|Strengthening Institutional Restraints|
Peter Brod, Editor, BBC Czech Service, Prague - Chair
Good morning, ladies and gentlemen, welcome to this plenary session. My name is Peter Brod, I am the head of the Prague office of the BBC, and I have the honor of introducing this morning's session. The topic of this session is "Strengthening Institutional Restraints". We have a very distinguished panel here and I would like to add that it is a very colorful panel. The participants represent institutions that in one way or another deal with corruption at the domestic level and in the international arena; we have with us representatives of two global organizations of the largest nation on Earth and of one of the smallest. Let me briefly introduce the participants now, and I shall also introduce each of them in more detail before they speak. Let me start with that member of our panel who has had the longest journey to come to our conference, she is on my left, on your right, Marie NoÄ‚Ĺ¤lle Patterson, from the republic of Vanuatu in the Pacific. Welcome. Mrs. Patterson is of French origin and has served her adopted country as its first ombudswoman. Welcome to Prague. When I spoke of the largest nation in the world, I meant China, of course. From there we have with us Mrs. Liu Liying, Senior Supervisor of the Ministry of Supervision in Peking. Welcome. A year ago the World Bank and the IMF held their annual meeting on these premises. Dr Cheryl Gray, one of the directors of the World Bank was not here then, but she has been to this part of the world many times, and I am sure that through her we can say to the World Bank, welcome back. From Lausanne in Switzerland comes FranÄ‚Â§ois Werner who deals with questions of ethics at the International Olympics Committee. Welcome. And last but not least, our keynote speaker; we welcome Baltasar Garzon Real, the investigating judge from Spain. Mr. Garzon has become something of a media star due to his efforts to bring to justice the former Chilean dictator Augusto Pinochet. Welcome, sir. According to the Bible the last will be the first, so we will start with you, Senor Garzon. Judge Garzon has had a distinguished career in the Spanish justice, and has dealt among other areas of crime with terrorism, the laundering of dirty money, drug trafficking and corruption. Mr. Garzon will address the topic of who could be the allies of the security and independence of an investigative judiciary prosecuting corruption, of course based on his immediate experience in Spain. He will be speaking in Spanish so I invite those of you who do not speak that beautiful language to put on your earphones. Your Honor, the floor is yours for twelve minutes exactly.
Baltasar Garzon Real:
Good morning. Thank you, Mr. Chairman, I would like to express my thanks to Transparency International for inviting me here, and I would also like to thank this organization for the enormous work it has been doing throughout the world. Perhaps we can ask the following question. Who can help, who can be helping investigating judges such as myself in our country? Who can actually assist the investigating judge in his fight against crime, against economic crime, organized crime and similar criminal activities? Let me propose the first statement to you: The main and principal advocate of the independence of judges should be the justice systems, that is, guaranteed safeguards that are incorporated in these systems and also the integrity of its members. What I mean is that if a country has formed an independent judiciary, totally independent of political powers, and has put in place external and internal checks and safeguards, then there is a very good chance for a prosecutor or an investigating judge to be able to investigate corruption without fearing censorship or sanctions against him. From my point of view, it is the first and very important element in the whole chain, which represents the whole system of justice.
The first and foremost element in this chain is judicial independence. In some countries judges are more instruments, toys in the hands of the political power of those who appoint them, who can replace them, recall them according to their discretion. This means that judicial independence, the independence of judges, is sometime the target of corruptive practices, especially economic corruption, corruption targeted towards those who nominate, who withdraw, who replace judges. Very often you do not even have to target a particular judge because the judges themselves are more than forthcoming. That's why we are advocating genuine independence. But still we do not have enough means and possibilities to protect this independence, especially when we have to deal with very difficult cases in which the political or economic power structures are implicated, or in which a strong private sector is implicated. Sometimes the judges are under the pressure to please these strong actors. How should we deal with this issue, how should we solve this problem?
We should have a good system of selection of judges, assessment and evaluation of judges; also, proper remuneration of judges is crucial. It is very important to have a good system in place to make sure that a judge can continue and finish a case he has started dealing with. Certainly, there should also be penalties and sanctions envisaged by the system. I am a little afraid of opening justice to external control as I believe that whatever has been said within the judiciary should remain there. Therefore, in the first place, controls should be of an internal nature. On the other hand, there is one other element of major importance, namely specialized bodies, institutions charged with fighting corruption, such as a Special Prosecutor's Office established to investigate and deal with acts of corruption and related crime. There is a problem, however, which has been discussed for quite a long time, since 1995, i.e. that such a body is being established only following a series of economic scandals due to economic crime. Fears have been expressed that a body like this will hardly be able to exercise full independence.
There is also a hierarchical structure here - a prosecutor in charge of economic matters reports directly to the General Prosecutor who determines which cases should be dealt with by this Special Prosecutor's Office. It is also quite possible that a clash of interests might occur between those who demand stricter independence of prosecutors, on the one hand, and those who hold the reins of political power, on the other. So, while we do have a special corruption prosecuting office, it does not enjoy full independence, not on the same level that is enjoyed by the Special Prosecutor's Offices designed to fight drugs or terrorist activities. We have a whole range of experts, both in the public and the private sectors, who help them fight corruption. These experts again report either to the prosecutor, or to an investigating judge such as myself. These people are experts working for all types of organizations in the public and the private sectors. They are professionals who know also how investigations should be conducted. Throughout the investigation of a case, they work for the judge or the prosecutor, they cannot be recalled. There are safeguards and guarantees in place to prevent any action being taken against these experts because they have a key role to play in cases of corruption.
Another important factor is the cooperation between national and international organizations. In Europe in general, and in Spain in particular, we are very well aware of the importance of fighting fraud, fraudulent activities in the European countries. By means of agreements and cooperation, a specialized organization has now been working closely with prosecutors, offices and also with judges, especially in the field of evidence collection for judicial trials. An argument in favor of judicial independence is also that there are, or there should be standards, rules regulating how the judiciary acts. Not always does the government of a state meet all requirements of domestic and international legislation, not always are anti-corruption laws fully implemented. On the 26th of January, the EU proposed a convention. However, this convention has not yet been adopted by any country, including Spain. This convention has not even been signed yet. One issue is currently being hotly debated in Europe, namely that of legislative and judicial cooperation throughout Europe.
Corruption does not always take place just in one country. Very often we have corruption in several places. This is especially the case with the multinationals and organized crime, and this is why it is so important that the judges and law enforcement cooperate. This is why the convention on the cooperation of judges held on the 29th of May of last year is of such enormous importance. Some countries such as Italy have already signed the convention; however, that countryĂ‚Â´s Senate has just signed an act of law, which in fact goes against everything that the convention contains. There are certain aspects, certain statements about formal insufficiency for cases when, it appears, the validity of the standards is abolished and cannot be applied retroactively. This means that all the cases we are working on at the moment - in fact I have a number of open cases which concern specific persons, highly placed officials - may quite possibly not be further investigated because the act that has been passed cancels the validity of the convention. Italy should in fact be the opposite example... Actually, what is no longer valid is the principle of so-called second accusation, as there are many forces in favor of the opposite principle. Moreover, there are certain standards in many countries that define as an offence or crime something that is not an offence. These standards fail to observe the Palermo Convention of December of last year, which includes Article 8 that requires the presupposition concerning corruption.
I would also like to mention tax havens and bank secrecy. This cannot be an obstacle for conducting prosecution - a point stipulated in the articles of the convention. However, as I have said before in connection with various other problems, over the years it has been almost impossible to obtain materials or any sort of reply from other magistrate's courts in foreign countries at the time when we needed it, when the country that was requesting the materials needed them. Very often it was said that bank secrecy makes it impossible to collaborate within the judiciary system on the international level. We are aware, however, that this collaboration is vital. It was recently stated at the conference of special forces that this kind of legislation should be passed as soon as possible and that it should deal with the questions of specific figures, account numbers, owners of the accounts. It was also observed that frequently we were unable to continue with the prosecution because while we did receive the data about the person in question, collaboration between the courts was usually refused. There was a specific case, on Jersey Island, where a year ago we began to communicate asking for collaboration. We requested only one thing - the identification of certain subjects, or persons - in hope of receiving a confirmation on who was using certain accounts for criminal purposes. These days, and this is of great concern to us, there are certain other matters as well. I would like to seize this opportunity to ask these experts to do more than what we were discussing at the beginning of the year.
Mr. Ocampo said that we cannot just speak, but that deeds are necessary to contain corruption. This is how I feel as well and this is why I have decided to set up a group of experts who will focus on combating corruption in the judiciary and also in prosecution. We have decided to monitor certain funds which could have disappeared or fallen into the hands of certain persons in places where investigation cannot be carried out and where we need support. This is why we have set up a foundation under the umbrella of several universities that have decided to collaborate with us. I would like to use the tenth anniversary of the death of Mr. Falcone to point out that this issue is highly topical. We must solve it. We must cope with it. Maybe it will not be a fight, but we must certainly face it. Thank you.
We turn now to Dr. Cheryl Gray. She is the director of the so-called Public Sector Group at the World Bank in Washington. In this position Dr. Gray oversees the Bank's work on public sector reform, including civil service reform, public finance, and anti-corruption activities. She holds a Ph.D. from Harvard and has been with the bank for fifteen years. During that time she has acquired an in-depth experience in Indonesia, in Central and Eastern Europe, as well as in Russia where she has studied transition economies. Dr. Gray will speak about the way the World Bank fights corruption.
Thank you very much.
First of all, we should start with the observation that tackling corruption is fundamentally about changing institutions, changing the rules of the game, the incentives that govern behavior. We do not see corruption as primarily a legal issue, a law enforcement issue, as you know. Very many laws are passed and sit on the books; in fact, almost all of our client countries have very good legislation in the area of anti-corruption. Institutions are, unfortunately, much harder to change than laws. Nor do we think that appealing to morals or to culture alone can solve corruption. Of course, corruption is a moral issue, but we really focus on the incentives that drive behavior. I did work, as was noted, in Indonesia, and I worked closely for three years with the Indonesian government and tax administration and came to know people well there. They would tell me in confidence that they did not like the system any better than we did; this was not a cultural issue. It was the essense of the incentives in which they worked. Certainly, you can go to the developing countries and people out there are as outraged about corruption as anyone here. That is why I think it really is not a question of morals and culture. I believe we need to focus on institutions and on how to change them. The challenge here is to move from one equilibrium to another. If you have an equilibrium of low corruption, the citizenry will not enforce it. I think our law enforcement agencies realize that the citizenry is the main enforcement of laws. The police and the judiciary operate at the margin, they can only operate at the margin even in the most advanced countries. If you are in a situation with low corruption, where it is an exception rather than the norm that somebody is corrupt and it comes out, citizens will turn them in. Whereas if you are in a situation with high corruption, where everyone is involved, it is very difficult to single out one person, and the citizens become passive in a way and have to accept the situation. In my opinion, moving from the equilibrium - which is equilibrium unfortunately - of high corruption and low citizen enforcement to one with low corruption and fairly high citizen enforcement is really the challenge. It is something like climbing a mountain. It is a very difficult challenge indeed.
We are in this together, in trying to address this issue. I also wanted to mention how this could be done. Basically, this is a very multi-pronged effort, and all of us in this room are partners in this effort, every organization has an important role to play here. A systemic focus is critical.
We in the World Bank, in our recent report "Corruption in Transition" available at our kiosk here, broke down this topic of how to address institutional change into five large areas. The first area discusses the structure of government, the checks and balances in the government structure itself, the independence of the judiciary, the role of the legislature. The second area concerns political contestability, accountability of leaders, the elections, how leaders are chosen, the competition for political office. The third area is on the civil society voice and participation. The fourth focuses on the competitive private sector, and the fifth on public sector management.
All these areas are critical, all of them need to move forward together. It is going to be very difficult to reform public sector management, if you have not reformed at the top. The same is true for the private sector, which goes hand in hand with the public sector. I really see all of us as partners in this effort. TI is doing a wonderful job in their work on civil society; the OECD is doing a fabulous job in its work in the international domain. We are trying very hard to work within client countries to improve governments and make them work better.
As concerns the private sector: I have noted here, in our program, many very interesting initiatives in the private sector itself to come together, and to set norms and ethics standards. We could have more work on political accountability; I think we could really gear up in that area because it is a very, very fundamental one. I would like us all to work together and give each other as much support as we possibly can, as we really need to move on all these fronts if we are really going to climb this mountain. What we have certainly learned, and it has changed the way we do business, is that good governance and development go hand in hand. There has been a wealth of research findings throughout the 1990s proving this point. No one argues any more that corruption is just a grease of the wheels and that it is harmless. You heard that a lot in the 1980s, particularly from economists. You do not hear that anymore; the evidence is overwhelming that you need good governance to have development.
We have our assessing aid report of a couple of years ago. This shows that the World Bank's own programs and projects are not effective in environments with bad governance and bad policies. We have three recent World Development Reports, which are our flagship of sorts: The 1997 report really set the stage for the role of the state; the 2000 report on poverty talks about governments and empowerment to address poverty; and the 2001 report, the most recent one which has just come out this year, this month in fact, is on Institutions for a Market Economy. I recommend you have a look at this latest report, probably at our Bank web site, as it is a very in-depth report on institutional reform for a market economy. And, of course, all our experience on the ground very much supports this issue. This includes some of the founders of TI who were frustrated that the Bank was not addressing it enough, as their experience showed them that you had to address governance if you were going to address poverty.
In fact, the 1997 report was the first major study that looked at 4,000 firms in 67 countries and found very clearly that much higher investment is achieved when there is good governance. Also, much greater growth of income per capital occurs when there is good governance. Of course, we could add a wealth of more findings here, but they all support the basic view that development cannot be tackled unless governance is tackled. As for the results, our bank has changed significantly, in fact dramatically, I would say, in the last five years. It has been focusing very systemically on poverty, governance and institution-building right at the center. You do not see any country-assisting strategies anymore, or any major lines in the Bank that do not have a very significant institution-building and governance component. We also have increased our emphasis on ownership, realizing that outside conditionality does not work; it is very important that this has to come from the country itself. Many of you may be familiar with the poverty reduction support papers, the PRSP process that has been implemented in the last couple of years where all of the low-income countries are asked to develop their own poverty reduction strategies, working in a transparent way with the private sector and civil society in their countries. When they come up with a collective strategy, both the IMF and the World Bank will get behind that strategy and support it if it is all within the range of what these organizations think will lead to development. It is very much an emphasis on ownership, very much on the way of doing business. This is still in the process, many of these issues are still under development at this point, and we are striving very much to move toward an emphasis on ownership.
We have certainly increased our lending and non-lending activities, our analytic work, the capacity-building work of the WBI, our staff expertise. Our number of staff has quadrupled over the last four years and so has, generally, our support for governance reforms and a greater concern for selectivity. The Assessing Aid Report shows that there is no reason to lend into environments where you are not going to have an impact. You really need to be selective and support countries that are trying to reform. A very significant focus is being devoted to empowerment, transparency and accountability, as well as to the demand and the supply sides. We had many failures in our projects in the 1980s and early 1990s in public sector management, as we were only working within the government to change, say, the civil service. Since governments do not reform themselves, people do not change automatically, there is a need for the demand side as well. We are therefore working much more intensively now to combine the supply side of technical assistance and capacity building, which is important, with the demand side coming from citizens and from competition. I would like to give you just a few examples.
First I should mention that these are just overall data to give you some sense of the overall amount of lending that we are doing for institution-building. It has risen from about three, two-and-a-half billion dollars in the fiscal year 1999 to four-and-a-half billion dollars, which is over a quarter of the World Bank's portfolio in the fiscal year 2001. This is a direct support to governance reforms and capacity- and institution-building.
I wanted to give you three quick examples, before I close, of this new approach, which emphasizes empowerment, transparency, accountability, as well as internal reform within government. The first is called the CDDI, the Community Driven Development Initiative. Now, over a $1 billion of lending this last year was under this rubric of community driven development. The difference here is that it gives resources directly to communities at a decentralized level, to make their own decisions about how the money should be spent. We have a lot of programs now where it does not have to be said at all where the money has to be spent. You set up the mechanisms, the institutions to let the people decide in a transparent and in an accountable way. In Northeast Brazil, where this has been a very big effort, a poverty alleviation project puts resources in the hands of local governments, which decide how it is to be spent. They decide in a transparent way, the monitoring is clear, the financial management is clear, the accountability is clear. Our goal is effectiveness, and to reach this point is hard to do.
The recent evaluation of this project has 94% of the resources going directly to the beneficiaries, 7.5 million people reached in over 30,000 communities. There are many other good indicators of progress, too. This is just a new way of doing business, getting resources in the hands of the community. Also in Indonesia, as they decentralize in a radical way, which they are now undertaking, the Bank is supporting the Skastachana development program in 27 provinces, 970 districts and 15,000 villages, where you put the money in the hands of the village. You get bloc grants to sub-districts, the villages prepare proposals and submit them, village representatives decide collectively on these allocations, and they monitor them. In fact there are several stages of monitoring: the project facilitators, a group of NGOs and an association of journalists are monitoring how this money is spent. However, it is completely up to the village groups to decide on what proposals will be funded. There is competition built in here because there is not enough money to fund all of the proposals. This is a new way of doping business and, in my view, a very important way for empowerment, transparency and accountability.
A second example is the so-called Public Expenditure Tracking Survey. It started in Uganda, and now it's being done in many countries that we work in. If you look at this graph in Uganda, the red line is the amount that was supposedly dispersed per student to the schools for grants. We started doing surveys on what the Ugandans did with the support of the Bank (WB) in 1990 and found what was actually getting to the schools. They would go down to the schools, interview the schools and the teachers, and ask: "How much money did you actually receive?" And that's the blue line. They began doing these surveys, and as you can see, the figures started creeping up. The amount actually received started geting closer to the amount that was supposed to be dispersed. They changed the disbursement procedures, the internal reforms were important in this respect, as the money was dispersed directly to the schools rather than through the ministry. Every time there was a disbursement, they put it up on the school wall and in the newspaper. The citizen has been doing the monitoring. So, the procurement and disbursement procedures changed, but so did the monitoring and accountability procedures. The last survey of 1999 showed that about 95 percent of the money dispersed actually reached the schools.
A third example, which I particularly like, is the Chile's Internet-based procurement. Now, Mexico has also pioneered this approach. The idea here is the importance of e-government - I noticed there is a workshop on e-government today - and technology to reduce discretion and open up transparency and efficiency of public service delivery. In Chile, their program has all supplier companies registering, indicating their area of business; public agencies submit tenders through the Internet, automatic e-mail is sent to all companies that signed up in the selected area. Then there is online information on the name and position of the official in charge of that area, there is online information on the results, on who participated, what proposals were made, what scores were received, and who won the bid. So it is very transparent. Their plan was to move from 300 procurement specialists to 15 people managing an e-based procurement for all government purchases.
E-government is one example that I particularly like. It is now undergoing implementation in Mexico, as I have said, and other countries are moving in this direction, too. This is only one example; we actually have an e-government web site where we are trying to collect cases from the developing world. It is one of the many, many ways where technology can reduce discretion and improve transparency in public service delivery. Some places like India, for example, are way out in front on this initiative and many interesting things are happening there. Brazil is another example, and many other countries are picking up these lessons in the developing world.
So, finally, in sum, just to reiterate my messages, I think that the Bank believes in reforming institutions and thereby changing incentives. This is the real key to tackling corruption. Many institutions matter, multiple planning approaches are absolutely critical. Many groups, all of us in this room, have complementary roles. And we need to support each other. We really are all in this together, and we need to help and support each other in any way we can, because the work of everyone will be necessary so as to climb this mountain. The World BankĂ‚Â´s focus on governance, and on empowerment, transparency and accountability has had increased significance in the past five years. In my opinion, the Bank is truly a very different place than it was five years ago. And by working together we hope very much to make a difference. Thank you.
Thank you, Dr. Grey. Francois Werner is a former civil servant in the French Ministry of Finance, but now he serves the global Olympic movement. He is a special representative of the Ethics Commission of the International Olympic Committee, which has its headquarters in the Swiss city of Lausanne. Monsieur Werner has chosen as his topic The Efforts of the International Olympic Committee to Develop Ethics among the Members of the Olympic Family. Monsieur Werner, please.
First of all, thank you for organizing the conference in this beautiful city of Prague. Prague will host the session of the International Olympic Committee in 2003, and I hope it will be as well organized as this conference. Secondly, thank you for inviting me to speak about the efforts of the IOC against corruption. I see it as a kind of recognition for the work we are doing, and this sounds like a cheer to go on in this way. What happened to the IOC three years ago? The IOC had to face one of the toughest crises in its history. It wasn't the first one. Wars have canceled many Olympic games, so did boycotts, financial problems; all this has threatened the existence of the IOC in less than one century. Yet this was the first time that the problem was coming from the heart of the body, the members themselves. Several members were accused of bribery by the bidding city of Salt Lake City: scholarships, gifts, travel, and so on. These were indeed very serious accusations, which had major consequences in the fairness of the decision to give the games to a city, and also serious consequences on the image of the IOC regarding the Olympic ideals. What happened then? Many decisions were taken. First of all, ten members were expelled or resigned. Secondly, an ethics commission was created. This commission is independent of the IOC; the majority of its members come from outside of the IOC. There are members like Javier Perez de Cuellar, Robert Banante, Edwin Moses, the famous hurdler, and all those guys are working completely independently. The mission is to put together new rules, a kind of a code of conduct inside the IOC. And then, a code of ethics is now in force. Also, the Olympic Charter was modified to avoid contacts between members and bidding cities. What kinds of results have been reached by this work?
I dare to say that today, scholarships, travel and gifts have disappeared. Of course, the decision to give the Olympic games to a city has huge consequences in terms of money. This decision is taken by individuals who are entirely free to vote for one city or another. Those individuals, fortunately, are no more the wealthy club of aristocrats it used to be. There exists a real danger, of course. The new rules are avoiding the exploitation of the weaknesses of some members by candidate cities, which are ready to do anything to win. Even if this is not acceptable, it is understandable. Those habits have disappeared today. And, incidentally, what was the real effect of this on the final, secret vote? With the end of the publicly revealed trouble, the IOC could have considered the job finished. However, it was necessary and useful to keep working and to go further. This is the opinion, the decision of the new IOC president Mr. Jacques Rogge.
This decision was necessary because certain people, if not some IOC members directly, could be interested in building more organized, more planned, more secret circuits of corruption. Even if these types of activities have never been proven in the IOC, the risk may exist. This time we need to prevent it. Within the next few months, we need to strengthen the action undertaken on this topic. Secondly, it was useful to go further because inside and outside the IOC, the ethical work was rather a new concept, as many people had still been living on the comfortable idea that Coubertain's ideal was sufficient to take the most appropriate decision or attitude, whatever the situation may be. Of course, this is not true anymore. People have changed and things are much more complex nowadays. Today we are working with the following objectives: The first objective is to assure compliance with the existing rules, with educational programs and with an ever greater transparency in the process of decision-making. For example, we are currently working on the problem of conflict of interest, which has never been treated inside the IOC, and this will lead to a new text in a few months. The second objective is to detail and to disseminate those rules. In dealing with more and more situations and institutions, the commission has been issuing more and more texts. For example, the most recent texts were devoted to such topics as the candidate cities and the electoral process for the presidency of the IOC.
As you see, we still have much to do, and I am happy to be here, learning from the experience of other people and situations. In conclusion, I would like to finish on two optimistic reflections. Firstly, the IOC itself earns a lot of money and everybody knows this. This fact has sometimes been criticized. What you need to know is that 93 percent of this money goes back into sport. Many national Olympic committees and many international federations of sports could not live without those negotiated sponsorship contracts. If the IOC likes money, this is not only for its own living standards; this is mainly for this last-mentioned reason. Secondly, the way of thinking towards transparency has been changed. Sometimes it is very comfortable for losing cities to explain their defeat by suggesting that the vote was spiced. The games are not for sale. It is good to say this and even better to prove it, and this is our ambition. Thank you.
Thank you. Like you, Marie-Noelle Patterson is a native of France, but for the last twenty years she has lived in the Pacific region, more specifically in Vanuatu, the former French-British condominium of British Hebrides. Mrs. Patterson has a number of academic degrees and has worked in state institutions in several countries, as well as in private business. At present, she assists a new agency in her adopted homeland, the Vanuatu Maritime Authority, but her talk will draw on her experience as Vanuatu's first ombudswoman. She has entitled her message "How did an ombudswoman in a tiny state like Vanuatu gain international recognition". Mrs. Patterson, please.
Good morning, all distinguished guests. Good morning, all participants and particularly all the friends from the Pacific who have traveled such a long way. Thanks to the organizers for having invited a representative of such a small country as Vanuatu on the podium. Most of you have probably never heard of Vanuatu and probably have no idea where it is, but as my 9-year old son says, big countries are like small countries, only bigger. Human nature at its best and at its worst is with us everywhere. I'm lucky to live in one of the South Pacific's most beautiful island archipelagos. And I would say in one of the best-kept secrets in the world, with a population of 200,000 inhabitants, no pollution, not one single traffic light in the country, beautiful beaches, unspoiled tropical countryside. I cannot imagine what any of you here today would have to do to make me move from where I live to where you live. That concludes the happy part of my speech. And as with all countries, there are two sides to Vanuatu. I would not be here today if this was not true.
For nearly 15 years after Vanuatu's independence from Britain and France in 1980, there was no ombudsman as required by the constitution. In 1994, I was appointed as the first ombudsman of the republic, and during the next five years, I issued more than 70 public reports reporting, implicating elected leaders and other officials in a wide range of abuses and serious crimes. Free media endured a very difficult time during the early years of the independence, especially political interference, and there was little else in the way of other effective checks and balances. This was coupled with the prevailing traditional view that it was improper to publicly criticize big men or leaders. These public reports came as quite a shock. The subject matter of my public reports was quite varied, and what made it more dramatic - not only in Vanuatu, but in the Pacific region as a whole - was that invariably cabinet ministers and prime ministers were involved. These leaders issued illegal reserve bank guarantees representing twice the annual budget, sold passports, plundered disaster relief funds, sold government assets and housing cheaply to themselves, robbed the nation's pension fund to award themselves, paid themselves illegal compensations from public funds for alleged political grievances, and so on.
It is often said that corruption is a Pacific drug and perhaps corruption as blatant as this would not happened in a developed Western country. However, let's not fool ourselves - the people from where I live are no different from people anywhere else. After all, what's the difference from what I described happening in Vanuatu and the more cleverly conceived and cynical antics of Chirac, Kohl, de Gaulle, Estrada, Mobutu, Fujimori, Suharto, Dumas, and the like. Another example of hypocrisy is the way that the highly topical issue of money laundering is being handled worldwide. The South Pacific finance centers or tax havens are firmly in the sight of the OECD for the past few years. Yet we all know, including the OECD officials, that money launderers, Russian Mafia, despotic heads of state, drug dealers and terrorists, as well as legitimate Western corporations could not do what they do without the connivance of large international financial institutions based in London, New York, Tel Aviv, Paris and other Western cities. If the majority of banks in the developed OECD member countries does not comply with their own reporting rules, can we really be surprised that smaller nations jump up and down and shout far when they get leaned on? If the West wants the developing nations to follow its example, then please, give us a good example to follow!
I remember years ago hearing someone saying: "If you want to be seen, stand up, if you want to be heard, speak up, and if you want to be liked, shut up." We live in a world of politically correct sound bites and mind numbing jargon of one sort or another. Bribes and kickbacks are nowadays known as facilitation payments, corrupt countries are known as captured countries, it is now unfashionable to name names and to call a spade a spade. So if I had restricted myself to diplomatically measured phrases, I would have achieved nothing. It was suggested today that my speech be focused on how did an ombudsman of such a small state as Vanuatu achieve international recognition. By not being diplomatic, and not being put off by bullying tactics! By not being put off by bullying tactics of those implicated in my public reports, by ignoring the insults to my family and me made by leaders in parliament, on television, radio and in newspapers. By refusing to be intimidated by even such an extreme action as an assassination plot such as was planned against me by a government minister at that time.
However, to surrender to these fears only makes it easier for evil people to influence and control how we all live. I was also encouraged from the beginning by very widespread support from the general public and the civil society, by the churches, the chiefs, and by all the ordinary people, almost all of them, except for the political supports. "Be careful not to offend people", I was often told. However, I say we need to be prepared to offend people more. Surely, I am not alone in having discovered that corrupt people have a thicker skin that almost any creature alive. During my mandate, the office also underwent a series of attacks through the court. In November 1996, the former chief minister Lemann sued the ombudsman, alleging constitutional breaches. The case finally ended in the appeals court, and gave him one final opportunity to provide answers, as required by the ombudsman, and he finally complied. In March 1997, Air Vanuatu, owned by the government, applied to stop the ombudsman from investigating alleged leadership breaches. The court rejected the argument that the ombudsman's act was not constitutional, refused the application, and we resumed our investigation. In July 1997, the minister's cabinet petitioned the president to dismiss me as the ombudsman. The ombudsman office applied for an order declaring the decision illegal and prohibiting further steps. In October 1997, the court ruled the cabinet's decision unlawful and contrary to the rule of law. That was the first time that an executive decision had been both challenged and struck down in Vanuatu Supreme Court. In July 1997, the ombudsman filed court claims for return of compensation payment of tens of thousands of dollars to three ministers and 23 MPs, nearly half of the parliament. The case came to court this month. In November 1997, the Vanuatu parliament repealed the Ombudsman Act. Virtually all MPs voting in favor had been implicated for corruption and misuse of power in report. The president refused and sent the bill to Supreme Court for constitutional opinion. The president later dissolved the parliament, citing corruption as a reason. The appeals court upheld the decision and a new act was eventually passed. My application for a second term was not accepted.
Vanuatu and many other small Pacific countries are not so different from most other countries in that we find it almost impossible to accept the idea that failures are brought to court. We have had no successful prosecution for the simplest reason of all - that no prosecution had been attempted. Our most corrupt leaders are still in power, which simply serves to undermine people's faith in justice. Over the last few years, while the Vanuatu government has been carrying out comprehensive programs supported by the Asian Development Bank, little or nothing has been done to strengthen the public prosecutor office and police investigative procedures. However, the positive result of my work as an ombudsman is that at least the information is in the public domain. Top leaders have been exposed and numerous illegal schemes have been exposed, which in itself acts as a deterrent or as a warning. There is stronger free media, and because of that it is now more difficult to abuse the public trust or the public purse. However, until our children in every country are taught a doctrine of personal responsibility and self-discipline, and self-indulgent, spoiled parents stop raising self-indulgent and spoiled children, it is difficult to be as optimistic as one would like to be.
As an individual in this world it is difficult to think that we can make a difference. Mergers of companies and countries into increasingly larger blocs can make us feel helpless as individuals. It feels less and less like the individual can actually influence anything, let alone change it. We shake our heads in dismay when we hear that behind the scenes, big oil and mineral companies control the policy and even choose the leaders of many underdeveloped or developing countries. Yet, is it not true that the same has been done in the United States, only in a more subtle way? When we look at the big picture today, what do we see? We are consuming four barrels of oil for every new one discovered. If it is true that 50 percent of the world's population lives on less than $2 a day and 80 percent of the population has never made a phone call, then the pack of cards containing our priorities really does need to be reshuffled. Small actions in our big world can and do make a difference, which is just as well, because it is the only thing most of us have the opportunity to do. If an ordinary professional woman and a mother like me can help to change one tiny part of the world in a positive way, so can the thousands of dedicated people who, like me, want to see a better world for their children. Thank you for your attention.
Thank you, Mrs. Patterson. Our last speaker this morning is Mrs. Liu Liying. She has had a long career in various legal, security, control and supervision bodies in the People's Republic of China, both in the apparatus of the Communist Party and in the state administration. She has spent the larger part of her working life in the public security bureau in the city of Shenyang in the Liaoning province. Since 1979, she has been working in central organs in Peking, rising to her present position of deputy chairwoman of the Central Commission of Discipline Inspection of the Communist Party of China and senior commissioner at the Ministry of Supervision in the rank of a minister. Mrs. Liu will speak on combing prosecution and prevention to cure the disease of corruption, and she will address us in Chinese. So, please use your earphones. Madam, the floor is yours.
Mr. Chairman, ladies and gentlemen, allow me on behalf of the Chinese delegation and on my own to salute the 10th International Anti-Corruption Conference. Today, I will be speaking about the ways how we seek the roots of corruption and how we strive to combat corruption. This is the first anti-corruption conference held in the 21st century. We have met here, delegates and friends, to discuss anti-corruption activities in our own countries and to find a basis for new collaboration, which is of great importance. I am pleased to be able to explain how the Chinese government tries to contain corruption.
First of all, we keep seeking methods that would be adequate for the situation in China. At present, we are concentrating on two features in particular, as China is at the long-term primary stage of socialism and also in the transitional period from central economy to market economy. However, the system is far from being perfect in all spheres because the distorted thinking of feudalism lasting for a thousand years still prevails. Economic development should therefore become our most important task, and combating corruption is one of the elements of this task. Also, when trying to cut corruption, we must try to look for its roots. The solution should be comprehensive, and therefore we should cut the exiting corruption, while at the same time focusing on those bodies and authorities and their weaklings that are most subject to corruption. We must renew the structure of the system, and that's how we can stop the machinery of the corruption. Secondly, we must develop further our anti-corruption activities. Since corruption has its specific trades, we have launched the following procedures - the leading officials must be disciplined and honest, and they must become models for others.
Since 1993 we have been introducing various measures for the conduct of officials and issued instructions on their honest work. This year, in accordance with the demands of the market economy, we issued further instructions on the discipline of officials. All officials must report their property, and if they are involved in other activities or other jobs, they must report these as well. Moreover, we are investigating cases where law is being violated; in this connection, we are focusing on party authorities, the executive, the judiciary, the economic management and the leading officials on the regional level. In the recent years we have revealed many cases of law violation in the Liaoning province. One of the leading officials was accepting bribes and the deputy chairman of the standing committee of the parliament was also violating our legislation. The mayor of Shenyang, Juan Sing, also committed a breach of law. Especially in the city of Sian-men, there were big corruption affairs. The culprits were punished, which fact was very stimulating for the people, as it demonstrated the determination of the Chinese government to tackle corruption.
We also want to do away with some bad habits in public offices. What do we mean by bad habits? By that we mean the instances when civil servants or company employees wish to enrich themselves individually or in groups. Consequently, as a toll of sorts, they prevent the exercise of state power and damage the public interest by their activities. There can also be much abuse in the medical services and so we try to stimulate people to criticize the work of public officials. Also, we want to focus on the sources of corruption and eliminate them. This year, we have concentrated on the influence of money on individuals; we want to restructure the mechanisms and systems where all these vices are still alive, where they proliferate. We have been concentrating on sectored budgets, we have been developing democratization in work places, we have also developed competition, and in doing so we have been very successful. What then are the trends of this struggle against corruption?
In China, we are not only in the process of solving the existing cases, but we are now concentrating on prevention. In the future, we plan to apply various measures to reform public administration. Combating corruption will be one of our main tasks, as we wish to uproot corruption while developing democracy. In this connection, we are interested also in the opinions of the people. The measures against corruption will be very stringent, very consistent. We want to establish new structures and intensify reforms that will destroy the soil for corruption. We want to consolidate the education of leading public officials so that they serve the people. For this, they must raise their cultural and moral profiles. We want to improve the coordination among the various sectors of anti-corruption forces, to use our cultural education, legislation and discipline in this struggle, and to see governance and cultural capacities on all levels. We are going to strengthen further the struggle against corruption.
Ladies and gentlemen, the world is one interconnected community and the containment of corruption is our common task. In the new century, the Chinese government will combat corruption just like in the past. Thanks to our bilateral and multilateral contacts, we wish to consolidate further international cooperation and uproot corruption together. I wish this conference much success. Thank you.
Thank you, Madam Liu. Ladies and gentlemen, I am afraid we have only a very short space for discussion, I would say about fifteen minutes. So I would ask you to present your questions in a succinct way. I shall try to give you a good example and use the privilege of the Chair to put the first question to members of the panel. I would like to address my question to judge Garzon and Dr. Gray. I know I shall be simplifying the question, but that is the privilege of journalists.
I think I have discovered in judge Garzon's keynote address a stress on legal procedures, on formal procedures in the fight against corruption. Dr. Gray, on the other hand, has put the stress on, let's say, informal procedures. She has said that the priority is not the legal framework, let's put it that way. I would like them to comment on each other's theses.
I feel like I am on a Ph.D. exam. It is absolutely critical to have good laws in place. The point here is that this is only the beginning. All of us have seen so many laws; it is so easy to draft a law and even to pass it, and not have any impact at all on the ground. I think it is dangerous to look at this question as one of law enforcement per se. I really think it is a question of changing the underlying rules of the game, often - though not always - embodied in law. Sometimes it is embodied in organizational procedures or simple norms in a society. However, changing the rules of the game that people really understand and that motivate them to action is much, much harder than rewriting a law, although the law may be a necessary but not sufficient condition.
Baltasar Garzon Real:
I believe that both aspects are mutually compatible and equally necessary. On the one hand, we certainly need the right laws, but without the will to implement these laws, we will see further injustice and increase in corruption. International norms, international standards do exist, however, as I have mentioned in my presentation, the judges are not always willing to apply these standards. The same is true about politicians; even the best law can be transgressed or avoided. I think that it is very important to raise the awareness of the people, to change their attitudes. The fact is that sometimes we see developments such as those recently in Spain, when the citizens and society at large are now becoming more involved in the struggle against corruption. People have come to believe now that corruption is not as serious a problem as it was in the past, which means that the struggle has been successful. So the government has been successful in choosing and using its methods of work. Nevertheless, certainly you first have to have the right legislation in place including sanctions.
If that were not the case I would invite questions from the floor. Please identify yourselves and tell us to whom your question is addressed particularly. Microphones are in the corridors.
Thank you, Mr. Chairman. I am Dr. She Asafo from Cameroon. I am a state inspector and a member of the National Observatory for the Fight Against Corruption in Cameroon. My question is directed to Mrs. Gray from the World Bank because in her endeavor to fight corruption the World Bank seems to lay emphasis on reforming institutions, which is a very good idea. However, I think that the World Bank is forgetting one important element in the fight against corruption in any country. The basic rule, the basic mandate of an audit institution in any country is to protect public funds, to protect the common good, to protect public property so that public funds could be managed effectively, economically, efficiently. But what we have been realizing day in day out is that when the World Bank comes in, it doesn't even want to know whether or not a supreme audit institution exists. Instead, it makes surveys that don't even take into account the reports presented by the auditor general, which can be very vital in determining what their position can be vis a vis one aspect or another. So what I would like to know now is what the World Bank is doing to strengthen this very important institution whose role in promoting accountability cannot be underestimated. Thank you.
I thank you very much for raising this incredibly important question. We are very aware, actually, of the importance of supreme audit organizations and the importance of empowering them to do their job. I think this is one of the evidences of a major change in our thinking. Indeed, five to ten years ago, and you are absolutely right, the Bank didn't pay much attention to the audit reports done in the country. I would be very surprised if in many countries that was the case now because there is a huge emphasis on public financial management now and on domestic institutions for public financial management. In fact, we have just done a review of all the HIPIC countries and their ability to tract funds, monitor funds, audit funds, leading very much to an emphasis on building institutions in those countries to do that. So I agree one hundred percent that supporting the supreme audit institutions is absolutely critical. I think the Bank has fallen short on that in the past, but the thinking has changed a lot. We work with INTOSAI, the international group that pulls these organizations together around the world, and this issue is high on the agenda. I am very glad that you have raised this question.
Thank you. I shall now take the question from over there, the gentleman on the right-hand side.
This question is addressed to any of the panel members. The question is: Does democratic government allow itself more possibilities of corruption? What institutional changes are to be made in order to purify democracy and the election process? Thank you.
Baltasar Garzon Real:
Well, I believe that there is no reason why a democratic government would be more prone to corruption than another government. On the contrary, in democratic society it is possible to oppose a government and it can be changed, provided electoral procedures are in place. In this case you can even bring charges of criminal offences against cabinet ministers. Certainly, legislation is very important in order to prevent corruption cases during election campaigns. Today we have heard of some such cases, certainly in Western democracies we find cases of this kind, but also many models of solution.
There is a list of procedures that should be in place, there is a list of things that should be avoided, ways political parties should behave, ways they can accept funds during election campaigns. Of course, much depends on political will. Political parties are funded from sources that are sometimes less transparent than at other times. In this sense, there is a difference between countries; it very much depends also on the electorate, on the situation in the individual countries. We have seen certain cases of insufficient transparency in the funding of political parties simply because the legislation was not in place. The funding of political parties must be done in compliance with certain rules, because, of course, parties are sponsored, they receive sponsorship gifts, they also receive donations from the private sector. Therefore it is very important to have the right legislation in place, so that we can effectively regulate the ways the political parties obtain finances. I think that this is at least a tendency in every country; this is where all countries are perhaps vulnerable. It suffices to look at those cases of corruption that are currently being investigated in the world. Eighty percent of all those cases involve political parties.
One more question and one brief answer. The gentleman over there will pose the last question.
Thank you. I will pose the question to Dr. Gray. The first question concerns an amendment of your regulation so that the World Bank may work more closely with parliaments. You have mentioned the failure of the World Bank program trying to push for more accountability within the government relations in the work that we are talking about. So, perhaps it is time for you to start working closely with parliaments. I think that in this regard you must amend your regulation. Secondly, I would like to mention a question that should be raised because at every anti-corruption conference I have attended in the past years we were talking about the international convention on the access to corrupt money in the banking system. Perhaps in this conference we can look into the start of having this kind of international convention. This, in my opinion, could help the poor nations to prevent corrupt money from flowing out of the country and be a very effective way of curbing corruption in those countries. Thank you very much.
Thank you for your question about the World Bank needing to do more to support parliaments. Also you have suggested that its regulations should be changed. I must say I agree with the point that we really do need to look at ways to strengthen parliaments and we are working on it. We are actually doing a review of the Bank's programs and its effects on parliaments. The World Bank Institute has a very large program of capacity-building for parliaments, and the parliamentarians themselves are developing a network for mutual support. This is an area that has not received as much attention in the 1990s as it deserves and that needs a lot more focus. The Bank has its own Charter and we lend to governments. I don't know the legal details on how feasible this would be. I think that is one thing we need to look into. Certainly necessary is more support, more capacity-building and more attention to the important role as a watchdog and another check on behavior. The important role of parliaments is something that we very much agree with.
As to your point on money laundering I might say this. In one of the sessions yesterday there was a very interesting money-laundering discussion on how much progress has been made in using these new money-laundering principles to go after the ill-gotten games of some government leaders in the past, and my impression is that the effectiveness is increasing dramatically. I am not an expert in this area but you may want to go to some of the sessions today, I think there is another one on money-laundering. I was quite positively impressed by the discussion yesterday on that topic.
Thank you for your answer and trailer for another ongoing session or workshop. Ladies and gentlemen, I must bring this plenary session to a conclusion, our time has run out. I know this is disappointing for many of you because you would have many more questions. I would like to tell you that at 10:45 there will be a press conference in Room 404 on the fourth floor, in which our panelists will answer questions from journalists. Perhaps those of you who are interested in either listening or putting questions yourselves are invited to that press conference at 10:45. For the time being, I would like to thank all our participants. See you at another conference or another venue. Thank you for your participation in this conference.