Peter Eigen
Removing a Roadblock
to Development
Transparency International Mobilizes
Coalitions Against Corruption
It is estimated that as much as U.S. $1 trillion is paid in bribes worldwide each year.1 This amount is 40 times the costs estimated by the United Nations for a glob- al campaign to stop the spread of HIV/AIDS, ten times total annual development assistance spending, and nearly the GDP of the entire African continent. Yet even $1 trillion is a dramatic underestimate of the social and human cost of corruption.
Corruption—the abuse of entrusted power for private gain—is a roadblock to
human development. It distorts competitive markets, leads to the misallocation of
resources, and disproportionately burdens the world’s poorest and most vulnera-
ble. Human development is impeded whenever public contracts are awarded
according to the size of the kickback instead of the size of the public benefit, Wann-
ever parents have to bribe teachers to educate their children, or whenever a moth-
er is forced to watch her daughter die because she does not have the resources to
bribe the hospital staff to provide care. Corruption makes a mockery of rights,
breeds cultures of secrecy, deprives the neediest of vital public services, deepens
Armut, and undermines hope.
Noch, despite the evident corrosive impacts of corruption on development, until
recently, there was no organized effort to combat either of its most harmful man-
ifestations: the cross-border corruption that so frequently plagues large-scale pub-
lic projects in poor countries, and the equally devastating small-scale corruption
that mercilessly aggravates the daily obstacles faced by many of the world’s most
disadvantaged citizens. Tatsächlich, only a decade ago, overseas bribery was legally per-
missible in most countries (the only exception was the United States, where in
1977, responding to the revelations about bribes to foreign public officials, welche
Peter Eigen is the founder of Transparency International and the chair of its Advisory
Council; he is also the Chair of the Extractive Industries Transparency Initiative.
This essay was compiled from interviews recorded and distributed by Ashoka
and WISU.
© 2008 Peter Eigen
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Peter Eigen
emerged from the Congressional hearings on the Watergate Affair, President
Jimmy Carter led the passage of the Foreign Corrupt Practices Act). As a conse-
quence, corporations were accustomed to bribery as a routine business practice
when operating overseas. Many even received generous tax write-offs at home for
their corrupt expenditures abroad.
As much as US $1 trillion is paid in bribes worldwide each year. This amount is 40 times the costs estimated by the United Nations for a global campaign to stop the spread of HIV/AIDS, ten times total annual development assistance spending, and nearly the GDP of the entire African continent. Corruption persisted because no single business or national government had an adequate incentive to solve the global coordination problem required for its elimination. The leading international organizations that could have taken a lead- ership role in the fight against corruption—the World Bank and the United Nations in particular—long were inhibited from doing so by diplomatic concerns and potential implication of their members. Impetus to act was blunted by a false presumption that the responsibility for cor- ruption rested mainly at the doorsteps of governments in poor countries. As such, cor- ruption was considered to be an internal “political” matter, beyond the purview of inter- national organizations. The will and commitment to con- front corrupt elements within member countries was absent. In the early 1990s, increas- ingly aware and intolerant of this state of affairs, I joined other colleagues from around the world to found Transparency International (TI), a global not-for-profit, non-governmental organization devoted to combating cor- ruption. In the decades since it was founded, a sea-change in attitudes and legisla- tion with regard to corruption has occurred. In a dramatic policy shift, former World Bank President James Wolfensohn declared war on the “cancer of corrup- tion” in 1996, correctly arguing that corruption is first and foremost an economic issue and therefore a legitimate concern of the World Bank Group. The World Bank has since engaged in a comprehensive fight against corruption, both inter- nally and in the countries it works with. At the March 2002 U.N. Conference on Financing for Development in Monterrey, Mexiko, a succession of ministers from donor countries joined World Bank and International Monetary Fund (IMF) offi- cials in a common judgment: that wherever corruption reigns, development aspi- rations will remain unattainable. Since then, we have seen the adoption of the United Nation Convention against Corruption (UNCAC) In 2003; Heute 116 states have ratified it. Wir haben 20 Innovationen / Frühling 2008 Von http heruntergeladen://direct.mit.edu/itgg/article-pdf/3/2/19/704352/itgg.2008.3.2.19.pdf by guest on 07 September 2023 Removing a Roadblock to Development also seen the emergence of voluntary initiatives like the Global Compact, which provides a conceptual framework for global corporate citizenship, and the Extractive Industries Transparency Initiative (EITI), which seeks to use trans- parency as the key to unlock the potential of resource wealth for some of the world’s most troubled and poverty-stricken countries. The World Bank, thus inspired, even launched a more ambitious, broader initiative this past April, dubbed EITI++. Ähnlich, the G8 has made the fight against corruption a central priority in recent years, and around the world, governments have been increasing- ly coming to power on anti-corruption platforms. Natürlich, actions still lag behind rhetoric, but we have seen a fundamental shift in dialogue and values. While corruption is still sadly prevalent in much of the world, an overwhelm- ing consensus exists today that corruption is the most serious impediment to eco- nomic and social development, as well as to peace and security. Goals in the battle against corruption that seemed to be unreachable only a decade ago have now been reached. The fight against corruption on a global scale is far from over, but it is a battle that has begun in earnest. THE CORROSIVE IMPACT OF CORRUPTION Like the founders of many other civil society organizations, I traveled a long road personally and professionally before committing myself to social action. Despite the fact that I grew up in the Germany of the 1940s, until my early twenties I was quite non-political—indeed, I was blissfully disengaged from the global realities of societal conflict and inequality. I began to develop an awareness of the severity of the world’s inequities in the course of a backpacking trip through Latin America in 1963. During those travels I met different groups of people. Some of them were rather comfortable members of the elite who, very friendly to me, invited me to stay in their houses. Among these, there were some who, despite their own com- fortable circumstances, decried the injustice of their own societies. At other times, sitting, for twenty-four hours at a stretch in small, over-crowded buses, I had ample opportunity to reflect on my past blindness to the societal inequities that suddenly seemed so evident. I became more and more concerned politically. After completing my doctoral studies at Frankfurt University and further research on economic policy at Georgetown University, I received and accepted an offer from the legal department of the World Bank. The work was exhilarating. Opportunities to help the world’s poorest countries develop seemed abundant. At one point I was asked by President Nyerere of Tanzania to go to Botswana to help his colleague, President Seretse Khama. At the time, Botswana was like a country under siege—surrounded by racist countries (Südafrika, “South West Africa,” and Rhodesia in particular) that threatened it with commercial and polit- ical domination. My charge was to assist the government of Botswana in develop- ing a legal system for the nation and to negotiate on the government’s behalf with big mining investors. I accepted the challenge, negotiating a leave of absence from innovations / Frühling 2008 21 Von http heruntergeladen://direct.mit.edu/itgg/article-pdf/3/2/19/704352/itgg.2008.3.2.19.pdf by guest on 07 September 2023 Peter Eigen the World Bank for a few years, and securing funding by the Ford Foundation. What followed was one of the most exciting opportunities for learning for which I could have wished. I committed myself fully to my work and, in the process, came to identify myself with the government of Botswana. The govern- ment was moderate and democratic. We developed certain systems of taxing min- ing investors that were considered by the global experts at the time to be rather radical. We just stood up to this. We were a group of Third World fighters trying to introduce new systems to ensure the fairness of investment agreements in Africa. In Botswana I had the rare opportunity to live deeply what I considered to be the fight for justice. To succeed, I worked to build coalitions and networks to help us. I brought in development professionals from the United Nations, and lawyers from New York and Canada. Together with brilliant young people from Botswana, we held weeklong work sessions to go through every clause of contracts to make sure that we had captured the state-of-the-art. When my assignment in Botswana came to a close I was happy to go back to the World Bank. The appeal of the Bank was that it combined the strength and the resources of the rich countries with an explicit mandate to help poor countries to develop, in human and economic terms. If you were working on a smaller country you had great latitude to act in the service of the Bank’s mission. Jedoch, im Laufe der Zeit, I came to recognize some signif- icant constraints in that freedom of action. In particular, when I moved on to countries that were more important to the powerful shareholders of the World Bank, I became aware of interests operating at the Bank which were not quite as open or as charitable as would have been suggested by the Bank’s mandate. Zum Beispiel, when I was a Bank manager for the Chile program, I was prohibited from using Bank funds to rehabilitate the copper sector. The reason for the obstruction was simply that a revitalized copper industry in Chile would have challenged the viability of big copper producers in the United States. From the standpoint of com- parative advantage, which we were preaching to everybody, supporting Chile’s cop- per industry was the most reasonable thing to do. Political expediency drove the Bank to disregard its principles in such cases, failing to work fully in the interests of development within the countries served. What began for me as a minor discomfort with the incentives and modes of operation within the World Bank gradually developed into a significant aggrava- tion. Insbesondere, I became increasingly aware of, and frustrated with, the man- ner in which corruption was interfering with decision0making. In one case, in the Ivory Coast, we were involved in a telecommunications project. The lowest evalu- ated bid for this project was $16 Million, but the government gave the contract to
a French company asking $26 Million. I talked to the responsible officials. Im
course of that conversation, it became very clear to me that corruption had played
a role.
When I became director of the World Bank office in Nairobi, the corrosive
impact of corruption became more obvious. In the country at that time there were
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Removing a Roadblock to Development
a number of huge projects on the table that were generating great interest from
prospective suppliers in the North. A consequence of the very scale of these proj-
ects—many had price tags of 300, 500, Und 600 million dollars—was that they lent
themselves naturally to equally huge kickbacks—payments of 10, 20, oder 30 Million
dollars to government officials with bank accounts in Lichtenstein and
Schweiz. A particularly infamous example of such a project was the so-called
Turkwell Dam, a big
power project in the far
west of
the country,
planned for construc-
tion in a beautiful place
where a river comes out
of a mountainous area.
We on the World Bank
recognized that
Personal
the project had no eco-
nomic merit: quite sim-
ply, no market existed
for the electricity the
plant would generate.
Außerdem, construc-
tion of the plant would
have disastrous conse-
quences for the local
ecology and would
undermine the liveli-
hood of the Turkana
and the Samburu peo-
Bitte (the nomadic tribes
living in the region). Also
we rejected the propos-
al, much to the chagrin of the Minister of Energy and the country’s President.
In the country at that time, Dort
were a number of huge projects on
the table that were generating great
interest from prospective suppliers
in the North. A consequence of the
very scale of these projects—many
had price tags of 300, 500, Und 600
million dollars—was that they lent
themselves naturally to equally huge
kickbacks—payments of 10, 20, oder
30 million dollars to government
officials with bank accounts in
Lichtenstein and Switzerland.
Jedoch, for the government ministers and private companies who stood to
benefit, the proposed project was too enticing to abandon—its detriment to the
country notwithstanding. Folglich, to our great disappointment, the project
was very quickly carried through with funding from commercial banks and export
financing agencies in the North, which had been mobilized by the suppliers. Der
consequences were as we had foreseen. The Turkana people and the Samburu lost
their livelihood because their cattle could not survive during the dry seasons; sub-
sequent studies have demonstrated that many of these people are now destitute in
the slums. Currently, the dam is silting up quickly. The water level at Lake Turkana
has fallen. For instance, there are a fish factory and port, built with Norwegian
assistance, that are now about 20 kilometers from the original shoreline because
the water level has fallen so much. The dam is a total calamity, ecologically, sozial-
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Peter Eigen
ly, macro-economically. The debt burden created by the loans incurred may be
with Kenyans for generations. All the while, the few who directly benefited from
project through contracts are the suppliers and decision-makers. The project has
turned out to be the very definition of overdesign and waste.
Natürlich, the Turkwell Dam project was no exception. In Nigeria, three or
four cases of similar scale and history exist—projects that cost hundreds of mil-
lions of dollars but that never generate one penny for the people. As a direct con-
sequence, Nigeria, which should be among the most prosperous countries in
Africa, remains mired in poverty. Likewise, the Democratic Republic of the Congo,
Angola, and Zimbabwe—all countries endowed with magnificent resource
wealth—have received nothing but the bitter dividend of interminable civil war
and unrelenting poverty. Due to corruption and the violence it engenders, solch
potential bread baskets of Africa are turned instead into basket cases.
I shared my concerns about the pervasiveness of corruption and its corrosive
impact with senior management at World Bank. The conversation was one in
which most managers were unwilling to engage. Issues of corruption were dis-
missed as internal political matters with which we, the staff, were categorically pro-
hibited under the Bank charter from systematically addressing.
For a time, I accepted this compromise. I accepted that the World Bank could
not deal with everything that was wrong in the world. I said yes, this is the reality.
It is ugly. It is destructive. But it is something which is simply not the business of
the World Bank.
But this was a compromise with which I was not comfortable. My wife Jutta, A
physician who spent her career working with disadvantaged people wherever we
lived, did not hesitate to challenge me. The pressure peaked during our time in
Kenya, where she worked for a non-governmental organization, leaving every
morning at seven and returning at seven at night. She would say, “Look I have seen
80 patients today. What have you done?” In the area in which she worked, um 85
percent of her young patients were HIV-positive. Her clear sense of moral purpose
was an important factor in my inability to settle into a permanent accommodation
with the compromises required of me in my position with the Bank.
After a time I had had enough. I was moved to act. Together with some African
friends I developed a concept for attacking corruption. I presented this at a retreat
in Swaziland of World Bank representatives from all over Africa. I presented it to
thirty country directors and the Bank’s Vice President for Africa. Everybody there
was very excited by my proposals. The said, “Why don’t we simply start a task force
which will develop a systematic approach on how we deal with corruption in
Africa.” We appeared to be on our way.
But a week later I received a memorandum from our legal department stating
that the activity I had initiated was totally off limits. It was too political. It was not
permitted under the Charter of the Bank.
Rather than abandoning the initiative, our group decided to pursue it as pri-
vate citizens. We were undeterred.
But making the initiative a private one, advanced on our own time, would not
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Removing a Roadblock to Development
turn out to be a viable solution. On my next home leave to Washington, a couple
of weeks later, I was summoned to the office of then World Bank President Barber
Conable. My presumption was that the reason for the meeting was social—I
expected that President Conable simply wanted to thank me for having hosted him
during his many visits to Nairobi. But upon arrival at Conable’s, office I quickly
found that I had been mistaken. Conable’s secretary handed me a memo from the
President, which stated that I was prohibited from pursuing the anti-corruption
initiative while a director of the Bank.
At that point it was clear that I had to leave the Bank. The decision was not a
heroic one at all. Really, it was very practical. At that point I had earned most of my
pension. I didn’t need any more money. My wife was very happy that I was, für die
first time since my work in Botswana, going to have the opportunity to focus 100
percent on doing what I felt to be the right thing.
That was the beginning of Transparency International.
THE FOUNDING OF TRANSPARENCY INTERNATIONAL
During the abortive attempt to create an anti-corruption strategy within the World
Bank, I had made many excellent contacts both within and outside the Bank. Der
idea had lit a candle in the minds of quite a number of people. I received letters,
telexes, visits from interested colleagues, phone calls from people who had heard
about the initiative. Building on these contacts, I convened a number of different
meetings with overlapping groups of 20 oder 30 Menschen.
Among those who had expressed interest, there was a core group of ten or so
Menschen, who were very closely connected with us from the very beginning. They all
had different skills. One was skillful in public relations. Another had been the
deputy inspector general of USAID; he was like a policeman, attuned to any the
clues that would indicate corruption. We had a business person intimately famil-
iar with the motivations of large corporations. Others wanted to participate while
remaining in the background; one of these was Robert McNamara. What all these
people shared was that each was in their own way suffering from the fact that their
own work was handicapped by the corruption they encountered on a regular basis.
In our preparation of the launch conference for the organization we deter-
mined would be called Transparency International, we had developed three key
insights, which are still the guiding principals of the organization today:
• First of all, we knew that we could not investigate individual cases, to expose
them as Amnesty International was doing. The reason was that, because cor-
ruption is so complex and is so technical, we needed to engage people who
were directly exposed to or peripherally involved in corrupt practices to work
with us and in joint programs. That was probably the most important shift
from what I had initially conceived when I left Kenya.
• Second, we realized that we would have to deal with corruption by mobilizing
the knowledge, enthusiasm, courage, and credibility of committed people in
each of the localities in which we intended to work. We wouldn’t be able to
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Peter Eigen
operate like the Catholic Church or the World Bank, preaching and dictating
from the center. daher, we began very early on to initiate the creation of
what we call national chapters, which are autonomous non-governmental
organizations incorporated in their countries of operation, bound loosely in a
global network, with basic governance criteria for its members.
• Third, we recognized that criminal law is a relatively blunt weapon against cor-
ruption. Folglich, we sought to develop a holistic approach, seeking to
identify the different elements of the so-called “integrity system,” which has to
be in place in order to protect society against corruption. This includes a legal
dimension, laws, institutions, and guidelines, but it also includes the media,
civil society, and the different branches of government. It covers very technical
matters, like how to select contractors under international competitive bidding;
how much transparency to enforce in a legislative body; to what extent politi-
cians and office holders can be forced to disclose their assets and liabilities; Und
how to deal with conflicts of interest in a society. The approach became a
mosaic of many different elements, which together created a holistic system of
integrity.
We initially had the sense that we would focus mainly on development proj-
ects, on large transactions. But we also had the idea that our national chapters
should define their own agenda and that they should decide what their priorities
Sind. As a consequence, we were very quickly caught in a dilemma. Some of the
chapters said, “We are not really interested in these big international transactions.
We don’t care whether our President gets another million dollars in some bank
account in Europe. What we care about is whether a policeman, for instance,
extorts money from the poor and the powerless in our slums. Or whether a teacher
extorts money from the parents of his students, in order to let them come to school
or give them a certain grade.” And therefore we began to look at the corruption
innerhalb von Ländern, as well as international corruption.
The challenge of confronting domestic corruption was not only one we faced
in developing countries. The German chapter, zum Beispiel, insisted from the out-
set that if we wanted to carry the anti-corruption message into the world from the
Norden, we would have to clean up our side of the street first. At that point we came
to a really frightening realization: the establishment in Germany was not really
against corruption as long as it took place outside the country. To get around this
indifference, we went to the media, and began expose the mechanisms of corrup-
tion. Daher, while political and business leaders continued to view our attempt to
eradicate corruption as idealistic and naïve, they did everything to avoid a conflict
bei uns. Paradoxerweise, many of the governments in the South—in particular a new
generation of more enlightened leaders who recognized the self-destructive
impacts of corruption—were much more committed to change. For instance, ICH
attended a conference of the global coalition for Africa in The Hague at which the
then-President of Ethiopia rose and addressed the ministers of development of the
Norden, including the German minister of development. His message was: “We are
trying to do our damnedest to clean up our homes and we are working with
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Removing a Roadblock to Development
Transparency International on this. But please, our brothers in the North, stop
your own exporters from bribing our elites and undermining our economic man-
agement.”
Ebene
Thus as we developed further and
began to build our network of
national chapters, we came to
realize the importance of
distinguishing between different
types of corruption, from petty
corruption at the local level to
grand scale corruption at the
international level. Each of these
types of corruption is abhorrent
in its own way, but the response
to each has to be different.
Thus as we developed further and began to build our network of national
Kapitel, we came to realize the importance of distinguishing between different
types of corruption, from petty corruption at the local level to grand scale corrup-
tion at the international level. Each of these types of corruption is abhorrent in its
own way, but the response
to each has to be different.
Petty corruption at the
takes
Gemeinschaft
many forms. Civil service
in many countries
In
Africa, zum Beispiel, is terri-
there’s no
bly bloated,
budget for proper pay or
for rewarding good per-
Form. daher, viele
governments simply rely
on the fact that these civil
servants will supplement
their incomes by extorting
money. When public ser-
vants do, predictably, turn
to bribery, they naturally
target the most vulnerable
Menschen,
poorest,
Die
because they are the least
able to object. As a direct
consequence,
manche
countries whole generations of young people are being lost because their parents
cannot afford the bribes that are being demanded by school officials or by teach-
ers. This sort of petty corruption has to be addressed through awareness building,
through campaigns, but also through the development of anti-corruption tools
and their deployment by civil society. In some countries, for instance, we have
helped puppet players to go into the villages and perform pieces for the villagers in
order demonstrate to them their rights and obligations. In some Indian villages we
have helped implement report card systems that rate the performance of local civil
servants, which the people are asked to complete. In Argentina we have supported
campaigns where school children stood in front of the entrance of municipal
buildings and asked passers-by if they had been asked for money, and if so, Wie
viel. If then the mayor objects and throws them out, the groups go to the media.
We are also working with cartoonists in different places, who are very powerful in
shaping the awareness of people. We work to make sure that this corruption aware-
In
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Peter Eigen
ness enters into the curriculum of schools as well—if possible, at a very early stage.
Students need to understand integrity as an important value of their culture, von
their society.
At the other end of the scale is grand corruption—large scale bribery that
crosses borders. A vast disproportion exists between the salary that civil servants,
bureaucrats, or even politicians earn and the huge amounts of money that are at
play in large procurement contracts—often hundreds of millions of dollars. Jetzt
there is a state of the art in preventing corruption in such transactions, welche, bei
this point, has been mainly developed by the World Bank. If and when careful
ground rules are followed—by putting in place monitoring processes, giving access
to civil society, and making the entire process open to the media—procurement
can be very clean and very effective. But unfortunately, many situations, für
Beispiel, directly following natural catastrophes or in other contexts in which there
is a sense of urgency, negotiations can take place behind closed doors and huge
sums of money can end up in the wrong pockets. (We have seen this in connection
with the procurement of the supplies and reconstruction of Iraq, zum Beispiel, sogar
though the United States normally has a very strict procurement system.) What is
erforderlich, as a consequence, is the development of a zero-tolerance philosophy,
linked to credible monitoring and severe sanctions for non-compliance.
A GLOBAL CAMPAIGN AGAINST CORRUPTION TAKES FORM
The Breakthrough
The first real breakthrough for Transparency International came when we finally
managed to get a dialogue going with the business leadership in Germany. Over a
period of two years we arranged meetings at the Aspen Institute in Berlin and
worked to the point where they acknowledged that what they were doing was not
simply adapting to conditions outside their control, but rather blatant bribery, bla-
tant perversion of economic decision-making. At the last meeting we held with
them they went so far as to say, “Yes we have to try to stop it. But how can we stop
when our competitors bribe and get all the contracts?” So it was a dilemma, In
which they were caught; a true sort of “prisoner’s dilemma,” where the company or
the exporting country that behaves better than the other is punished for their good
behavior. I find this quite interesting because this kind of prisoner’s dilemma is not
only found in the fight against corruption. It also exists in other areas of failed
global governance—for example, human rights violations, child labor, exploitation
of women, slavery, violation of labor standards, and destruction of the environ-
ment. Very often, it is more expensive—in the short run at least—to produce with
a higher standard of social responsibility.
Our exit route from this dilemma was an attempt to help them find a way to
avoid corruption without losing contracts. We had a couple of ideas regarding how
we could do this. One very simple way I proposed was that we find and identify
competitive situations, say for certain major contracts where very few companies
had the capability to bid. This is true in civil works contracts financed by the World
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Removing a Roadblock to Development
Bank, where sometimes you have five, or perhaps eight, global companies pre-
qualified to participate. It is also true in the privatization of public utilities,
telecommunications companies, and in the area of minerals, extractive industries
and petroleum development. We offered to bring the competitors together and
induce an agreement to stop bribing, backed up by a system of monitoring and a
system of sanctions.
When the business people met with us again and heard this proposal, Sie
quickly got on board. “If you are able to stop our competitors from bribing, we are
going to support you,” they said, “because we want to get away from corruption.
We understand that corruption is not only destroying the host country, welches ist
afflicted by this cancer, but it’s also destroying the companies that are allowing this
kind of behavior.” The companies signed an open letter to the German govern-
ment, in which they demanded that the Kohl government—which had been resist-
ing any attempt to outlaw international corruption—participate in the negotiation
of a convention that was being prepared with our help, under the auspices of the
Organization for Economic Co-operation and Development (OECD).
The OECD Convention signified a quantum leap in the efforts to fight corrup-
tion. For the first time, exporting countries signed a binding convention, in which
they promised to change their own laws to prohibit their exporters from bribing
abroad. The convention entered into force in 1999. It was a tremendous step. Auch,
zu der Zeit, the German government abolished the tax deductibility of foreign
bribes—a particularly scandalous feature of its tax system. From that moment on,
at least on paper, the system had changed, and the days of transnational corrup-
tion as a business practice were suddenly numbered.
The U.N. Global Compact and Convention Against Corruption
Soon thereafter, another opportunity to promote change in international commit-
ments came in the course of the negotiations at the United Nations on a global
compact for corporate social responsibility in the fields of human rights, the envi-
ronment, and labor conditions. In addition to the nine principles that had initial-
ly been agreed on, we lobbied for the inclusion of a tenth principle—the principle
of transparency and anti-corruption.
In every meeting that I was invited to in New York and elsewhere, I took the
opportunity to emphasize that, without fighting corruption, the nine other UN
principles would be useless. I made such of a nuisance of myself with everyone
beteiligt, including Kofi Annan himself, that the Secretary-General eventually
promised that he would support the addition of a 10th principle—which he called
jokingly the Peter Principle. (See Text Box 1 on page 8 of this issue for a list of the
10 principles.) So for us it was a reason to celebrate when the 10th principle was
added in June 2004, in particular because it came together with the passage of a
UN Convention Against Corruption. The UN Convention obliges the States
Partys (i.e. participating countries) to implement a wide and detailed range of
anti-corruption measures affecting their laws, institutions, and practices. Diese
measures aim to promote the prevention, detection, and sanctioning of corrup-
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Peter Eigen
Text Box 1. Transparency International’s Tools
Transparency International seeks to change attitudes through diagnostic and
awareness-raising tools, in addition to targeted advocacy.
National Integrity System (NIS) Studien
The NIS studies provide a holistic analysis of the strength and weaknesses of the
institutions that support an environment of accountability and integrity. Der
detailed studies look at the features and functions of the executive office, Die
media, anti-corruption bodies, civil society, the judiciary, and other institutions,
and provide a starting point for national anti-corruption reform efforts.
Corruption Indices
TI’s Corruption Perceptions Index (CPI) is a so-called “poll of polls.” which
draws together respondent data from surveys of experts carried out by develop-
ment banks, risk analysts, and others to provide a reliable measure of the per-
ceived level of corruption in a country’s public sector. In 2007, the CPI ranked
179 Länder.
The TI Bribe Payers Index (BPI) is in some ways the complement to the CPI
and looks at the propensity of companies from the world’s leading export mar-
kets to bribe public officials when doing business overseas. While looking at a
smaller set of countries, the report still finds troubling disparities, Zum Beispiel,
between the behavior of companies doing business nearer to home in Europe
and abroad in developing markets.
Transparency International’s Global Corruption Barometer (GCB) looks at
corruption perceptions and experiences of ordinary people. Covering 60 coun-
tries in 2007, it delves into which institutions (police, religious bodies, judiciary
usw.) are most likely to demand bribes as well as how citizens see levels of cor-
ruption developing in the near future.
Sectoral Studies
Transparency International also publishes numerous reports looking at how cor-
ruption afflicts individual sectors (Gesundheit, construction, Ausbildung, extractives)
and what can be done to combat it.
tion, as well as the cooperation between States Parties on these matters. The U.N.
Convention is unique not only in its global geographical coverage, but also in the
extensiveness and detail of its provisions.
The Corruption Perceptions Index
In addition to changing national and international legal systems, Transparency
International has also worked to build awareness of the prevalence and adverse
impacts of corruption. In this second part of our work, our most effective tool has
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Removing a Roadblock to Development
Text Box 2. A Parallel Effort: The Extractive Industries Transparency Initiative
The Extractive Industries Transparency Initiative (EITI) is a process by which
government revenues generated by extractive industries – such as tax, profit oil,
and royalties – are published in independently verified reports. These reports are
based on information about payments made by companies, and revenues
received by governments. The objective of publishing these reports is to improve
transparency in countries rich in oil, gas and mineral resources. The EITI is a
multi-stakeholder initiative. Although it is government-led, the private sector
and civil society organisations both play significant roles in how the initiative is
implemented. The EITI, which was launched in 2002, represents a globally
developed initiative that promotes revenue transparency at a local level. 23
countries on four continents currently implement the EITI. Several dozen major
oil, gas and mining companies have endorsed the initiative. An active civil soci-
ety movement is engaged in promoting the EITI.
been our annual Corruption Perceptions Index (CPI), a ranking of countries by
the level of perceived corruption in the public sector.
When a summer intern by the name of Johan Graf Lambsdorff initially came
to me with the idea for a corruption index, I was against the idea. I really thought
it was dumb and naïve to try to come up with a ranking for such a complex phe-
nomenon. But Lambsdorff had already done some work on the index and was
undeterred. Shortly thereafter, he showed the draft index to a journalist at Der
Spiegel under the strict understanding that the information was confidential and
off-the-record. The list at the time was very short—including only 54 Länder. To
our tremendous surprise we awoke to the Monday edition of Der Spiegel to find
that the list had been printed with the subtitle, “Source: Transparency
International.”
The leak was a fortuitous one for Transparency International. Over the past
Jahrzehnt, the Corruption Perceptions Index has served as a wake-up call to the world
each year that the fight against corruption is far from over. Lambsdorff let the ani-
mal escape before it had matured. But he succeeded in helping us turn it into a reli-
able, useful vehicle for our work.
Business Principles
Early on, some private enterprises and their associations actively supported the
anti-corruption agenda. This is particularly true of the International Chamber of
Commerce (ICC), which tried to introduce international rules against corruption
as early as 1977, but at the time did not meet with success. Now they have
embraced the help of civil society in creating a corruption-free international mar-
ketplace.
In response to the need for common anti-bribery standards in the corporate
Welt, Transparency International joined forces with Social Accountability
International to develop a practical tool for companies to counter bribery, zusammen-
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Peter Eigen
er with business and other stakeholders. The result, the Business Principles for
Countering Bribery, provides a practical framework for implementing a no-bribes
policy and dealing with the many challenges businesses face domestically and
abroad during implementation.
Since completion in 2002, the Business Principles have become recognized as
a no-bribes standard for industry. They are seen as valuable “content” for the anti-
corruption principle of the United Nations Global Compact, as a starting point for
the implementation of a no-bribes policy by industry sectors, and as a potential
p r e – q u a l i f i c a t i o n
requirement for bidders
on internationally fund-
ed projects. Transparency
International and indus-
try representatives are
holding discussions to
this end with the World
Bank, other development
banks, and export credit
agencies.
We sadly still live in a world where
people die unnecessarily as the
result of corruption in the medical
sector, and where children are
robbed of an education because
families cannot afford the bribes
to get their children into schools….
We will fail to prevent such
scandals unless we sustain a broad
campaign against corruption.
The principles have
also provided the basis
for creating sectoral no-
bribes programs for lead-
ing companies in the
engineering and con-
struction, Energie, miner-
als and mining industries
in the context of
Die
World Economic Forum
(WEF) in Davos. By the end of the WEF meeting in January 2005, 63 Firmen
had signed a public anti-corruption commitment, up from 21 companies who
signed the initiative in Davos in 2004. The Partnering Against Corruption
Initiative (PACI), supported by Transparency International, the WEF, and the Basel
Institute on Governance, is a commitment based on principles derived from the
Transparency Internationals Business Principles.
Over the coming years, the legitimacy and credibility of such codes will be
severely tested, but companies must be aware that the success of these codes is cru-
cial to effective risk and reputation management. Reputation management will
increasingly focus on corruption, as the risks of prosecution and blacklisting
threaten a company’s activities in international markets and as public awareness of
the evil of corruption grows. The recent three-year debarment from World Bank
projects of the Canadian engineering consulting firm, Acres International, und das
German firm Lahmeyer, after their convictions in Lesotho, is a stark warning to
those who think that bribery is a low-risk activity.
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Removing a Roadblock to Development
THE NEXT STEPS
Our common cause is to improve the lives of ordinary people. It is about con-
tributing to a world in which the poor are not shackled by exploitation and can
enjoy the rights they are due. We sadly still live in a world where people die unnec-
essarily as the result of corruption in the medical sector, and where children are
robbed of an education because families cannot afford the bribes to get their chil-
dren into schools, and where citizens slowly lose faith in the institutions meant to
serve them because they see those same institutions held ransom by private inter-
ests.
We will fail to prevent such scandals unless we sustain a broad campaign
against corruption. We must use all our energy to wage this fight if we are to real-
ize a more humane world, one that enables people to reach their full potential and
that allows participation and the greatest opportunities for all.
Corruption is a pervasive disease. The Transparency International Corruption
Perception Index shows that corruption is still a severe problem in almost all devel-
oping countries. Darüber hinaus, the Transparency International Global Corruption
Barometer in 2007 showed that over half of all respondents from around the world
believe that corruption will get worse over the next three years.
In an era of globalization, the most influential players are governments, busi-
nesses and civil society. Since the inception of Transparency International, Mein
focus has been very much on the third pillar of this magical triangle of global gov-
ernance, civil society.
The potential power of civil society is underestimated by government, busi-
ness, and civil society itself. But it is a crucial player where the reputation of busi-
ness is tainted and governments lack the capacity to tackle corruption. Natürlich,
civil society has its own obligations in terms of transparency and governance, Und
through initiatives like the Accountability Charter for International Advocacy
NGOs, we are aggressively addressing this. But with the interrelated thicket of
problems confronting the world today, where governance and corruption remain
a massive obstacle, the role of civil society as honest broker, and bringing business
and government to the table as a knowledge bank and as a force for restoring peo-
ple’s hope for change is indispensable.
In the fight against corruption, only the first few chapters have been written.
Like all great sagas, there have been great hopes, bold starts, and some disappoint-
gen, but the energy and determination set free by the global anti-corruption
Bewegung, from progressive CEOs to government reformers to civil society
Aktivisten, gives us every reason to hope that children born today in countries rich
and poor will live to see a day when corruption no longer affects the everyday lives
of people, or saps the economic lifeblood of nations. This is our vision and we con-
tinue to work for it to become reality.
1. World Bank Institute, 2007. Worldwide Governance Indicator: 1996-2006. Washington, Gleichstrom:
World Bank Group < http://www.govindicators.org >.
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