economy in different ways. The three services included private shippers, the United are very distinct: healthcare, that affects virtually Nations Develop ment Progr amme all citizens, as seen during the current COVID-19 (UNDP) and three of the country’s anti- corruption agencies. The network worked pandemic; land administration, a sensitive service together with the Nigerian government impacting a large proportion of the population; to develop corruption risk assessments and ports, a specific and narrower government to of five ports, followed by standardizing business service. If the health sector is plagued procedures, using an e-governance by pervasive corruption, human development can por tal, and establishing a grievance be impacted; corruption in land administration mechanism. Surveys conducted by the can undermine land reform and citizens’ trust in network and its partners suggest the government as a whole; and corruption in ports measures have had a positive impact in directly affects trade and the investment climate improving the functioning of ports, even in the countries relying on maritime commerce, though substantial work remains to be hampering their development. done. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 13 PART II Key Instruments for Fighting Corruption EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION Open Government Two case studies focus on engaging Initiatives citizens. Open government reforms aim to • Kenya’s experience with open budgeting illustrates that engaging citizenr y in promote an ethos of transparency, the budgeting process can enhance inclusiveness and collaboration. accountability of public officials. ‘Participatory budgeting’, an approach introduced at the local government level (counties), involved T he aim is to shift norms in a sustainable allocating a portion of the budget for citizens’ way by introducing changes that lead to priorities and creating a participatory process enhanced transparency and promote an where citizens could work together to define environment that is less conducive to corrupt activity, and vote on development priorities. While and empowering citizens to demand better services participatory budgeting did not directly from the government. The impact of these reforms target corruption, it nonetheless had an depends on the existence of other enabling factors, impact on ensuring public funds were such as political will, a free and independent media, spent on citizens’ needs, increased citizen oversight of public spending, and in some a robust civil society, and effective accountability and cases resulted in cost savings. sanctioning mechanisms. • Ethiopia’s Social Accountability Program, Openness can lead to a stronger relationship an effort to better engage its citizens and between government and citizens, increasing levels improve public ser vice deliver y at the of trust and social capital. An open government local level, led to increased trust between civil society, service providers, and the involves citizens in oversight of government functions by government. While the program’s goals were providing relevant information, creating opportunities mostly to increase public participation, build for citizen engagement, and implementing mechanisms better relations between local governments, that strengthen accountability. While it is a challenge to citizens, and civil society organizations, and make an empirically-grounded causal link between open to improve service delivery, the initiative government measures and reduced corruption, due to likely had spillover effects in reducing limited evidence, a growing body of case studies and corruption, even if on a small scale. experimental evidence demonstrates that well-designed open approaches can lead to positive change. While there has been a surge in interest in itself cannot address corruption, although it is often transparency in recent years, the impact of seen as a necessary first step and is certainly key in transparency on improving accountability hinges shifting incentives and nudging behaviors. A broader on several factors. These factors include whether or enabling environment that supports the involvement not stakeholders can easily find and understand the of a range of stakeholders in accessing, analyzing information, and the ability and willingness of the and responding to information in the public domain officials to respond to requests for information. Other helps access to information initiatives lead to more reasons include lack of civic space, political will and fundamental change. institutional capacity, which results in governments failing to meet the expec tations of dif ferent W hile mea suring the impact of citizens’ stakeholders. Under such circumstances, reform engagement on corruption is hard, there is champions, coalitions for change, “infomediaries,” evidence that social accountability mechanisms, such as journalists, an independent media where that such as social audits, surveys, citizen report cards, exists and watchdog organizations, can play a critical or grievance redress mechanisms, can all be used role. Even though about 120 countries have passed to address corruption in service delivery. Impactful a right to information law, evidence of the impact of interventions are effective when they address citizens’ legal rights to access information on the extent and private interests, and garner high levels of citizen nature of corruption is inconsistent. Transparency by participation. Important enabling factors include access Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 15 EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION to information, legislation, policy and practices, an active and independent media, citizens’ ability to hold institutions accountable through oversight institutions and political channels, markets and institutions that prevent elite capture, credible sanctions, and the existence of coalitions among multiple actors.5 Open government measures can directly or indirectly lead to a reduction in corruption even though the impact can be difficult to measure. However, if information is increasingly reaching citizens and the media, and officials are acknowledging its accuracy, that is a step in the right direction. Over time, with a holistic approach tailored to the context, open governance may help change behaviors so that public resources are directed not to the pockets of individuals but rather to the common good. GovTech The broadening and deepening of global digitization of governments and citizens is changing the face of public sector governance and its impact on anti-corruption. W hile digitization as a ‘foundational’ factor digitization can help improve transparency, with near is important, other factors like institutional real-time feedback helping expose illicit behavior, it incentives and capacities and strong can also facilitate a rapid or scaled illicit syphoning of leadership are key for enhanced efficiency, improved resources. The options for leveraging opportunities service delivery and fewer opportunities for corruption. that new forms of digital data offer are very different Reducing the human interface in service delivery helps for a country like Singapore than those available to governments to curtail the risk of rent-seeking behavior. economies reliant on paper-based workflows, and Yet, the traction of digital technologies in reducing where existing systems are not set up to link to each fraud and corruption depends on the institutional other, at least in the short run. context. Any system will only be as good as the practices that complement it. To gain greater traction Developing countries could leapfrog and deploy for addressing fraud and corruption, data needs to be new disruptive technologies more widely to captured and linked with other data. Mandating the use address public sector challenges. Digital technology of the system and validating and analyzing data using disruptions are being used in a number of areas, Artificial Intelligence (AI) or other methods can prove including for revenue, expenditure, regulation, and to be effective. financial and physical asset management. Framing technology-supported reforms as a public services Digital government transitions, coupled with delivery agenda, rather than in the first instance as an disruptive technological change, offer both anti-corruption crusade, may also be a more disarming opportunities and risks for anti-corruption. While approach in light of the existence of the vested interests 16 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION benefiting from corruption. However, the impact will be heterogenous and depend on complementary practices like the degree to which electronic channels are voluntary, and how discretion was used. Big data, cloud-based platforms, biometrics and fin-tech are all being used, but the full advantage can be realized only by addressing omissions and biases. Greater access to digital data in usable form, alongside technology tools, can empower civil society and reform champions in government to detect fraud and corruption. While big data—and the related application of Artificial Intelligence-Machine Learning (AI-ML)—can enhance detection and limit discretion abuse, the perseverance and skills to link and clean data will be key. Cloud-based platforms and services are providing for on-tap computing, better data management capabilities, and storage capacities. Although biometrics have been used in identity validation, better targeting and access to services, and to improve attendance of public servants, the risk of excluding genuine beneficiaries from government programs needs to be factored in. Finally, while fin- tech innovations have increased the scope and scale for digital payments between governments and citizens, blockchain technology is still evolving, and The case study on Andhra Pradesh’s sensor technology is increasingly gaining momentum. Municipal Reform program Blockchain technology has the potential to improve demonstrates how the sub-national trust in digital government in settings where trust is low. government progressively leveraged The internet of things (IoT) and other sensor technology digital government platforms and are increasingly allowing for richer and more dynamic emerging technologies to improve tracking and feedback. public services. While different technologies have merit in their own right, the full impact lies in breaking technology silos and implementing interlinked • In Andhra Pradesh, the government used approaches across sectors and services. Given the drones to collect geospatial data and update expanse and diverse nature of public sector services, maps, replaced paper-based systems with the most productive strategies build on a mix of wider digital ones, and trained both staff and government digitization contexts and intersecting citizens on how to use the new platforms. technology developments, rather than focusing Citizens could access services or lodge excessively on a single technology. The roll-out of grievances through multiple channels: online, by telephone or through a mobile the latest ICT systems, including those supported by phone application. The reforms significantly development partners, may be seen as potentially reduced oppor tunities for fraud and solving the problem, but this is not necessarily the corruption in key areas, such as taxation and case. What is essential is that for any country to adopt construction permits, and improved revenue new technology or ‘leapfrog’, the corresponding for local governments. analog complements must be in place. In some cases, they may indeed be game-changing, but care must be taken that the next must-have technology does not become an excuse to address persistent challenges, such as poor service delivery and fraud and corruption. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 17 EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION Asset and Interest look like and how it can be relevant in the context of transnational financial flows, new ways of disguising Declaration (AID) unjustified wealth, as well as domestic typologies of conflict of interest and hidden wealth. AID systems have increasingly The chapter provides guidance on several critical become a multi-purpose tool AID system design questions: Who should file, how frequently to file, paper vs electronic filing, what to aimed at preventing conflicts of declare, how to verify declarations, how to sanction interest, detecting unjustified non- compliance, and how much transparenc y. assets and building broader Though the direct impact of AID systems on anti- integrity of public service. corruption will always be dif ficult to quantif y, governments should nevertheless try to assess their effectiveness—public perception sur veys, exper t W hile many countries have AID systems, there opinions, and quantitative review of compliance data is limited evidence of their effectiveness. are some methods available. Most AID systems have yet to live up to their potential. Cumbersome filing procedures, crucial gaps in the disclosure forms, and lack of transparency and enforcement are limiting the role of AID. Such The two case studies highlight the impact of weaknesses also may make it merely another check- enforcement, digitization, and transparency. a-box exercise to implement national anti-corruption strategies. Lack of control of submission and ineffective verification of declarations undermine their importance • In Ukraine, the asset declaration system put in place as an anti-corruption tool. The chapter on AID in the 1990s had been nothing more than a formality. elaborates on what an effective AID system should But in 2014, civil society successfully advocated an overhaul of the country’s anti-corruption infrastructure. When the new asset declaration system became operational in September 2016, it was one of the most comprehensive worldwide. By the end of 2019, the system held over 4 million electronic documents, all of which were available for free public access, including in machine-readable format. However, at the end of 2019, due to concerns over effectiveness and impartiality of enforcement, Parliament adopted a law that overhauled the anti-corruption agency in charge of the system and further strengthened provisions on the disclosure and verification of assets and interests. • Romania reversed a long history of inactivity on tackling corruption with the introduction of AID forms for a wide range of public officials, together with a verification mechanism focused on detecting and sanctioning unjustified variations of wealth, conflicts of interest and incompatibilities. Transparency has been critical to the system’s effectiveness, as all disclosure forms are published on the website of the National Integrity Agency (ANI) and used by civil society and investigative journalists. ANI uses the system to sanction unjustified changes in wealth, as well as conflicts of interest and incompatibilities. ANI’s work is also focused on prevention, most notably though the PREVENT system, which issues early warnings to contracting authorities about potential conflicts of interest in procurement procedures. 18 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION Beneficial Ownership The path to implementing beneficial Transparency ownership transparency reforms is not easy. The report presents three diverse country examples as to how The release of the Panama Papers they have approached the adoption of and Paradise Papers in 2016 a beneficial ownership transparency policy: and 2017 shone a spotlight on the extensive use of anonymous • Nigeria is an illustration of how reforms that companies for concealing corrupt are politically and technically challenging practices and proceeds. have b e e n i ni t iate d by leve r agi ng international commitments and policy platforms, building on existing institutional T he sudden growth in publicly available frameworks, such as the transparency information on this widespread practice has commitments in the extractives sector. helped increase pressure on policy makers to Beneficial ownership requirements were address the abuse of anonymously-owned companies introduced in 2019 as part of a bill to reform and other anonymous financial vehicles, given the role the private sector. The Nigerian Corporate that they play in concealing illicit practices and proceeds. Affairs Commission (CAC) is now tasked with collecting beneficial ownership information Addressing the abuse of anonymous corporate entities for all 3.1 million Nigerian companies, and is a global challenge. Regulatory loopholes in beneficial making that information publicly available. ownership disclosure requirements in one country have serious consequences because illicit financial • In Slovakia, companies are required to flows (IFFs) are not constrained by national borders: register as a Partner of the Public Sector illicit funds can find a safe haven in jurisdictions where through ‘authorized persons,’ (e.g., attorneys, notaries, banks, or tax advisors), who are regulations protect anonymity. Developing countries jointly liable for false information. Free public pay the heaviest price for these practices because of access is another cornerstone of Slovakia’s lost revenues or funds that are diverted as a result of approach to verifying data. Slovakia shifted fraud, tax evasion, and the illegal exploitation of natural the burden of validating beneficial ownership resources. information to companies through these ‘authorized persons,’ given the technical Though still relatively new, the use of publicly and administrative challenges inherent in available registers of the beneficial owners of verifying the accuracy of beneficial ownership corporate entities (beneficial ownership registers) information. is beginning to have an impact in two ways: (1) • The UK experience offers an example of helping enforce illicit enrichment laws, 6 and (2) how to balance data protection and privacy helping detect and prevent conflicts of interest in a disclosure policy, through: (a) publishing in public procurement. Even before the release enough personally identifying information of the Panama Papers, international bodies like the to distinguish between beneficial owners Financial Action Task Force (FATF)7 were emphasizing and officers, while withholding sensitive the value of beneficial ownership disclosure as a tool information, and (b) allowing beneficial for law enforcement authorities. Since then, civil society owners with privacy concerns to apply to have their information removed from the organizations, thinktanks and watchdogs have been register, but only under very strict rules- contributing ideas to help solve technical challenges based criteria. Out of millions of companies associated with establishing credible and effective public registered, only around 300 have applied to disclosure systems. One of the important milestones have their information removed, and only 30 is the development of the Beneficial Ownership of these applications have been granted. Data Standard (BODS), a framework for representing information about people, companies, and relationships as structured data, in a standardized format that can be replicated across countries and systems. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 19 EXECUTIVE SUMMARY – PART II KEY INSTRUMENTS FOR FIGHTING CORRUPTION Exchange of Tax Chapter 10 presents two case study Information and examples on how tax administrations can play a stronger role in the fight against Collaboration on corruption and specifically against illicit financial flows. Tax Crimes • Exchanging data to detect potential corruption: Corruption is intrinsically linked to While most prosecutions for tax crimes related to tax crimes, as corrupt persons do corruption can be undertaken by the tax authorities, they often require support in the form of information not report their income from corrupt sourcing or expertise from other agencies. There are activities for tax purposes. multiple obstacles to such information sharing, but an increasing number of countries are creating the legal precedence to overcome them. A starting point F ATF includes tax crimes in the set of is to establish bilateral agreements or memoranda of designated predicate offenses for money understanding (MOUs) to share information, while laundering purposes, explicitly recognizing respecting relevant privacy laws within the country. the linkages between tax crimes and money laundering. Establishing a national task force to enhance Moreover, the extensive level of corruption related to collaboration and improving inter-connectivity among databases are also key steps to be taken by tax has serious implications for government revenues national authorities. and economic development. • Using tax data as evidence in the prosecution of The impact of inter-agency cooperation can be corruption: The level of cooperation between tax significant. In the Brazilian Petrobras investigation, administrations and other domestic law enforcement tax auditors supported the transnational corruption agencies is critical in countering tax and financial investigation by analyzing suspects’ tax and customs data crimes. Tax administrations are granted access to and sharing this with the police and public prosecutor the transactions and records of millions of individuals as permitted by law. With that information, officials and entities, but they may be unaware of the typical were able to uncover evidence of money laundering, indicators of possible bribery, corruption, and other tax evasion and hidden assets and the investigation financial crimes not related to tax. Moreover, in many countries there are legal barriers to the ability of tax has, so far, resulted in criminal fines, tax penalties, and administrations to share information with the police recovered assets amounting to $15 billion. or public prosecutors in non-tax investigations. The ability of tax administrations to be involved in prosecuting financial crimes is often made easier when tax crimes are recognized as predicate offenses to money laundering because it means that a person may be charged with the offense of money laundering and the predicate offense of tax evasion. PART III Role of Institutions in Fighting Corruption EXECUTIVE SUMMARY – PART III ROLE OF INSTITUTIONS IN FIGHTING CORRUPTION Anti-Corruption effort. Once political support is obtained, the next step is the introduction of a comprehensive and clear Agencies legal framework for anti-corruption work. Such a legal framework, although necessary, is not sufficient, and laws and regulations need to be applied to make a difference. Furthermore, inter-agency coordination and Anti-Corruption Agencies (ACAs) cooperation among different jurisdictions is required to have in recent years received a enhance the investigative capacity (and effectiveness) of ACAs. Once this is assured, ACAs need an explicit role great deal of attention and criticism and mandate, and, as with every public institution, they because of the high visibility of their require adequate resources to operate. ACAs, because work and their seemingly limited of the complexity of their work, must also position impact compared to the resources themselves clearly within the institutional environment and establish effective inter-agency coordination and devoted to them. cooperation. A lack of clarity about their mandate and position, and unclear political commitment, are two factors that have commonly contributed to T he existing literature 8 has highlighted the the emergence of ineffective ACAs that encompass complexity and variety of these institutions multiple ill-defined functions. Measures promoting the and identified key elements for their ACA’s accountability and relationship with citizens and effectiveness. Political will and high-level commitment the media (including the emerging social media) can be are the cornerstone of every successful anti-corruption powerful tools to create an enabling environment for 22 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – PART III ROLE OF INSTITUTIONS IN FIGHTING CORRUPTION ACAs that face faltering political support. ACAs should set an example and make themselves accountable for Three case studies, the UK, Lithuania, their work by regularly sharing the outcome of their and Bhutan, show three different efforts and initiatives. Investing in programs to establish approaches to anti-corruption, each good relationships and communication with the public, partly effective in its own way. based on visible and relevant indicators of impact, has helped several ACAs to fend off political pressures and • The UK opted not for an ACA, but allocated survive attacks aimed at undermining them. Clear and a number of anti-corruption roles to the comprehensive performance indicators for ACAs are International Corruption Unit (ICU) of not commonly used by ACA officials, making ACAs the National Crime Agency, through a less able to track and report on results and impact and reconfiguration of expertise within existing even more vulnerable to political pressure and vested institutional arrangements. The ICU was interests. given dedicated staff and budget, and its capacity was enhanced, yielding positive results. Success was also due to the Despite high expectations, ACAs have fallen short flexibility of the parent institution, and the of achieving the organizational standards set by leadership of a senior official with a clear the United Nations Convention Against Corruption focus and a degree of executive authority (UNCAC). ACAs have often been introduced in that ensured availability of and control environments where other key institutions (for over resources necessary to maintain, to example the judiciary) were weak and/or captured by date, its organizational development and private interests. Moreover, the independence of the consolidation. institutions (functional, budgetary and appointments), • Lithuania set up a dedicated ACA, the strategic focus, human and financial resources, and Special Investigation Service (STT), as a unit mechanisms for collaboration and coordination have within the Ministry of Interior. It was able to not achieved the level that would enable them to be handpick experienced staff on enhanced effective. ACAs have therefore not been successful in terms and benefited from internal and delivering according to their mandates and in line with international guidance. The STT was seen citizens’ expectations, and in many cases have not had as a quasi-law enforcement agency with any significant impact on the trends, types, and levels strong leadership and technical expertise. Its effectiveness can be attributed to the of corruption in their jurisdictions. combination of a strategic approach taken on the basis of informed intelligence, The pervasive institutional limitations raise specific technical approaches, and continued questions as to whether the model of a stand-alone guidance from international agencies. multi-functional ACA is the right one, or whether the need can be addressed through existing • In Bhutan, the Anti-Corruption Commission institutions. Corruption has all too often been (ACC) was established as part of the 2005 constitutional arrangements, with the aim regarded as a stand-alone issue, with the establishment of rooting out corruption. It was given a of an ACA being a stand-alone response. In most cases, disproportionate mandate with respect to its countries do not develop a national anti-corruption size and capacity, and its staff and activities strategy in advance of establishing an ACA and so do were quickly ramped up. Fur thermore, not tailor the design of such an agency to the problem. despite the very challenging environment, There is often a lack of clarity over the roles and the ACC was set up without an institutional responsibilities of other key institutions which also play a and corruption risk assessment, which could have helped identify institutional gaps and role in combating corruption, as well as the mechanisms weaknesses that the ACC could have begun and incentives to ensure the inter-connectedness and to address in its work. This lack of strategic inter-dependence of the institutional landscape. The planning had consequences for the agency’s chapter’s case studies highlight the importance of impact. Many reforms did not address past having a political commitment to tackling the problem cultural heritage issues. As a result, the ACC of corruption, developing a deep understanding of the continues to face challenges as it does not fit nature of the corruption problem, and mapping the entirely into the country’s environment and the environment does not fully facilitate its existing institutional landscape before establishing a purpose. new anti-corruption agency if it is to be effective. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 23 EXECUTIVE SUMMARY – PART III ROLE OF INSTITUTIONS IN FIGHTING CORRUPTION Supreme Audit In an environment where corruption is widespread, establishing the integrity of SAIs can be a Institutions challenge.11 Top management of the SAI can be expected to lead by example in maintaining high integrity and establishing zero tolerance regarding Supreme Audit Institutions (SAIs) staff violations, failing which they will not be able to can play a useful role in detecting administer or propagate an organizational culture of integrity. This can be complex territory to navigate and preventing corruption, when as auditors are often insiders who are asked to play they have the mandate, tools, and the role of outsiders. While the effectiveness of an trust of the government to take on SAI largely depends on its operational and financial the fight against corruption.9 independence, it is also influenced by the external audit model they follow, the country context, and the associated norms of behavior. S AIs are the chief auditors of the government and play a pivotal role in ensuring transparency and accountability. The SAI’s independence The two case studies from Ghana and and operating capacity are important foundations for India demonstrate the effectiveness providing fiscal oversight through presenting credible of the SAIs in two different contexts. and timely audit results to legislatures, government, civil society, and the general public. The primary purpose of • The case study of SAI Ghana is an apt the SAI is to report on the management of public funds example of an overlapping or hybrid model and the quality and credibility of the government’s of a Westminster12 type SAI equipped with reported financial data. Its recommendations can sanction powers. It shows the transformation indicate ways to strengthen institutions. SAIs can of a marginalized agency to a reform champion contribute to combating corruption by directly in the fight against corruption. This was reporting on transactions and internal controls; and possible due to a seasoned and charismatic by assessing ways to improve the accountability leader, operational autonomy to investigate and performance of government agencies and anti- irregularities, and building alliances with civil corruption bodies. SAIs are not primarily responsible society to help communicate the importance for tackling corruption and fraud. However, given the of financial integrity. Their work has helped curtail corrupt practices and lend added nature of work performed by SAIs, including checking voice to CSO advocates on a range of other government accounts, verifying regulatory compliance related issues, such as asset disclosure. and assessing the performance of government entities, SAIs are capable of contributing to the anti-corruption • The case study on India, also a Westminster agenda. model, demonstrates the key role played by the Comptroller and Auditor General To be effective in detecting fraud and corruption, in unear thing inappropriate financial SAIs need to build capacity including guidance and transactions costing the government huge training for auditors.10 They also need to strengthen sums of money. It revamped the manner their relationship with parliaments and anti-corruption in which future awards for the telecom agencies. SAIs could establish formal collaboration spectrum were allocated. The core mandate agreements with law enforcement agencies, where allowed for not just examining expenditure programs, but also forgone revenue and the scope of collaboration extends to information potential conflicts of interest in government sharing, joint conferences and workshops to share procedures. knowledge and experiences, referred case follow-up, staff exchanges and joint agenda setting. 24 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption Justice System should also target the process of selection, evaluation, and promotion of judges, prosecutors, and court staff. Second level reforms should address the criminal For the justice system to perform justice chain, i.e., how different institutions interact and effectively, the constituent parts collaborate on agreed performance targets. – courts, prosecutors, police, and Finally, each institution itself should diagnose its supporting bodies – need to be performance bottlenecks as well as the corruption supported by the political leadership challenges it faces internally (e.g., through court and encouraged to play their role. user and multi-stakeholder justice surveys). Indeed, justice institutions themselves are not exempt from corruption and capture that affect the broader W ithout strong political commitment, there is public sector. Police is a common first interface for often a gap between the laws on the books citizens with the justice system and surveys worldwide and the implementation on the ground. indicate that many citizens in developing countries have Under-resourcing of the justice system (both financial experienced police corruption, for example with police and human resources) is a long-standing problem in stopping or arresting vulnerable people to extort a many countries and one that impedes performance, bribe or other favors. Corruption among judges and including as it relates to prosecuting corruption cases. court staff often involves the speeding up and slowing down of case processing, or other manipulations of case Enhancing the effectiveness of the justice system files. Surveys also indicate that many countries struggle in the fight against corruption needs to proceed with a lack of integrity among judges and prosecutors, at multiple levels: system-wide, at the criminal justice which affects their decision-making. chain level, and at the institutional level. Governance reforms at the system level need to ensure judicial and In an increasingly interconnected world, mutual prosecutorial independence so decisions are made legal assistance and other forms of international without undue interference, while encouraging judges cooperation between jurisdictions are crucial to and prosecutors to be accountable to the public for effectively fight against cross-border corruption. their performance, including for non-compliance with The Justice chapter highlights two recent examples integrity requirements. Reforms at this highest level to where such cooperation has been instrumental in increase performance in the fight against corruption exposing large-scale and pervasive corruption. Enhancing Government Effectiveness and Transparency: The Fight Against Corruption 25 EXECUTIVE SUMMARY – COUNTRY SPOTLIGHT: MALAYSIA’S APPROACH TO FIGHTING CORRUPTION Malaysia Case Malaysia’s case study highlights both citizens become so outraged that they voted out the political party that had been in power for over 60 years. the opportunities and challenges of The new government – a loosely formed coalition of building and sustaining an effective opposition parties led by the former Prime Minster anti-corruption drive over time. (PM) – stressed the “rule of law” and took upon itself to revitalize the institutions that were put in place to fight corruption and to re-establish limits on the power D espite several reform initiatives to address of the PM. Yet, without the parliamentary majority corruption, Malaysia continued to fair badly needed to make changes in the Constitution, the in global perception surveys on corruption. scale of changes was necessarily limited. The actions Indeed, many of the institutions that were set up to taken by the Pakatan Harapan (PH) government during detect and sanction corruption became gradually its two years in office boosted Malaysia’s ratings in compromised, with increasing concentration of global surveys of corruption perceptions in 2019. With political power. Only when the magnitude and scale of the collapse of the PH government in March 2020, it corruption in the 1MDB sovereign wealth fund became is unclear whether the momentum on anti-corruption widely known to civil society and the global media, did reforms will be sustained. 26 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption Conclusions EXECUTIVE SUMMARY – CONCLUSIONS Conclusions Corruption is stubborn but not intractable, as demonstrated by the dozens of cases of progress toward combating corruption presented in this report. Sustaining the momentum for corruption- T he progress in the fight against corruption is not necessarily from the large government-wide mitigating reforms is challenging but could be announcements and initiatives that garner aided by improving the measurement of their extensive press coverage, but from the more focused impact. The current tools that are used internationally efforts and more subtle changes that governments and to measure corruption have the common problem of communities make that may go unobserved. The cases relying on perceptions of experts. While there is some presented here provide evidence of how opportunities benefit from such surveys as a broad proxy, they are not can be seized within a specific sector or function to a substitute for having a more quantitative or evidence- enhance governance; in many cases, the push to more based set of indicators. transparency has been a common theme. However, the impact of the initiatives reviewed here may not always Achieving long-term economic growth and shared be measured in quantifiable savings from corruption prosperity depends upon governments, private or a jump in global survey rankings, as perceptions of sector, and communities working together to corruption may be slower to adjust. Indeed, one of the address corruption and its corrosive impacts. This criticisms of the global survey rankings is that they are report acknowledges that the challenges to confronting not actionable, and rather obtusely relate to the nature corruption are deep-rooted but shows that they are not of the corruption problems being faced. impossible to overcome. Each case study gives evidence of impact in reducing the risk of corruption, spanning a Effective anti-corruption strategies typically variety of country contexts: fragile states, low-income, combine multiple measures, often including both and advanced countries. However, public policy sector-specific interventions and transparency practitioners and civil society advocates must recognize and accountability measures that apply to the that the success and sustainability of reforms cannot whole public sector. Corruption manifests itself in be achieved solely through legislation, technology, or specific functions and sectors of government, and the even citizen participation. What is needed above all, report emphasizes the relevance of this sector-based is the commitment of all parties to engage proactively perspective. Yet, corruption at the sectoral level may in the fight against corruption through collaboration, flourish because of the existing social norms and a innovation, and mutual trust. Only then can the war be governance ecosystem that encourages opacity or won, with economic growth no longer being impeded, even secrecy, which either tolerates or encourages but rather benefiting the whole of society, especially corruption. Broader governance measures may the poor and vulnerable. include strengthening institutions that help to combat corruption on the one hand, and implementing specific tools or policy measures that encourage transparency and make it harder to hide corrupt activity (and the associated proceeds) on the other. 28 Enhancing Government Effectiveness and Transparency: The Fight Against Corruption EXECUTIVE SUMMARY – CONCLUSIONS While many factors may contribute to the effectiveness of anti-corruption initiatives, there are six cross-cutting drivers of anti-corruption reforms that can be identified from the case studies. Not every factor is evidenced in every case study, but these six are present in some combination in each of the cases. • Strong and determined political leadership is often needed to provide vision for reform and a commitment to support increased integrity in the face of opposition from vested interests.  • Countries benefit as institutions become more capable, providing checks and balances and fostering accountability. Without strong institutions to assure implementation, reforms risk being short-lived or only superficial. • Transparency can promote greater compliance and improve human behavior. Open government policies and access to information help make corrupt actions harder to hide and contribute to their prevention, particularly when they are linked to engaged and empowered communities and official processes. • Incentives (often captured in social norms) drive behavior and the entry points for corruption vary across functions of government. Therefore, one needs to focus on corruption at the micro-level and its manifestation in specific sectors or functions and changing the incentives of the perpetrators. • Technology is enabling countries to standardize processes, minimize human interaction, and capture comprehensive data that helps establish accountability for a wide range of transactions. • Finally, efforts that foster collaboration among multiple stakeholders, including across international borders, to pursue a common goal achieve greater success. EXECUTIVE SUMMARY Notes 9. The Congress of the International Organization of Supreme Audit Institutions (INTOSAI), held in 1998 in Montevideo, Uruguay, discussed and delivered concrete recommendations 1. World Bank. (2020). Doing Business 2020. Washington D.C.: for SAIs to make an effective contribution to the fight against The World Bank. https://www.doingbusiness.org/en/reports/ corruption. See also U4. 2018. “The Role of Supreme Audit global-reports/doing-business-2020 Institutions in Fighting Corruption” for a more detailed overview. 2. G. Ware, S. Moss, J. Campos, and G. Noone, Corruption in Public Procurement: A perennial Challenge, in J. Campos 10. According to the survey conducted in 2010 by INTOSAI and S. Pradhan, The Many Faces of Corruption: Tracking Working Group on Fight Against Corruption and Money Vulnerabilities at the Sector Level, World Bank, 2007. Laundering (WGFACML), only one-third of SAIs (18 out of 54) responded positively on the questions of availability of audit 3. 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