How to expose the corrupt Peter Eigen

I’m going to speak about corruption but

I would like to drug suppose two

different things one is the large global

economy the large globalized economy and

the other one is a small and very

limited capacity of our traditional

governments and their international

institutions to govern to shape this

economy because it is this this this

asymmetry which creates basically

failing governance failing governance in

many areas in the area of corruption in

the area of destruction of the

environment in the area of rotation of

women and children in the area of

climate change in all the areas in which

we really need a capacity to reintroduce

the primacy of politics into the economy

which is operating in a in a worldwide

arena and I think corruption and the

fight against corruption and the impact

of corruption it’s probably one of the

most interesting ways to illustrate what

I mean with this failure of governance

let me talk about my own experience I

used to work as the director of the

World Bank office in Nairobi for for

East Africa at that time I noticed that

corruption that brand corruption there

systemic corruption was undermining

everything we were trying to do and

therefore I began to not only try to

protect the work of the World Bank our

own projects our own programs against

corruption but in general I thought we

need a system to protect the people in

this part of the world from the ravages

of corruption and as soon as I started

this work

I received a memorandum from the World

Bank from the legal department first in

which they said you are not allowed to

do this you are meddling in the internal

affairs of our partner countries this is

forbidden by the charter of the World

Bank so I want you to stop doing this

in the mean time I was chairing donor

meetings for instance in which the

various donors and many of them like to

be in Nairobi it is true it is one of

the unsafest cities of the world but

they like to be there because the other

cities are even less comfortable and in

these donor meetings I noticed that many

of the worst projects which were put

forward by our clients by the

governments by promoters many often

representing the suppliers from the

north that the worst projects we are

realized first let me give you an

example a huge power project 300 million

dollars to be built smack into one of

the most vulnerable and one of those

beautiful areas of western Kenya and we

all noticed immediately that this

project had no economic benefits it had

no clients nobody would buy the

electricity there nobody was interested

in irrigation projects to the contrary

we knew that this project will destroy

the environment that would destroy

riparian forests which were the basis

for the survival of nomadic groups

Samburu and the Turkana in this area so

everybody knew this is a not a useless

project this is an absolutely damaging a

terrible project not to speak about

future indebtedness of the country for

these hundreds of millions of dollars

and the siphoning off of the scarce

resources of the economy from much more

important activities like schools like

hospitals and so on and yet we all

rejected this project none of the donors

was willing to have their name connected

with

and it was the first project to be

implemented the good projects which we

as donor community will take under our

wings

they took years we had do many studies

and very often they didn’t succeed but

he’s bad products which we are

absolutely damaging for the economy for

many generations for the environment for

thousands of families who had to be

resettled they were suddenly put

together by consortia

of banks of supplier agencies of

insurance agencies like in Germany

aramis and so on and they came back very

very quickly driven by an unholy

alliance between the powerful elites in

the countries there and the suppliers

from the north

now these suppliers were our big

companies three we are the actors of

this global market which I mentioned in

the beginning they were the Simmons’s of

this world coming from France from the

UK from Japan from Canada from Germany

and they were systematically driven by

systematic large-scale corruption and

you are not talking about fifty thousand

dollars here or a hundred thousand

dollars there over 1 million dollars

there no we are talking about 10 million

20 million dollars on the Swiss bank

accounts on the bank accounts of

Liechtenstein of the president’s

ministers the high officials in the

parastatal sectors this was a reality

which I saw not only one project like

that I saw I would say over the years I

worked in Africa for hundreds of

projects like this and so I became

convinced that it is this systemic

corruption which is perverting economic

policymaking in these countries which is

the main reason for the misery as a

poverty for the conflicts for the

violence for the desperation in many of

these countries that we have today more

than a billion people but we know the

absolute poverty line that we

more than a billion people without

proper drinking water in the world twice

that number to more than two billion

people without sanitation and so on and

the consequent illnesses of mothers and

children still tribe mortality of more

than ten million people every year

children dying before they are five

years old the cause of this is to a

large extent grand corruption now why

did the World Bank not let me do this

work I found out afterwards after a left

and Arabic fight to Burbank the reason

was that the members of the World Bank

thought that foreign bribery was okay

including Germany Germany foreign

bribery was allowed it was even

tax-deductible no wonder that most of

the most important international

operators in Germany but also in France

in UK in Scandinavia everywhere

systematically bribe not all of them but

most of them and this is the phenomenon

which I call failing governance because

when I then came to Germany and started

this little NGO here in Berlin the villa

Bozek and we were told you cannot stop

our German exporters from bribing

because we will lose our contract we

will lose to the French we lose to the

Swedes volutes with Japanese and

therefore there was indeed a prisoner’s

dilemma which made it very difficult for

an individual company individual

exporting country to say we are not

going to continue this deadly disastrous

habit of large companies to bribe so

this is what I mean with a failing

governance structure because even the

powerful government which we have in

Germany comparatively was not able to

say we will not allow our companies to

bribe abroad they needed help and the

large companies themselves it is

dilemma many of them didn’t want to

bribe many of the German companies for

instance belief that they are really

producing a high quality product at a

good price so they are very competitive

they are not as good in bribing as many

of their international competitors are

but they were not allowed to show their

strengths because the word was eaten up

by grand corruption and this is why I’m

telling you this civil society role rose

to the occasion

we had a small NGO Transparency

International we began to think of an

escape route from this prisoner’s

dilemma and we developed concepts of

collective action basically trying to

bring various competitors together

around the table explaining to all of

them how much it would be in their

interest if they simultaneously would

stop right and to make a long story

short we managed to eventually get

Germany to sign together with the other

OECD countries and a few other exporters

in 1997 a convention under the auspices

of the OECD which obliged everybody to

change their laws and criminalize

foreign bribery this is thank you I mean

it’s interesting in doing this we had to

sit together with the companies we had

here in Berlin on the Aspen Institute

and on the onesy we had sessions with

about twenty captains of industry and we

discussed with them what to do about

international bribery in the first

session yet three sessions there over

the course of two years and president

from weizsäcker by the way chaired one

of the sessions the first one to to take

the fear away from the entrepreneurs who

we are not used to deal with

mental organizations and in the first

session they all said this is not

private what we are doing this is

customary there this is what these other

cultures demand they even applauded in

fact Martin Weiser still says this today

and so they are serve a lot of people

are not convinced that you have to stop

writing but in the second session they

admitted already that they would never

do this what they are doing in these

other countries here in Germany or in

the UK and so on cabinet ministers would

admit this and in the final session at

the Aspen Institute we had them all sign

an open letter to the core government at

the time requesting that they

participate in the OECD convention and

this is in my opinion an example of soft

power because we we were able to

convince them that they had to go with

us we had a longer term time perspective

we had a broader geographically much

wider constituency we are trying to

defend and that’s why the law has

changed

that’s why Zeman’s is now in the trouble

they are in and that’s why am i n s the

probably in some other countries the

OECD Convention is not yet properly

enforced and again civil society is

breathing down the neck the

establishment in London for instance

where a BAE got away with a huge

corruption case which the Serious Fraud

Office try to prosecute a hundred

million British pounds every year for

ten years to one particular official of

one particular friendly country who then

bought for forty four billion pounds

military equipment this case they are

not prosecuting in the UK why because

they consider this as contrary to the

security interest of the people of Great

Britain civil society is pushing cessful

civil societies is trying to get a

solution to this problem also in the UK

and also in Japan which is not properly

enforcing and so on in Germany we are

pushing the ratification of the UN

Convention there is a subsequent Condor

we are Germany it’s not ratifying why

because it would make it necessary to

criminalize the corruption of Deputies

in Germany we have a system where you

are not allowed to bribe a civil servant

but you are allowed to bribe the deputy

this is under German law allowed and the

members of our Parliament don’t want to

change this and this is why they can’t

sign the UN Convention against foreign

bribery one of the very very few

countries which is preaching honesty and

good governance everywhere in the world

not able to ratify a convention which we

managed to get on the books this about

160 countries all over the world I see

my time is ticking

let me just try to draw some conclusions

what has happened I mean I believe that

what we managed to achieve in fighting

corruption one can also achieve in other

areas of failing governance by now the

United Nations is totally open on our

side the World Bank has turned from

solace to powerless under Wolfensohn

they became I would say the strongest

anti-corruption agency of the world most

of the large companies are now totally

convinced that they have to put in place

very strong policies against bribery and

so on and this is possible because civil

society joined the companies and joined

the government in the analysis of the

problem

in the development of remedies in the

implementation of reforms and then later

in the monitoring of the forms of course

if civil society organizations want to

play that role they have to grow into

this responsibility not all civil

society organizations are good the Ku

Klux Klan is an NGO so we must be aware

that civil society has to shape up

itself they have to have a much more

transparent van

governance you have to have a much more

participatory governance in many civil

society organizations we also need much

more competence of civil society leaders

this is why we have set up the

governance school in the center for

civil society here in Berlin because you

believe most of our educational and

research institutions in Germany and

continental Europe in general do not

focus enough yet on empowering civil

society training the leadership of civil

society but what I’m saying from a very

practical experience if civil society

does it right and enjoying the other

actors in particular governance

governments and the international

institutions but also large

international actors particularly those

which have committed themselves to

corporate social responsibility then in

this magical triangle between civil

society government and private sector

there is a tremendous chance for all of

us to create better work thank you