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  in focus
21 December 2006  

TI Year in Review 2006

"When you see illness, death, a poor quality of life, you see that fighting corruption is vital to the future of these people.”

Huguette Labelle, Chair of Transparency International, on what inspired her to join the fight against corruption.

In 2006
Transparency International saw corruption seep into the crevasses of daily life. It infested the water people drank and appeared in their doctor’s offices. It even showed up as thousands watched the perfect goal. These are not new occurrences of corruption, what happened in 2006 demonstrates what TI has known for a long time – whether through the health system or the world of sports, corruption affects the lives of millions of people everyday. This special ‘Year in Review’ gives a snapshot view of the highs, like the new Water Integrity Network, and the lows, such as continued corporate corruption scandals in Germany and the United States.

Review of TI’s activities and new intiatives

Launched on 1 February 2006, the Global Corruption Report (GCR) 2006 highlighted the global US $3 trillion health sector, exposing a maze of complex and opaque systems that are a fertile field for corruption. Since 2001, the GCR offers an annual, systematic analysis of corruption around the globe. Besides dedicating a thematic section to one key corruption issue, the report features assessments of the state of corruption at the international, regional and national levels and examines topical themes of global importance.

The 2006 report, which examined the health sector, found that while the majority of people employed in the sector perform their functions with diligence and integrity, there is evidence of bribery and fraud across the breadth of health services, from petty thievery and extortion to massive distortions of health policy and funding fed by payoffs to officials. Click here to see the GCR 2006

In April 2006, Transparency International re-launched its newsletter for the anti-corruption movement. Replacing the hard-copy quarterly newsletter, TI created Transparency Watch a monthly, electronic newsletter designed to provide more up-to-date news, more often.Transparency Watch features interviews with the big names in the anti-corruption movement; articles highlighting the latest topics in the fight against corruption; and news from the Transparency International movement around the world.

You can access the newsletter on the website at: www.transparency.org/newsletter or by creating a free subscription account to receive it automatically each month by email. To create an account, go to: www.transparency.org/user/register, enter your name and email address to register, then choose “newsletter” from the list of available products.

On 26 June 2006,
TI issued the second Progress Report on the Enforcement of the Organisation for Economic Co-operation and Development (OECD) Convention on combating bribery of foreign public officials. The report showed that only a third of OECD member states have taken significant enforcement action under the OECD Convention on Combating Bribery of Foreign Public Officials, while two-thirds of 31 signatory countries surveyed have achieved little or no enforcement since the Convention came into force in 1999.

Five countries have been singled out that play a major role in international trade – Canada, Italy, Japan, the Netherlands, and the United Kingdom – where the lack of enforcement is a particular concern. However, prosecutions have substantially increased in the United States and France compared to 2005, and prosecutions also are underway in Belgium, Bulgaria, Denmark, Germany, Hungary, Korea, Norway, Spain, Sweden and Switzerland. The report surveyed the enforcement performance of the signatory countries, based on information provided by TI national experts in each country and following extensive consultations with government officials and other qualified professionals. Click here to read the report

During World Water Week in August 2006, Transparency International and five leading water organisations launched a new initiative aimed at cleaning up the water sector. The Water Integrity Network (WIN) promotes greater global access to clean water for the poor, better quality of service for consumers and increased confidence among taxpayers in the equitable provision and distribution of water.

Founded by TI, the International Water and Sanitation Centre, Stockholm International Water Institute and the Water and Sanitation Program Africa, the network works with the public and private sectors to raise awareness and promote effective anti-corruption measures by influencing national policy and implementing community initiatives.

For more information, see: www.waterintegritynetwork.net. In addition, TI offers an overview on the issue of corruption in the water sector and related work of TI’s national chapters: Click here to see more

On 4 October 2006,
TI launched its Bribe Payers Index (BPI), the most comprehensive survey of its kind, which looked at supply side of corruption in terms of the propensity of companies from 30 leading exporting countries to pay bribes overseas.

Overseas bribery by companies from the world’s export giants is still common, despite the existence of international anti-bribery laws criminalising this practice. Companies from emerging export powers India, China and Russia ranked among the worst. In the case of China and other emerging export powers, efforts to strengthen domestic anti-corruption activities have failed to extend abroad. Click here to see the BPI 2006

The 2006 Corruption Perceptions Index (CPI),
launched on 6 November 2006, pointed to a strong correlation between corruption and poverty, with a concentration of impoverished states at the bottom of the ranking.

The 2006 CPI is a composite index derived from multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world. It scored countries on a scale from zero to 10, with zero indicating high levels of perceived corruption and 10 indicating low levels of perceived corruption. Click here to see the CPI 2006

The 12th International Anti-Corruption Conference (IACC)
took place in Guatemala City from 15-18 November 2006. With the theme “Towards a fairer world: Why is corruption still blocking the way?”, the conference brought together participants from governments, international institutions, civil society organisations, and the media to look at the obstacles facing the anti-corruption movement and how to best move forward.

With close to 1,400 participants from 120 countries, four plenary sessions and 45 workshops, the IACC emerged with four calls for action from the anti-corruption movement. The first, called on the government of Chile to speed up the extradition of the former Peruvian President, Alberto Fujimori for allegations of corruption and human rights abuses. The second was a conference declaration laying out an action agenda for the anti-corruption movement. In addition, a youth declaration asked the international community to pay more attention to the opinions, interests and strategies of young people and to increase funding for youth-driven anti-corruption programmes. Finally, the 12th IACC called on the Conference of States Parties to the United Nations Convention against Corruption (UNCAC) to adopt an effective follow-up monitoring programme at its 10-14 December 2006 meeting in Amman, Jordan. Click here to read more

On 7 December,
TI launched its 2006 Global Corruption Barometer (GCB), a public opinion survey conducted for TI by Gallup International, looked at the extent of corruption through the eyes of ordinary citizens around the world.

It explored the issue of petty bribery in greater depth than ever before, highlighting people’s personal experience of bribery, and identifying the sectors most affected by corruption, its frequency, and how much people must pay. The Barometer was published in anticipation of International Anti-Corruption Day, 9 December 2006. Click here to see the GCB 2006 or Click here to see the Anti-Corruption Day pages

TI staff picks for 2006 news stories

In 2006, corruption was a mainstay in the international news headlines. The staff at Transparency International have selected a few of their top picks below.

Wolfowitz announces World Bank anti-corruption strategy
World Bank President Paul Wolfowitz put corruption at the top of his agenda. At the World Bank / International Monetary Fund meeting in September, Wolfowitz’s flagship anti-corruption strategy was hotly debated, and is currently in the process of being finalised.

Private sector scandals hit Germany
This year Germany saw a storm of corporate corruption scandals. Automaker Volkswagen, the German branch of the Swedish furniture outlet IKEA and the electronics manufacturers Philips and Siemens were caught up in allegations of corruption with several prosecutions for bribery.

US mid-term elections dogged by corruption
In November, the American mid-term elections resulted in the Democrats taking control of both the Senate and the House of Representatives. International media reported that exit polls following the vote showed corruption scandals were a major issue. According to Time Magazine, “three fourths of voters said corruption and scandal were important to their votes”.

Worldwide football scandals
Football has been plagued by a series of corruption scandals in national leagues all over the world. Just to mention two: The BBC’s current affairs programme Panorama claimed to have found evidence of British football agents paying “bungs” to football clubs. In Italy, the 2005-2006 season champion Juventus Turin were relegated to play in Serie B (Italy’s secondary league) because of its match-fixing scandal while other top clubs had been punished with points deductions in the new season.

Romania and Bulgaria step up anti-corruption drives as EU accession nears
Negotiations surrounding Romania and Bulgaria’s bids to join the European Union (EU) centred on their capacity to cut corruption. The two countries will join the EU in January 2007, with the condition that they must have plans in place to effectively fighting corruption, particularly in the judiciary ministries.

Online poll results in 2006

Taking the temperature of the public is one way TI can stay in tune with group thought about corruption. Each month, TI has an online poll on the homepage to do just that. The polls from 2006 have garnered some interesting results that reflect in TI’s tools, publications and indices, as well as major corruption news stories.

The results of this year’s Global Corruption Barometer, launched on December 7, 2006, demonstrated once again that petty corruption in the public sector is top of the list. The online poll in January, however, said that bribes in the public sector are avoidable but that governments are seriously challenged to commit for solutions.

The February poll on corruption and health underlined the importance of the 2006 Global Corruption Report on Health, showing that 85 percent of the voters felt affected by corruption in health services.

While major corruption scandals – such as corporate corruption in Germany and the United States – hit developed countries in 2006, corruption is still perceived as more of a problem in the developing world, said 75 percent of the online poll voters in April.

One of the major corruption-related stories in 2006 has been in the context of accreditation for new European Union (EU) member states Bulgaria and Romania. The importance of effectively fighting corruption as condition for joining the EU also has been expressed in the results from May’s poll with 79 percent of the voters indicating that corruption problems should keep Bulgaria and Romania from joining the EU.

In 2006, civil society organisations (CSO) have been stonewalled through new law initiatives, namely in Russia and Venezuela. Freedom and independence of CSO’s are very relevant for the fight against corruption. This importance was reflected in the online poll in August with 92 percent of the voters supporting CSO’s as “very important” for the fight against corruption.

Corruption in humanitarian assistance is a complex and difficult area, especially when considering corruption. In September, TI asked: “Whose responsibility is it to see that humanitarian assistance is handled transparently?” Forty one percent voted for the responsibility to lie with local governments, but humanitarian agencies and donors need to look at their actions as well, with 28 percent and 24 percent holding them responsible respectively. Surprisingly, only seven percent mention CSO’s as needing to be held accountable. But in case of CSO’s being the provider and donor, their responsibility would increase significantly.

To keep up-to-date with TI’s online polls and to include your opinion on corruption-related topics go to the bottom, right side of the home page here.

Note: Transparency International online polls are not statistically valid representations of our website users nor intend to guide or represent public opinion in any way.

A year in quotes

A year in quotes: Transparency Watch, TI’s compelling e-newsletter, interviewed visionaries fighting corruption around the world. Highlights from those conversations encapsulated both the wins and the loses for the fight against corruption during this past year.

April 2006
“The most important thing about these kinds of scandals is that they cause the general public to lose faith in their own institutions of democracy. It is even more damaging than the direct financial loss. As you know, Kenya is in the middle of a severe drought, and obviously people have said one of the connections that can be made is between the amount of money that may be being misappropriated and the drought and the way it is affecting Kenyans. However, I always assert that the biggest impact of these kinds of issues is usually on democratic institutions and causing people to lose faith in them.”

John Githongo, the former Kenyan anti-corruption tsar, on the opportunities Kenya has missed out on because of the Anglo Leasing scandal, estimated to have cost approximately US $700 million.

May 2006
“In my early days at the Canadian International Development Agency, I saw the effects of corruption first hand; I saw so much money being lost, being diverted from people who depended on it to improve their lives. Countries rich in natural resources were exploiting these resources and yet their people remained painfully poor, struggling to survive at the bottom of the poverty spectrum. So you know that money was going somewhere. When you see illness, death, a poor quality of life, you see that fighting corruption is vital to the future of these people.”

Huguette Labelle, Chair of Transparency International, on what inspired her to join the fight against corruption.

"Corruption most probably opened the door for the terrorists to come to Beslan. The border where they crossed into North Ossetia from Ingushetia is a well-known and well-observed smugglers’ transit road. Without having bribed police in the border region, they could not have gone unnoticed.”

Walter Mayr, Moscow Bureau Chief of the German newsmagazine Der Spiegel, on the role of corruption in the siege of the Beslan No1 School in Russia.

June 2006
“Corruption in sport is too often discussed only as a phenomenon of players and officials. It is much more. The really big cases have to do with big international crime - drug trafficking, money laundering, political corruption. Billions of dollars are lost to companies connected to the sport system. With the many competitions on the field, with the many bidding competitions for the organisation of prestigious events and lucrative marketing rights, with diplomatic status for officials and lack of border controls, the system promotes the opportunity to do dirty business.”

Jens Weinreich, journalist for the Berliner Zeitung and author of Corruption in Sport, on the prevalence of corruption in sport.

July 2006
"Companies involved in extractive industries are long-term players in the countries where they operate, and therefore the success of our business is very much tied to the success of the host country. The business case for EITI [Extractive Industries Transparency Initiative] is terribly important. It comes down to a simple matter of efficiency. It is very costly to operate in a corrupt regime, because everything takes longer – [Corruption] is a drag on the efficiency of moving goods and services, or of just doing business. Simply in terms of cost of operations, a country that is thriving is going to be a more efficient, safer place to operate. All of that equals greater profits – in the long term.”

Graham Baxter, Vice President, Corporate Responsibility, BP, on why business should implement the Extractive Industries Transparency Initiative (EITI).

August 2006
To me, the campaign against corruption is closely related to social movements for securing political freedom, equality, rule of law, opportunities for involvement in productive endeavours and social justice. Together they constitute what we call “development”. The ultimate sources of the challenge to anti-corruption are the same as those for all such agendas for change. The vestiges of the feudal social order get in the way, as do the difficulties in resolving the contradictions between the need for political financing and clean governance. In short, the battle against corruption is about inculcating new values in society and in politics.”

Devendra Raj Panday, member of the TI Board of Directors and former president of TI Nepal, on the challenges he faces in the daily fight against corruption.

September 2006
“My argument is that throwing good money at incompetent and corrupt politicians and bureaucrats is obviously not going to end poverty. Aid is a subsidy for African government corruption and incompetence. It is not so much that these countries don’t have resources; it is that they mismanage available resources. Giving them aid is an incentive for them to continue mismanaging.”

Andrew Mwenda, journalist at the Ugandan newspaper, The Monitor, on why Western governments should stop giving development aid to Africa.

October 2006
“Good governance reforms are important for the private sector generally, but will be particularly important for attracting investment from good international companies. Countries with high levels of corruption may still get investment, but are more likely to get investment from second- or third- rate companies or companies. The investment climate goes beyond the issue of corruption. The World Bank has a regular survey where one of the questions is: “How long does it take in this country to start a new business?” In Indonesia the process is very long, in Singapore it is really quick. I take that question as a proxy for bribery because if procedures are slow and cumbersome, that increases the temptation for business people to offer bribes, or for officials to create obstacles in order to solicit extra payments for removing them.

John Bray, policy specialist at the independent risk consultancy Control Risks, on the results of the International Business Attitudes to Corruption Survey 2006.

November 2006
The institutional building process should be the rule and the strength of the institutions should be the norm rather than the exception. But I mostly aspire to inject this in the psyche and the conduct of people; to make it second nature. It changes with people. There was a generation where this was common practice, and it was condoned or maybe even encouraged, it wasn’t even an ethical question or a moral question. It was a way to do things; it was a way to get the contract. In other words, you got fired if you didn’t do it. Now, it is becoming obvious that this is maybe not an appropriate conduct. That is an improvement. Maybe the next step is to say this is undesirable, unbecoming conduct, and then more and more people around you will reject it. You have work on building political accountability on both sides.”

Angel Gurria, Secretary General of the Organisation for Economic Cooperation and Development (OECD), on what he would like to see being achieved in the fight against corruption by the end of his term.

The newsletter can be accessed on the website at: www.transparency.org/newsletter or by creating a free subscription account to receive it automatically each month by email. To create an account, go to: www.transparency.org/user/register, enter your name and email address to register, then choose “newsletter” from the list of available products.

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Integrity Awards winners 2007

Transparency International award recognises an international anti-bribery leader and a grassroots activist