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Danger zone: aid must take corruption into account

Donor and recipient countries must work hand in hand

Intractable poverty is one result of poor governance, says Transparency International, and fighting corruption is an indispensable element of poverty reduction. Aid is necessary, but corruption may prevent certain types of aid reaching its target. For example, the risks of corruption are particularly high in construction projects, which are nonetheless vital.

“Additional aid resources are needed, but their delivery has to be structured in a way that takes account of the risk of corruption,” said Transparency International Chairman Peter Eigen. “At the same time, while developing countries need increased resources, both sides must work together to put an end to corruption. This should not be misunderstood as arguing for rigid conditionality. It is a call for decisive common action to ensure that increased resources have the desired result.”

Recipients and donors share a common responsibility for bold action against corruption.

Recipient country responsibilities

1. Build and strengthen institutions of justice and oversight.
Strong institutions are the cornerstone of good governance. These include a strong, independent judiciary with the capacity to conduct commercial cases, an independent anti-corruption agency that can liaise with its international counterparts, a supreme audit institution (SAI) capable of carrying out investigative audits and a parliamentary accounts committee. Politicians must know that they are accountable to the people that they serve.

2. Enable and encourage civil society participation.
Enabling civil society to keep an eye on government and to engage in substantive policy dialogue is a vital check on government power.

3. Allow freedom of information.
When media outlets are free and independent, they are able to conduct journalistic investigations and voice critical opinions against the government. This principle applies to politicians as well; by declaring their personal assets and interests, conflicts of interest can be dealt with preemptively.

4. Publish details of aid received and how it is spent.
By publishing the details of aid received and accounting for how it is spent, governments enable civil society and investigative entities to follow the money trail. Publicly available information on government budgets supports a healthy media sector and informs civil society activities. Clean bidding must be built in to all aid activities.

5. Ratify international and regional anti-corruption conventions.
The UN Convention against Corruption is a powerful tool for introducing anti-corruption measures, from whistleblower protection to mutual legal assistance.

6. Enforce clean bidding for public projects.
Where large public projects are bid for, there is always the danger of bribes being used to gain competitive advantage. Procurement standards with real sanctions for infractions ensure fair usage of funds.

Donor country responsibilities

1. One standard for everyone.
No G-8 country has yet ratified the United Nations Convention against Corruption, which was signed in December 2003. Ratification would send an unmistakable message that the G-8 lives by the rules it expects recipient countries to follow.

2. Stem the supply side.
Foreign companies are often the source of big-ticket bribe money in the developing world. G-8 countries have already ratified the OECD convention that criminalises this behaviour. Wealthy governments need to publicise and enforce their laws, to ensure that companies no longer view bribery as an acceptable way to win foreign contracts.

3. Tackling corruption hotspots.
The G-8 should develop provision for anonymous reporting of bribe requests, which could help identify hotspots where action to address corruption is urgently needed.

4. Publish details of aid given.
When the details of aid delivery are made public, civil society and independent investigators can follow the money trail to ensure fair usage. Aid packages should include funding for measures to fight corruption and build the capacity of local institutions.

5. Untie aid and follow rigorous procurement standards.
The conditions under which aid is given should encourage free and fair bidding. The aid process should include procurement standards that ensure transparent, quality-based bidding on public projects, not tied to vendors from a specific country.

6. Effective follow-up to Gleneagles.
The G-8 should report publicly on progress in implementing their anti-corruption commitments, on International Anti-Corruption Day, 9 December 2005.


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