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Anti-corruption strategies for donors during the COVID-19 pandemic

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Headshot of Matthew Jenkins, Research Manager at Transparency International
Matthew Jenkins

Research Manager – Knowledge Services, Transparency International

Although the COVID-19 pandemic has severe implications for all societies, these challenges are particularly acute in low-income and low-capacity states. As the International Crisis Group warns, the virus has the potential to exacerbate underlying problems in fragile states, trigger social unrest, disrupt humanitarian aid flows, and inhibit peacekeeping efforts.

The outbreak has already triggered demands for immediate and unprecedented donor support to low- and middle-income countries to help them cope with the public health crisis and the associated economic crash. Simultaneously, many donors are loosening their anti-corruption safeguards, such as due diligence, oversight and accountability mechanisms in the name of achieving rapid impact.

Yet past experience has shown that the huge influx of financial flows into humanitarian settings creates fertile ground for fraud and corruption that can critically weaken the effectiveness of donors’ interventions, with a disproportionate impact on the most vulnerable groups.

In past emergencies, such as the Ebola epidemic, documented corrupt practices included the widespread diversion of funds and medical supplies, misreporting of salaries and payments for goods, petty bribery to bypass containment measures such as roadblocks and quarantined zones, as well as flawed and opaque procurement processes. The International Federation of Red Cross and Red Crescent Societies estimated that it lost over US$6 million due to corruption and fraud during its Ebola operations from 2014 to 2016.

Nor is this a problem restricted to low-income countries. The US Government Accountability Office reported that an estimated at US$1 billion of payments made by the US Federal Emergency Management Agency during and after the hurricanes Katrina and Rita was improperly distributed and potentially fraudulently obtained.

Corruption in humanitarian assistance results in a reduced quantity and quality of aid reaching the intended beneficiaries, and, as a result, may prolong humanitarian crises. In addition to the direct costs, there are non-financial forms of corruption that affect humanitarian relief efforts, such as nepotism in staff recruitment, cronyism in beneficiary selection, political interference in aid distribution and the sexual exploitation of those seeking access to aid.

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While corruption has the potential to severely inhibit the efficacy of donors’ financial and technical support to health systems in aid-recipient countries, anti-corruption efforts are themselves complicated by some of the unique features of the current COVID-19 crisis.

Not only does the global nature of the pandemic threaten to overwhelm donor capacity to work on all fronts but also public health measures, such as social distancing enacted to slow the spread of the outbreak, complicate the physical delivery of aid. Due to lockdowns in many countries, reaching vulnerable communities has become more difficult and could worsen the existing problem of donor agencies having to pay bribes to access target communities in hard-to-reach areas.

Restrictions on the freedom of movement, and in some countries on freedom of expression, also hamper the operation of traditional oversight mechanisms. This applies both to vertical oversight by state agencies and parliaments, but especially to participative approaches that engage non-state actors to monitor humanitarian relief programmes. The extent to which civil society will be able to participate in relief efforts, monitor government initiatives and represent marginalised communities is unclear. These restrictions also complicate donors’ efforts to coordinate their activities with other donors, government agencies and NGOs.

The challenges COVID-19 poses to traditional aid modalities and delivery mechanisms mean that donors will need to adopt a principled but flexible approach. That said, not every aspect of the crisis is unprecedented.

A new paper by Transparency International’s Anti-Corruption Helpdesk draws on available literature and experiences from past humanitarian interventions to provide guidance to development practitioners. It finds that there are a number of actions that donors can take immediately to reduce their operational vulnerability to corruption, regardless of their existing level of preparedness.

  • Recommendations included in the paper range from communication strategies to aid transparency initiatives and preventive safeguards in the area of procurement. In particular, donors should:
  • focus on clear communication, setting the “tone from the top” that corruption is not a tolerable cost of doing business;
  • be as transparent as possible (“open by default”) when it comes to their own budgets and activities;
  • simplify and strengthen their internal preventive controls to the extent possible in light of the pressure to disburse funds quickly.

Embedding anti-corruption into emergency programming will necessitate being realistic and pragmatic. Realistic in the sense that, in the short term, there is likely to be a spike in the incidence of corruption in donor operations. As the total volume of funds increases so will new opportunities for the discretionary use of these resources.

At the same time, constraints on corrupt behaviour are likely to decrease as existing accountability mechanisms struggle to adjust to the new circumstances. Donors should acknowledge this risk, which entails being internally clear about their risk appetite as well as being open about their anti-corruption stance and policies with external audiences.

Pragmatism is also important. Development agencies should focus on the anti-corruption strategies and tools available to them that can be feasibly implemented immediately and reasonably expected to have some impact. This will likely mean prioritising the management of corruption issues that donors are likely to encounter in their own operations.

Donors should also take pre-emptive steps to reduce the risk that corruption will undermine their emergency response. These include measures to ensure ex-post accountability after the crisis for decisions taken and money spent in the weeks and months after the initial emergency response. For instance, widely communicating the decision to set aside dedicated resources for evaluation and audit can potentially deter corrupt behaviour by conveying the sense that those with discretion over resources will have to account for their use later.

Unfortunately, corruption is occasionally seen as the cost of doing business in humanitarian contexts, especially where there is a perceived trade-off between exigency and due diligence. Yet it is clear from past emergencies that corruption prolongs humanitarian crises and raises their social, human and economic costs. Ultimately, therefore, effective corruption risk management will help donors “maintain control and effectiveness even when moving at high speed”.

In this sense, anti-corruption procedures and accountability mechanisms are some of the best instruments to ensure that humanitarian assistance is being used effectively and donors’ objectives are achieved.

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