NGO PERSPECTIVE: FROM NGO PERSPECTIVE: FROM
WORDS TO DEEDS WORDS TO DEEDS
Miguel Schloss Executive Director
Transparency International
MMSD & IIED MMSD & IIED Managing Mineral Managing Mineral
Wealth Wealth
Issues Issues
• Policy distortions
• Institutional incentives
• Governance
Implications Implications
■More costly public investments
■Lower government revenues
■Lower expenditures on operations and maintenance
■Lower resource surpluses
Poorer economic performance
Controlling Bribery
Controlling Bribery and Civil Liberties and Civil Liberties
AGO
ARG
AUS AUT
BEL BFA
BRA
CAN CHL CHE
CHN
CIV CMR
COL
CRI
CZE
DEU
DNK EGY
ESP ETH
FIN FRA
GBR GHA
GRC
GTM HND
HUN IDN
IND
IRL ISL
ISR
ITA JOR
JPN KEN
KOR
LSO
LUX MAR
MEX MOZ
MUS
MWI MYS
NAM
NGA NIC
NLD
NOR NZL PER
PHL
POL
PRT RUS
SGP
SVK
SWE SWZ
THA
TUN TUR
TWN
TZA UGA UKR
USA VNM VEN
ZAF ZMB ZWE
r=0.67
Civil Liberties
Bribery
(GCS97+)BRIBERYLOW
LOW HIGH
Source: Kaufmann and Sachs (1998)
(Freedom House)
HIGH BRIBERY
Bribery vs. Civil Service Professionalism Bribery vs. Civil Service Professionalism
BGR
SVK CZE KAZ
BRA
CAN CHE CHL
CHN COL
CRI
CZE
DEU DNK ESP
FIN FRA
GBR GRC
GTM
HKG HND
HUN IDN
IND
IRL ISL
ISR ITA
JOR
JPN KOR
LUX MEX
MYS NIC
NLD NOR
NZL PER
PHL
POL
PRT RUS
SGP SLV
SVK
SWE THA
TUR
TWN UKR
USA
VEN VNM
ZAF ZWE
r=0.86
Civil Service Professionalism
Bribery
HIGH LOW
LOW HIGH
Corruption and Rule of Law Corruption and Rule of Law
ZMB ZWE ZAR
ZAF
VNM
VEN
USA URY
UGA
TZA
TWN TUR
TUN
THA SYR
SWE SVK
SGP SAU
RUS
ROM
QAT
PRT POL PER PHL
PAN
PAK
OMN
NZL
NOR NLD
NGA
MYS MMR
MEX
MAR LKA
LBY
KWT KOR
KEN
JPN JOR
ITA
ISR
IRQ
IRN
IRL IND
IDN
HUN HKG
GRC GHA
GBR FIN FRA
ESP EGY
DZA ECU
DNK DEU CZE
CRI
COL CMR
CIV
CHN
CHL
CHE
CAN BWA
BRA BOL
BHR
BGR BGD
BEL
AUT AUS ARG
ARE AGO
r=0.82
Rule of Law (ICRG, average 1990s)
S&P-DRI Corruption Index
LOW HIGH
LOW HIGH
Bribery vs. Civil Service Professionalism Bribery vs. Civil Service Professionalism
BGR
SVK CZE KAZ
BRA
CAN CHE CHL
CHN COL
CRI
CZE
DEU DNK ESP
FIN FRA
GBR GRC
GTM
HKG HND
HUN IDN
IND
IRL ISL
ISR ITA
JOR
JPN KOR
LUX MEX
MYS NIC
NLD NOR
NZL PER
PHL
POL
PRT RUS
SGP SLV
SVK
SWE THA
TUR
TWN UKR
USA
VEN VNM
ZAF ZWE
r=0.86
Civil Service Professionalism
Bribery
HIGH LOW
LOW HIGH
Corruption and Rule of Law Corruption and Rule of Law
ZMB ZWE ZAR
ZAF
VNM
VEN
USA URY
UGA
TZA
TWN TUR
TUN
THA SYR
SWE SVK
SGP SAU
RUS
ROM
QAT
PRT POL PER PHL
PAN
PAK
OMN
NZL
NOR NLD
NGA
MYS MMR
MEX
MAR LKA
LBY
KWT KOR
KEN
JPN JOR
ITA
ISR
IRQ
IRN
IRL IND
IDN
HUN HKG
GRC GHA
GBR FIN FRA
ESP EGY
DZA ECU
DNK DEU CZE
CRI
COL CMR
CIV
CHN
CHL
CHE
CAN BWA
BRA BOL
BHR
BGR BGD
BEL
AUT AUS ARG
ARE AGO
r=0.82
Rule of Law (ICRG, average 1990s)
S&P-DRI Corruption Index
LOW HIGH
LOW HIGH
Corruption and Regulatory Discretion Corruption and Regulatory Discretion
ARG
AUS AUT
BEL
BRA
CAN CHE
CHL
CHN
COL
CRI CZE
DEU
DNK ESP
FIN
FRA
GBR
GRC
HKG
HUN IDN IND
ISRIRL
ITA
JPN
KOR
LUX
MEX
MYS
NGA
NOR NLD NZL
PHL
POL
PRT
RUS
SGP
SWE
TUR THA
TWN
USA
VEN VNM
ZAF
r=0.76
Regulatory discretion (GCS97)
Corruption
High corruption
corruption Low
Low High
Even more important (than regulatory interventions) in understanding bribery and corruption is the degree of regulatory discretion.
Unofficial Economy and Corruption Index Unofficial Economy and Corruption Index
VEN URY
PER
PAN
MEX
HND GTM
ECU
CRI
COL
CHL
BRA
BOL
ARG
SWE USA
PRT
NOR NLD
JPN
ITA
IRL
GRC
GBR
FRA
ESP DNK
DEU CHE CAN
BEL
AUT
UKR
SVK
RUS
ROM POL
LVA HUN
EST CZE
BLR BGR
r = 0.79
0%
20%
40%
60%
Corruption
Unofficial economy as percent of GDP
corruptionLow High
corruption
Time Management Spent with Bureaucrats and Time Management Spent with Bureaucrats and
Frequency of Bribery Frequency of Bribery
ARMARM
AUTAUT
AZE AZE BEN
BEN BGRBGR BLRBLR
BOL BOL
CANCAN CHECHE
CIVCIV
CMRCMR COG COG
COL COL CRI CRI
CZECZE DEUDEU
ECUECU
ESPESP
ESTEST FJIFJI
FRA FRA GBR
GBR
GEOGEO
GHAGHA
GIN GIN
GNB GNB
HKGHKG
HUNHUN
INDIND
IRLIRL ITAITA
JAMJAM JORJOR
KAZ KAZ KENKEN
KGZKGZ KORKOR
LTULTU LVALVA
MAR MAR
MDA MDA MDG MEX MDG
MEX
MKD MKD
MLI MLI
MOZ MOZ
MUSMUS MWIMWI
MYSMYS
NGA NGA
POLPOL
PRTPRT
RUSRUS SEN SEN
SGP SGP
SVK SVK TCDTCD
TGO TGO
THATHA
TURTUR
TZA TZA
UGAUGA UKRUKR
USA USA
UZBUZB
VEN VEN ZAFZAF
ZMB ZMB
ZWE ZWE
R =.77 R =.77
00 10%10%
20%
20%
30%30%
Frequency of bribery
Frequency of bribery
(WDR 1997)(WDR 1997)% Management Time
% Management Time with bureaucrats
with bureaucrats
LowLow HighHigh
Source:
Source: KaufmannKaufmannand and WeiWei(1998) Data analysis based on survey conducted under the World(1998) Data analysis based on survey conducted under the WorldBank’s World Development Report 1997.Bank’s World Development Report 1997.
11
0 10 20 30 40 50 60 70 80 90 100
Former Soviet Union Sub-Saharan Africa
South Asia Latin America and Caribbean Central/Eastern Europe and Baltics
East Asia OECD
%
Middle East and North Africa
Corruption Perception By Regions
Corruption Perception By Regions
Multipronged
Multipronged Strategy for Combating Strategy for Combating Corruption
Corruption
Legal
Legal--Judicial:Judicial:
•Independence
•Judicial Strengthening
•ADR Mechanisms
Corruption Corruption Economic Policy:
Economic Policy:
•Deregulation
•Tax Simplification
Financial Financial Controls:
Controls:
•Audit
•Procurement Civil Service:
Civil Service:
•Pay
•Meritocracy
Public Oversight:
Public Oversight:
•Parliamentary Oversight
•Civil society and media
•“Power of data”/Surveys
• Independent agency/NGO
Multipronged
Multipronged Strategy for Combating Strategy for Combating Corruption
Corruption
Corruption
Public Oversight and Civil Society:
Public Oversight and Civil Society:
Ombudsman
Ombudsman in Albania and Boliviain Albania and Bolivia
•• Private Sector CoalitionPrivate Sector Coalition in Boliviain Bolivia
•• DiagnosticDiagnostic Surveys andSurveys and NGONGO monitoring in Ecuador and others monitoring in Ecuador and others
The Response The Response
Financial Controls:
Financial Controls:
Procurement
Procurement Reform in Bolivia,Reform in Bolivia, Ecuador and Georgia
Ecuador and Georgia stitutional and Civil Service
stitutional and Civil Service eform:
eform:
ransparent
ransparent PrivatizationPrivatization n Ecuador
n Ecuador Salary
Salary Reform in BoliviaReform in Bolivia Disclosure of Assets Disclosure of Assets inin Bolivia and Georgiaolivia and Georgia
egal-egal-Judicial:Judicial:
evamp of
evamp of Supreme CourtSupreme Court in Bolivia in Bolivia Competency test
Competency test of judges in Albaniaof judges in Albania Mediation
Mediation in Albaniain Albania
Economic Policy:
Economic Policy:
Deregulation and
Deregulation and DelicensingDelicensing in Boliviain Bolivia
•• Revamping Revamping CustomsCustoms in Ecuador and Latviain Ecuador and Latvia
•• Tax AdministrationTax Administration in Latvia and Ecuadorin Latvia and Ecuador
•• Tax/CustomsTax/Customs Code Reform in AlbaniaCode Reform in Albania
www.transparency.org/activiti es/lac_tool-kit/intro.html
Professional Coordination
Homogenous products
Primary data (invoices, contracts)
Information analysis (price ranges, averages)
Bulletin, Publications, Dissemination
Monitoring Results
Price Comparisons Price Comparisons
The Response
The Response
Meeting with Stakeholders, including media
Levelling Playing Field; Technical Experts
Agenda, Trade-Offs Assessment, Discussion, Minutes
Explicit Resolution of Issues
Public Hearings Public Hearings
The Response
The Response
The Response The Response
• No-bribery commitment by bidders
• Commitment of government to prevent extortion and acceptance of bribes
• Disclosure of payments
• Sanctions against bidders who violate their no- bribery commitment
• Involvement of civil society in monitoring bid evaluation, award decision process and
implementation of the contract
Integrity Pacts
Integrity Pacts
Ominous Correlations:
Ominous Correlations:
Governance Governance
Venezuela
Azerbaijan
Indonesia Ecuador
Nigeria
Cameroon Gabon
United Kingdom
Saudi Arabia Russia
Colombia Mexico
Malaysia Kuwait
Norway
Chad Angola
Algeria
Iran
155 Countries
Strong governance Weak
Source: World Bank Institute
Mining Sector: Issues Mining Sector: Issues
•
Sudden wealth, easy money
• Location limitations
• Conflicting interests between mine finders, mine
builders and operators, local community, governments, civil society.
• Government regulations, taxation regime, incentive
structures.
Mining Sector: Emerging Mining Sector: Emerging
Supply & Demand Forces Supply & Demand Forces
•
Supply-side: •OECD Convention
•Corporate Codes of Conduct
•Industry Standards
•
Demand-side •Local Governance Framework
•Institutional & Policy Evolution
•Role of Multilateral Organizations
40.0 50.0 60.0 70.0 80.0 90.0 100.0
19 85
19 86
19 87
19 88
19 89
19 90
19 91
19 92
19 93
19 94
19 95
19 96
19 97
19 98
19 99
20 00 Chile
Canada
USA Australia
Cash Costs: Selected Countries Cash Costs: Selected Countries
2000 currency c/lb
Others
Mining Sector: Economics Mining Sector: Economics
0.00 0.50 1.00 1.50 2.00
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999
EUROPE USA
1: Copper Consumption Index to Industrial Production Index Ratio
Intensity of Copper Use
Intensity of Copper Use11 in Selected in Selected Developed Countries (1985=1.00) Developed Countries (1985=1.00)
Code lco
Mining Sector: Economics Mining Sector: Economics
0.00 0.50 1.00 1.50 2.00 2.50
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
MALAYSIA TAIWAN
Intensity of Copper Use
Intensity of Copper Use11 in Selected in Selected Developing Countries (1985=1.00) Developing Countries (1985=1.00)
1: Copper Consumption Index to Industrial Production Index Ratio
Code lco
0 5 10 15 20
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Finland
Sweden
Germany
Japan USA
Francia
Austria Australia
Italy
Canada
Spain United Kingdom
South Korea
Malaysia Chile
Thailand Argentina South Africa
Brazil Mexico
China Indonesia India
Russia
Per Capita Refined Copper Consumption,1998 Per Capita Refined Copper Consumption,1998
Consumption (kg/person)
GDP (US$/person)
Mining Sector: Dynamics Mining Sector: Dynamics
• Order takers
• Cost cutting
• Productive focus
• Enterprise manager
Decommoditising
Downstream, End-User Strategy
Partner-approach (manufacture, regulators, complementors) Structural support (environment,
human health, transparency, scrutiny
Mining Sector: Dynamics Mining Sector: Dynamics
SEGMENTATION
GLOBALIZATION
Production Lock-in; proprietary standards Best Product; cost-advantage
Customer Solutions; promotion Global Integration; scrutiny
Addressing the Issues Addressing the Issues
• Efficient Collection of Revenues
• Extractive Industries Revenue Management
• Budgetary Discipline
• Public Expenditure Management
• Institutional Strengthening
• Transparency and Accountability
• Civil Society Participation & Tracking
Revenue Management Revenue Management
• Revenues Flow through Off-shore Audited Escrow Accounts
• X % Royalties and Dividends to Special Accounts (examples):
• 80% Poverty Reduction
• 15% Government Expenses
• 5% Local Region
• 10% Future Generations Fund
Civil Society Participation &
Civil Society Participation &
Tracking Tracking
• Information Campaign
• Surveys / Consultations
• Poverty Reduction Strategy
• Integrity Pact, Monitoring Arrangements
• Public Access; Feedback; Diagnosis
Conclusions Conclusions
Levelling
Levelling the Playing Field the Playing Field
■Establish Coalitions
■Support / Build National Chapters
■Encourage Research
■Enhance Networks, Transfer Know-how
■Experiment Integrity Pacts
■Support Reforms & Monitor
• • A Time for Optimism and Commitment A Time for Optimism and Commitment
• Greater focus and attention: irreversible commitment
• Increasingly open and participatory dialogue
• Innovation: New ideas and experimentation
• • Need for rigor and concrete actions Need for rigor and concrete actions
• Empirical and Analytical Rigor: Diagnostics
• Reforming misgoverned institutions (e.g., judiciary, tax)
• Political obstacles: powerful losers
• • A Need for Realistic Expectations A Need for Realistic Expectations
• Complex challenge: institutionalization
• Improvement, not perfection
Conclusions
Conclusions
Conclusions Conclusions
■ Competition rest on superior products/services at competitive prices.
■ Businesses establish and implement codes of conducts.
■ Businesses engage governments and civil society (PBEC Charter, need for work with TI).
■ Build-up civil society for sustainable development.
A Role for Everyone
A Role for Everyone
Back-ups
Petroleum Import Dependency
The Future Response: Example
The Future Response: Example
Government Involvement and Levels of Inefficiency
Potential Savings
Potential Savings
Oil Rents in Selected Countries Oil Rents in Selected Countries
Country @ $10/BBL @ $20/BBL @ $30/BBL
Nigeria 5.6 13.6 21.7
Norway 2.3 13.6 24.9
Indonesia 2.4 7.1 11.9
Algeria 1.8 6.1 10.5
Venezuela 8.2 19.1 30.1
Mexico 9.8 22.4 35.1
Estimated Annual Rent ($Billion)
Blessing or Curse?
Blessing or Curse?
Average Annual GDP Growth (%)
Country 1980-90 1990-98
Nigeria 1.6 2.6
Norway 2.8 3.9
Indonesia 6.1 5.8
Algeria 2.7 1.2
Venezuela 1.1 2.2
Mexico 1.1 2.5
World 3.2 2.5
Mid Income 2.8 3.9
Low Income 6.5 7.4