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Transparency International: financial crisis a betrayal of public trust

Global anti-corruption organisation outlines critical areas for action on transparency, integrity and public accountability

World leaders need to recognise that the global financial crisis is the result of, “an enormous mismanagement of funds entrusted by the public to financial institutions”, according to a statement by Transparency International’s (TI), the worlds leading anti-corruption organisation, at its 2008 Annual Membership Meeting yesterday in Athens, Greece.

“What is particularly problematic is the broad economic and humanitarian impact of the crisis. Leaders must ensure that the poor do not suffer even more,” said TI Chair, Huguette Labelle.

A resolution, issued at the TI annual meeting and approved by delegates from over 90 TI national chapters and individual members, called the crisis, “a failure by public authorities to ensure the integrity and stability of the system and the safety and soundness of banking.”

“We are calling on the leaders of the Group of 20 (G-20) industrialised nations, meeting on the crisis on 14-15 November in Washington D.C., USA, to ensure that transparency, integrity and public accountability become the foundation of the vital reforms needed to rebuild the world’s financial system,” added Labelle.

Transparency International outlined seven priority areas for action by the leaders of the G-20:

  1. Regulation and supervision: Secure greater transparency and public accountability in order to restore public trust and adopt a far more consistent and internationally coordinated framework for regulation and supervision of all financial institutions.
  2. Rescue measures: Ensure effective safeguards with transparency and accountability at the forefront, in all aspects of public management of taxpayers’ funds, in support of efforts to restore the sound functioning of financial institutions and markets.
  3. Offshore havens: Halt evasion of all tax and financial regulations and the facilitation of illicit activities through use of “offshore havens” and ensure that these centres cooperate fully with other national and international authorities on the exchange of information.
  4. Governance: Build strong corporate governance, including board accountability, with emphasis on executive compensation, risk management and disclosure on financial products.
  5. Conflicts of Interest: Take measures to prevent conflicts of interest in the activities of credit rating agencies, auditing firms, and in relationships between financial firms and the public sector.
  6. Investigations and Sanctions: Pursue appropriate criminal investigations in compliance with existing laws and regulations, and impose strong sanctions where corruption, insider trading and other abuses are found.
  7. Aid: Take urgent action to address rising global poverty resulting from the current crisis by increasing official development assistance, with particular emphasis on those in greatest need and with the necessary accountability mechanisms.

The full text of the resolution is available here.

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