MALAYSIA’S & ASEAN/APEC LEAD CONSUMERIST DR JACOB GEORGE – ADDRESSING CORRUPTION MUST BE A GLOBAL EFFORT TODAY!

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“And there must be political will, not rhetoric and attempts to protect shenanigans and politicians, under the excuse, that corruption is a domestic affair, and, its exposure undermines the sovereignty of a nation!”

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MALAYSIA’S & ASEAN/APEC LEAD CONSUMERIST DR JACOB GEORGE – ADDRESSING CORRUPTION MUST BE A GLOBAL EFFORT TODAY!

It is a fact that corruption is nothing new in many parts of the world!
So much said, written, discussed, exploited, promised and denied!

From East to West, North to South, we all know how corruption damages the social and institutional fabric of many countries, but despite so, it is far more potent in today’s society, then it ever was and in some, systemic, justified in race and political ideology!

As such, I will instead attempt to look at the reform options and avenues open to future generations to address this abomination and sin, that has gone untouched, unaddressed and even if addressed, only cosmetically!

I have always being an advocate who has recommended a two-pronged strategy aimed at increasing the benefits of being honest and the costs of being corrupt, what I call a sensible combination of “reward and punishment” as the driving force of reforms.

To address it, I will attempt to look at several options available to us.

1. A Well Paid Civil Service!

Will a well-paid civil service act as a deterrent against corruption?

This was raised in Singapore several decades ago, and addressed implemented accordingly and successfully, by that government to this date!

And credit to the much endeared and loved affectionately, founding father of Singapore, the late Premier, Mr Lee Kuan Yew!

Some say that whether civil servants are appropriately compensated or grossly underpaid will clearly affect motivation and incentives.

That if the public sector wages are too low, employees may find themselves under pressure to supplement their incomes in corrupt activities.

I will not deny that there is evidence from several countries, where this is true with empirical work showing that in a sample of less developed countries, there is an inverse relationship between the level of public sector wages and the incidence of corruption.

But, then again, there are also evidence that greed has no borders as seen in several countries, where despite wealth and political power, greed over-runs all like a runaway bullet train!

2. Transparency & Independent Appropriation and Procurement Task Force

Only the corrupt, will disagree that the creation of transparency and openness in government spending will curtail and reduce corrupt activities.

In several countries, both rich and poor subsidies, tax exemptions, public procurement of goods and services, soft credits, extra-budgetary funds under the control of politicians—all are elements of the various ways in which governments manage public resources.

And yes, governments collect taxes, tap the capital markets to raise money, receive foreign aid and develop mechanisms to allocate these resources to satisfy a multiplicity of needs.

I cannot deny that several countries do this in ways, that are relatively transparent and make efforts, to ensure that resources will be used in the public interest.

The more open and transparent the process, the less opportunity it will provide for malfeasance and abuse.

I have always advocated and supported a narrative, that in countries where citizens are able to scrutinize government activities and debate the merits of various public policies also makes a difference.

In this respect, press freedoms and levels of literacy will, likewise, shape in important ways, the context for reforms.

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Whether the country has an active civil society, with a culture of participation could be an important ingredient supporting various strategies aimed at reducing corruption.

And governments should not hide corruption by hiding behind the Official Secrets Act (OSA) for example, or other draconian statutes!

For example, let me cite New Zealand, which is consistently one of the top performers in Transparency International’s Corruption Perceptions Index!

Are you aware that New Zealand is a pioneer in creating transparent budget processes, having approved in 1994 the Fiscal Responsibility Act, providing a legal framework for transparent management of public resources.

I have yet to discover any other country doing so!

3. Cutting Red Tape

I have always believed, that when governments create red tape and zig-zag policies, constant U-turns, it is an active potent avenue to spearhead corruption and this is very true in many countries!

And there is a very high correlation between the incidence of corruption, and the extent of bureaucratic red tape, as captured, for instance, by the Doing Business indicators suggests, the desirability of eliminating as many needless regulations while safeguarding the essential regulatory functions of the state.

The sorts of regulations that are on the books of many countries—to open up a new business, to register property, to engage in international trade, and a plethora of other certifications and licenses—the engagement of foreign workers, all these are sometimes not only extremely burdensome but governments have often not paused to examine whether the purpose for which they were introduced is at all relevant to the needs of the present.

My call to all governments in the ASEAN/APEC region is basically immediately to eliminate laws and programs that breed corruption.

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4. Replacing Regressive and Distorting Subsidies with Targeted Cash Incentives.

Subsidies are another example of how government policy can distort incentives and create opportunities for corruption.

We are agree that the objective of subsidies were to address inequalities and economic disparities within target populations by a “means test” but these are also under attack by abuse!

Did you know that according to an IMF study (2013), consumer subsidies for energy products amount to some $1.9 trillion per year, equivalent to about 2.5 percent of global GDP or 8 percent of government revenues.

These subsidies are very regressively distributed, with over 60 percent of total benefits accruing to the richest 20 percent of households, in the case of gasoline.

Removing them, could result in a significant reduction in CO2 emissions and generate other positive spillover effects.

In many countries, which includes Malaysia, subsidies often lead to smuggling, to shortages, and to the emergence of black markets.

Putting aside the issue of the opportunity costs (how many schools could be built with the cost of one year’s energy subsidy?), and the environmental implications associated with artificially low prices, subsidies can often put the government at the center of corruption-generating schemes.

I have always advocated, that it is far better to replace expensive, regressive subsidies with targeted cash transfers with the protocols put in!

Should this not be instead encouraged now?

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5. Entrenching International Conventions

Thanks to a globalized economy corruption, today has a cross-border dimension, and the international legal framework for corruption control is a key element among the options open to governments.

And I am grateful that this framework has improved significantly over the past decade.

And in addition to the OECD’s Anti-Bribery Convention, in 2005 the UN Convention Against Corruption (UNCAC) entered into force, and by late 2013 had been ratified by the vast majority of its 140 signatories.

Let me tell you, that the UNCAC is a promising instrument, because it creates a global framework involving developed and developing nations and covers a broad range of subjects, including domestic and foreign corruption, extortion, preventive measures, anti-money laundering provisions, conflict of interest laws, means to recover illicit funds deposited by officials in offshore banks, among others.

And those nations who are signatories – you have a duty of care, a social international responsibility to implement these, without fail!

And true, that the UN has no enforcement powers, and as such, the effectiveness of the Convention as a tool to deter corruption will very much depend on the establishment of adequate national, international and cross border, monitoring mechanisms to assess government compliance and major global sanctions to follow for noncompliance.

As an attorney, I have always argued that a more workable approach in the fight against corruption may consist of more robust implementation of the anti corruption laws in the 40 states that have signed the OECD’s Anti-Bribery Convention.

And there must be political will, not rhetoric and attempts to protect shenanigans and politicians, under the excuse, that corruption is a domestic affair and its exposure undermines the sovereignty of a nation!

To be effective, in the private sector, governments, will need to be more pro-active in cracking down on OECD companies, that continue to bribe foreign officials.

In their efforts to protect the commercial interests of national companies, governments have at times been tempted to shield companies from the need to comply with anti corruption laws, in a misguided attempt not to undermine their position vis-à-vis competitors in other countries.

And certainly, trade promotion should not be seen to trump corruption control.

Many governments continue to be afflicted by double standards, criminalizing bribery at home, but, often looking the other way when bribery involves foreign officials in non-OECD countries or the other way around?

6. Deploying Smart Technology

Just as government-induced distortions, provide many opportunities for corruption, it is also the case that frequent, direct contact between government officials and citizens can open the way for illicit transactions.

And one way to address this problem, is to use readily available technologies to encourage more of an arms-length relationship, between officials and civil society!

In this respect, the Internet has been proved to be an effective tool to reduce corruption.

In several countries, the use of online platforms to facilitate the government’s interactions with civil society and the business community, has been particularly successful in the areas of tax collection, public procurement, and red tape.

Perhaps, one of the most fertile sources of corruption in the world, is associated with the purchasing activities of the state.

Purchases of goods and services by the state can be sizable, in most countries somewhere between 5-10 percent of GDP.
More so, the arms industry for starters!

And not surprisingly, the awarding of contracts can involve a measure of bureaucratic discretion, and because most countries have long histories of graft, kickbacks, and collusion in public procurement, more and more countries have opted for procedures that guarantee adequate levels of openness, competition, a level playing field for suppliers, fairly clear bidding procedures, and so on.

In this respect, Chile is one country that has used the latest technologies, to create one of the world’s most transparent public procurement systems in the world.

For example, ChileCompra was launched in 2003, and is a public electronic system for purchasing and hiring, based on an Internet platform.

It has earned a worldwide reputation for excellence, transparency and efficiency.

It serves companies, public organizations as well as individual citizens, and is by far the largest business-to-business site in the country, involving 850 purchasing organizations.

I am advised that in 2012, users completed 2.1 million purchases issuing invoices totaling US$9.1 billion.

It has also been a catalyst for the use of the Internet throughout the country.

So far in my narrative herewith, is aimed at combating corruption, with the underlying philosophy that eliminating the opportunity for corruption, by changing incentives, by closing off loopholes and eliminating misconceived rules that encourage corrupt behavior, we address the issue.

But at the same time, I am fully committed to an approach, that focuses solely on changing the rules and the incentives, accompanied by appropriately harsh punishment, for violation of the rules!

To be far more effective, if it is also supported by efforts to buttress the moral and ethical foundation of human behavior.

Will this happen or forever be a dream, only time will tell!