Global Forum on Fighting Corruption and Safeguarding Integrity II: Final Declaration Annex
Reports of the Workshops
(The recommendations in the texts reflect views expressed by the experts during the workshops. They have no formal status.)
Workshop I: Integrity and governance
Sub-Session 1: Political Financing and Integrity
Discussion existed among the participants about the need for an incentive which ties the amount of public subsidies to the success of grassroots-financing in terms of fundraising efforts among the general public (matching funds, partial reimbursement of specified expenses, tax credits, etc.).
Minimum standards for transparency are:
Good practices are:
Sub-Session 2: Integrity and the Police
The focus of this workshop was upon efforts to establish and maintain police forces characterized by high levels of integrity and low levels of corruption and misconduct. Six presentations covered experiences in Poland, Hungary, South Africa and Northern Ireland -- all states currently undergoing significant transformation. Although there are particular problems associated with the democratization of policing in such societies, it is clear that all societies may be considered, in one sense, as being in transition. Consequently, issues of police integrity and legitimacy are of concern to all as the integrity of the police and the integrity of the state are closely linked.
Two fundamental observations underpinned the discussions. First, it was argued and accepted that misconduct and corruption by police officers are pervasive (found in all jurisdictions), continuing (likely to be found at all times) and not bounded by rank. Second, it was agreed that effective policing is based on public confidence and trust. Maintaining such trust is dependent on full and effective action against misconduct. Of central concern for the workshop was the issue of what form efforts to tackle corruption and misconduct should take. Examples from the workshop indicated, either through relative absence (Poland, Hungary), or presence (South Africa, Northern Ireland), that some form of independent, external oversight of the police is vital (particularly in societies where trust in police is especially low). Such external review is important for two reasons. First, it can provide an environment in which investigation can take place free from professional and political influence. Second, it has a vital symbolic role in fostering public trust in the police. Different models of external oversight were discussed, the most radical model of which was that now existing in Northern Ireland. There a newly established office of Police Ombudsman has powers to investigate all complaints made to police, supported in law and made possible by a very high level of financial support. An effective system of scrutiny needs such financial support in order to be able to respond quickly and comprehensively to complaints.
The workshop explored the sources of police misconduct and corruption, and considered the sociopolitical and legal environment, human rights and organizational issues. Included within this were such matters as the legal basis for investigating misconduct, the nature and extent of human rights and ethics training, and such organizational issues as recruitment, selection and police pay and conditions of work. Poor pay and conditions were held to be an important factor, particularly where police officers are paid salaries below the poverty line. However, it was generally agreed that much or even more could be achieved by careful selection and recruitment procedures, and through ongoing training, to instill professional values, and to develop skills which protect against misconduct. Thus, in addition to strong, independent, retrospective scrutiny, it was agreed that considerable responsibility must remain with the police organization for proactive action against misconduct. Police leadership, it was accepted, must also be at the core of tackling corruption. Creating the right environment to prevent misconduct is a core management responsibility for the police. There are concerns, though there is no evidence as yet from Northern Ireland, that removing the entire responsibility for investigating complaints from the police might lead to abrogation of responsibility by senior police managers for tackling misconduct and corruption.
The contributors to the workshop talked of the importance of establishing a complementary or symbiotic relationship between proactive prevention by the police organization, and internal and external means of investigation and oversight. There is clearly no single model for fostering integrity and tackling misconduct and corruption in policing. The challenge is to find a balance between 'internal' and 'external' means that are appropriate to the political and cultural environment in which they have to operate.
Sub-Session 3: Integrity and Public Administration
Programs to safeguard integrity of public officials have focused on two broad approaches: a compliance-based approach and a values-based approach. The compliance approach focuses primarily on regulation, inspection, sanction, and conformity to prescribed standards -- the moral minimum. The emphasis is on what officials should not do. The values-based approach is concerned with inculcating rules, principles and values through ethics education and by cultivating the officials' capacity for ethical judgement -- the moral maximum. This approach relies on the moral capacity of officials and focuses on the notion of responsibility. Both approaches are to be found in most jurisdictions with the crucial question being about the weighting and the balance of the two approaches. An integrated approach combines both orientations: to prevent corruption and to promote integrity the desirable way forward is to balance control systems with policies to nurture responsibility within the official culture, with a focus on rules whenever necessary and a focus on values, guidance and dialogue wherever and whenever possible.
During the sub-session the City of Amsterdam presented an instructive case study of its integrity project 'Correct or Corrupt'. The sub-session was also introduced to a number of instruments that might assist public organizations in the promotion of integrity in public administration, via a multimedia program focused on encouraging officials to discuss moral choices; an instrument for screening the personal integrity of new staff; an instrument for measuring integrity in an organization's culture and a board-game for making officials more aware of moral dilemmas.
The introduction and maintenance of program for ethical management is not costless. The direct 'upfront' cost to the taxpayer must, however, be weighed against the large benefits to the community that accrue from successful program for preventing corruption and promoting integrity.
The sub-session recommends:
Sub-Session 4: Transparency and Integrity in Government
We had a productive and stimulating session with delegates from all continents and a forum of four experts. Bience Gawanas (Namibia Public Prosecutor) stressed the importance of lifting the veil on secrecy, and of combating ignorance of the functioning of government and the silence born of fear of victimization. Mick Andersen told of his experiences as an officially honored whistleblower and stressed that organizations must focus on the message and not on the messenger. In his role as an international journalist he described the role whistleblowers play in providing stories. Abha Joshi (a human rights lawyer) made clear that information is essential to combat poverty and explained how transparency helps to deter financial misconduct in government and to protect public health and the environment. Maurice Frankel (an expert on transparency) made clear that corruption is not a question of cultural determination by giving examples of corruption in western countries. He demonstrated that the right to public information does not weaken government but builds trust between government and the people. Mark Sovens (professor of Utrecht University) led interactive case studies on an opinionated civil servant, a critical general, a corrupt Vice-President in an international agency and a whistleblower who discloses information to Parliament after having exhausted internal channels. These cases showed the dilemmas that civil servants can face and delegates' votes on the appropriate courses of action have informed these recommendations:
Provide the public with information and with a legal right of access to information. Give reasons for official decisions and restrict access to information only when the wider public interest clearly demands:
Protect and promote integrity by providing safe alternatives to silence inside and outside every organization for staff to raise genuine and reasonable suspicions about corruption and misconduct:
Provide access to bodies (whether ombudsmen or the courts) to oversee and enforce rights on freedom of information and whistleblowing, Public authorities should also recognize the contribution of a free media, an independent judiciary, civil society and the public generally in deterring and detecting misconduct and corruption.
Sub-Session 5: Democracy and Integrity
(end Workshop I report)
(The recommendations in the texts reflect views expressed by the experts during the workshops. They have no formal status.)
Workshop II: Law Enforcement
National Integrity systems
Law and law enforcement
Assessment of anti-corruption policies
(end Workshop II report)
(The recommendations in the texts reflect views expressed by the experts during the workshops. They have no formal status.)
Workshop III: Customs
Participants were pleased to have an opportunity to contribute to such an event, whose basis is a fundamental dedication to promoting dignity, integrity, mutual respect, and fair competition. This occasion also allowed us to undertake careful analysis of a topic that has long occupied the attention of the international customs community.
Some 93 countries and 7 international organizations took part in the Customs expert workshop of the Second Global Forum. The Customs workshop convened on May 28, and concluded its work on May 30, 2001. It consisted of three plenary meetings and two concurrent sessions created to examine specific areas, including anti-corruption efforts at the national and international level.
The World Customs Organization (WCO) has been a leader in the fight against corruption, having placed the issue of integrity on its agenda over a decade ago. The 1993 Arusha Declaration further defined these integrity principles. The WCO has developed a variety of tools and approaches to assist member administrations in taking practical steps to build integrity and combat corruption.
The international customs community and WCO have already made a tremendous contribution to the Global Forum. Collective vision, common purpose, and cooperation have always been the guiding stars that made the WCO what it is today and successful collaboration between national administrations possible. We have created a unique culture of mutual respect, dignity, and cooperation among customs administrations of over 150 countries.
The Customs workshop sought to review progress, identify new challenges, and exchange experience. Throughout the session, five key themes were identified on which deliberations focused: (1) that Customs is a microcosm of society; (2) that integrity is a shared issue for both the public and private sector; (3) that Customs recognizes the problem and is taking steps to manage the issue at the national and international level; (4) that there is a need to ensure that solutions promoting integrity within Customs are compatible with prevailing culture, socioeconomic, and political circumstances; (5) that Customs can offer some positive lessons for other areas of public administration.
The first theme was that Customs is a microcosm of society: a smaller, similar version of society as a whole. Customs' role in society -- the collector of revenue and the primary border protection agency -- makes it vulnerable to transnational criminality. However, it is uncommon to see corruption in Customs and not in other sectors of society.
One factor to consider is that organized crime increasingly targets customs officers and operations as a vehicle for carrying out its illegal activity. The international customs community recognizes the threat that organized crime poses at the national and international level and commits itself to take the strongest possible measures to counter this emerging challenge to customs integrity.
Another factor is their strategic and highly visible role in world trade and tourism. Customs is responsible for managing substantial flows of goods and people on a daily basis. Our actions in relation to these people will affect our countries as a whole. Another factor is that customs administrations are also responsible for overseeing a wide range of complex government regulations. Many unethical people try to bypass these regulations and taxes in order to save either themselves or someone else time and money.
Customs also has an unavoidably close working relationship with the trade community. In order to discharge its function effectively, Customs has within its purview a wide array of discretionary powers. The combination of these factors makes the problem of solving corruption difficult. Also, customs officers -- those on whom the country relies to manage collection, and enforcement functions -- often have extremely low salaries compared to what people are able to acquire through illegal activities. Lastly, customs administrations are vulnerable because of their frequent need to work in highly decentralized locations such as cargo sheds, remote border posts, and seaports, all of which make direct supervision and accountability difficult to maintain. Customs administrations are therefore particularly vulnerable to corruption.
Participants recognized that corruption does not exist in only one part of the world. We have come to realize that corruption exists everywhere, in developed as well as developing countries, in both public and private sectors. Corruption knows no borders and recognizes no social, economic or cultural distinctions. It has invaded every aspect of life, not just Customs, and each of us must fight against it as long and as hard, and in as many ways, as possible. Key to such efforts are education and the creation of "integrity coalitions", which respectively impart values and mobilize relevant actors to counter societal forces that, left unchecked, would foster an environment In which corruption would thrive.
A number of country presentations made clear this recognition. In fact, every action taken by a customs administration to address integrity is grounded in a realization that no organization is immune and that positive, proactive steps are required to prevent corruption from gaining a foothold.
Related to the recognition of the pervasive nature of corruption, the second theme put forward during the Customs workshop was the idea that integrity is a shared issue for both the public and private sector. The majority of corrupt practices between the international trade community and Customs occur in the context of a border transaction. These transactions inherently involve two parties and both sides need to collaborate and search for solutions to corruption in the global trade arena. This is particularly important given the increasing volume and complexity of trade transactions.
Because both sides are recognized as parties to the problem, each must equally be part of the solution. Customs administrations recognize and applaud the efforts of those traders who are prepared to allocate significant resources to ensure compliance -- such initiatives should be promoted and encouraged. Nevertheless, some traders are willing to participate in corrupt practices because of the short-term benefits they receive, even though they know that corruption is ultimately detrimental to everyone involved. Only a partnership can produce real solutions that address the problem.
In light of these observations, we recommend that every government ensure optimal cooperation between anti-corruption agencies. In addition, Customs and the private sector should establish mechanisms to examine the problem of corrupt practices on tooth sides and develop practical, sustainable solutions. We also recommend that the WCO continue to work with the International Chamber of Commerce (ICC) and other private sector organizations to establish leadership in this area and to identify further opportunities for Customs and trade community cooperation. The development and maintenance of a sound, cooperative relationship between customs administrations and the private sector is a necessary element of any national anti-corruption strategy. However, there was a cautionary note about avoiding "state capture", or having external actors influence Customs in a way that could compromise, or be perceived as compromising, its ability to perform its mission impartially and objectively.
The third theme discussed was that Customs recognizes the necessity for integrity and the negative effects of corruption, and is taking steps to manage the issue at the national, regional and international level. While we acknowledge that Customs is a reflection of society and that corruption is a shared problem, the customs community recognizes its responsibility to devise effective anti-corruption mechanisms. Instrumental in resolving these difficulties is a dedication to internal reform. Customs began examining this issue some time ago and has already undertaken significant actions to enhance integrity within individual administrations. These initiatives have provided a well-developed framework for an effective international anticorruption strategy within Customs. National administrations now need support from their respective governments, the business community, and civil society in order to implement the major elements of this framework. Also critical in this is the vital role these actors play in ensuring translation of principles into concrete, measurable actions.
Although the WCO has provided high level anti-corruption strategies, work has not been restricted to the international level. Realistic steps have also been taken elsewhere. Customs administrations have created regional action plans and are sharing experiences. Looking back to country presentations, we saw several best practices, which will be available as an appendix to the written report of the Customs workshop. Examples were also shared from the Asia-Pacific Economic Cooperation (APEC) forum; the Commonwealth of Independent States (CIS); the Caribbean, through the Caribbean Customs Law Enforcement Council (CCLEC); and South Pacific, through the Oceania Customs Organization (OCO). However, there is still a need for continued attention and increased support to provide customs administrations with the resources necessary to implement integrity programs that attack the systemic causes of corruption.
The fourth theme addressed the need to ensure that solutions and mechanisms for promoting integrity within customs services are compatible with existing legislative authorities, and cultural, socio-economic, and political circumstances. These solutions need to be periodically reviewed to ensure they remain relevant to changing conditions in the society in which they operate. The Customs community has a demonstrated commitment to eliminating all forms of corruption. But, by finding solutions compatible to a specific area, we are acknowledging that there are various underlying causes of corruption. The strategies that are selected must, therefore, deal with these causes.
Some participants noted that a developed country's "practical" solution for dealing with integrity may be unrealistic for a developing one. Countries can be at completely different starting points. One size does not fit all. The Arusha Declaration is clear about what is required, yet is not prescriptive in its calling for customs administrations to develop and implement appropriate solutions
This conclusion is also central to the proposed process for Integrity Self-Assessment, Sharing of Best Practices and Peer Review and Monitoring of integrity standards, which the WCO unveiled during this Forum. This scheme is based on the 12 elements of the Arusha Declaration. It involves Member customs administrations agreeing to participate in a voluntary system of self and mutual assessment against a series of minimum standards or recommendations derived from the Arusha elements. This process is designed to identify and share what works rather than uncover cases of non-compliance, and could include benchmarking against best practices. Finally, it will include a reasonable period of time in which participating customs services can work to Implement solutions that meet the minimum standards.
In light of these conclusions and observations, we recommend that the Global Forum note the proposed peer review and monitoring concept outlined by the WCO. We also encourage all members of the international customs community to actively support and participate in this process when it commences. We must continue to support efforts to bolster integrity for years to come.
The final theme was a recognition that customs services have the clear potential to serve as an example for other areas of public administration. Customs administrations might be able to make a greater contribution to public service, especially since they have experienced and successfully dealt with problems that may be new to other agencies.
The best practice examples speak to the cutting edge approach that customs administrations are taking on this issue, and their ability to contribute to efforts that might be undertaken by other public agencies.
Beyond these themes, the participants discussed other ideas spurred by the various presentations. Delegates discussed the usefulness of a United Nations convention on corruption. The Customs workshop concluded that it fully supported the negotiation of such an instrument.
With regard to its content, participants agreed that the proposed convention must be positive in its focus and scope and give equal attention to prevention and criminalization.
Secondly, the group asserted that the convention should focus on addressing the underlying causes of corruption. The group felt that the agreement should include an acknowledgement of the role that both the public and private sectors play in any corrupt transaction and treat each in an appropriate manner. The convention then should provide for meaningful incentives for compliance and appropriate sanctions for non-compliance.
Next, it needs to encourage cooperation between all sectors of society. The proposed convention needs to be clear and unambiguous in defining the concepts of integrity and corruption and in setting appropriate standards.
Finally, at a more detailed level, the convention must prohibit facilitation or service payments to government officers, as this is a major problem for many customs administrations.
After examining a number of strategies and approaches to fighting corruption in Customs, the workshop concluded that there are no quick or simple solutions. The problem cannot be addressed by only increasing supervision and accountability; achieving high levels of integrity in Customs required that we tackle the problem comprehensively -- through proactive and reactive measures.
We therefore recommend that the following strategies be used:
In short, for corruption to be eliminated from Customs, governments need to focus their attention and resources on the comprehensive reform and modernization of their customs administrations. Without such a holistic approach, attempts to eliminate corruption are likely to fail in the long term. "Quick-fix" solutions such as employing pre-shipment inspection companies to undertake some aspects of Customs work may appear attractive, but experience shows they rarely achieve their purported goals. Typically, these companies further erode the capacity of the organizations they are intended to assist.
We all know that customs administrations play a vital role in collecting government revenue, protecting the community from prohibited imports, facilitating trade, encouraging foreign investment, and contributing to national development. A trustworthy customs administration is an important national asset to everyone. Moreover, due to its high visibility and central role in the economic development of many countries, a reliable and credible customs service can demonstrate a nation's commitment to high moral principles in public administration. Indeed, it is an excellent advertisement for a nation's ability to make effective use of inward investment and development assistance funding.
Finally, we recommend that the Global Forum acknowledge the fact that national customs administrations are taking positive steps to deal with the issue of corruption, but that additional government commitment and investment are required to implement comprehensive integrity measures. Additionally, we recommend that the Forum call upon the World Customs Organization, regional customs organizations, national customs administrations, and the private sector to consider the various conclusions of this Customs workshop when they define their further work to maintain high quality and corruption-free customs administrations.
ANNEX (Workshop III)
BEST PRACTICE EXAMPLES
The participants at the Customs Workshop identified several examples of national, regional and international strategies that have proved particularly useful in the fight against corruption. These practices are provided as an appendix to the workshop report, as they may prove relevant to delegates from the other workshops.
(end Workshop III report)
Workshop IV: 'Corruption, Transition and Development'
Workshop 4 Corruption, Transition and Development has been held under the auspices of the Netherlands Minister for Development Cooperation, Ms. Eveline Herfkens. Dutch development cooperation aims to contribute to poverty reduction. International studies by the World Bank and others have shown these goals can only be attained by countries that are serious about establishing good governance. Corruption is a symptom of bad governance; it undermines democratic values and disturbs the development priorities of a country. Furthermore, corruption slows down sustainable economic growth by disrupting the distribution of scarce goods. Corruption exists everywhere but it does most harm in those areas where resources are already limited. Everyone must fight corruption, in the north as well as in the south, in the east as well as in the west.
However, fighting corruption can never be an isolated policy objective. It must always be an integral part of promoting a transparent and accountable government, of promoting good governance. Preventive legislation is important but it addresses only part of the problem. Fighting corruption requires engagement at all levels, from political leaders to the man and woman in the street, from the oldest to the youngest in society. Every member of society is accountable for his or her own contribution to fighting corruption. Public authorities, the private sector and civil society should complement and reinforce one another in a concerted effort to make public resource flows more transparent. After all, public funds are intended for the development of all citizens and not just for the benefit of one group.
Workshop 4 has been a very dynamic workshop. Where the other workshops had a more focused task, the participants of Workshop IV have been addressing very different topics. Ranging from the role of the media, the role of parliaments and supreme audit institutions, regional cooperation and local government to the role of the youth. These topics were chosen from the belief that good governance is a precondition for poverty reduction. The Workshop was meant to elaborate the belief that political commitment should lead to cooperation with all actors in society. International cooperation has an essential role to play in the fight against corruption.
But with or without cooperation: each government must take its own responsibility to strive for a corruption free society.
In the end corruption boils down to two dimensions: People and opportunity. All around the world people share the fact that corruption is human behavior. It is not a natural disaster or a technical problem. There is not much data available about the human drive to be corrupt, but from the available data one could draw the conclusion that about 90 percent of corruptive behavior has everything to do with the opportunity to be corrupt. For instance: when employees, caught embezzling from their own employer, were interviewed about the reason for their behavior they all gave the same explanation, namely "it was so easy": opportunity.
All eleven sub-sessions dealt with diminishing the opportunity for corruption one way or an other:
The workshop has led to an exchange of ideas on concrete methods and best practices that would make anti-corruption efforts both more efficient and effective.
Diminishing opportunities for corruption:
3. At local level:
2. At national level:
8. At national level:
9. At supra-national level:
10. At global level:
5. Under emergency rule:
4. Building in reduction in structural strategies:
1. By heightening chance of being exposed by media:
6. By public complaint:
7. By public participation and disclosure of information:
11. By making room for and involving the youth:
All these ideas can be grouped to 5 conclusions and recommendations:
First the hardware that will diminish the opportunity for corruption:
All government levels need a solid legal framework with clear rules about corruption so that it is clear what you can do and what not. And governments and institutions need funding and capacity for implementing the legal framework.
Workshop IV is convinced that to hand over a better world with less corruption and less poverty to the youth, these five priorities should be implemented.
(end Workshop IV report)
Workshop V: Government and the business sector
Sub-session Financial Reporting, Compliance Programmes Facilitating Payments Globalization.
The Workshop discussed a range of topics concerning the relations between governments and the business sector.
The OECD Convention
After hefty discussions it was formulated as follows: "As there is a consensus on having a holistic approach to corruption, then should there be equal attention paid simultaneously to
Consideration should be given to how petty corruption can be discouraged on the supply side by provisions in corporate codes of practice. However it would be a retrograde step to simply regard petty corruption or 'facilitating payments' as a necessary evil to oil the wheels of international trade while subsidizing the poverty line wages of minor civil servants in the developing world. Zero tolerance may not be a realistic objective in the near future, but the international community should continue to press for a bribe-free world."
By excluding the so-called petty corruption or facilitating payments from criminal sanctions probably, quite an effective loophole was constructed. Since the OECD Convention has become effective various functionaries from major multinational companies have approached their respective Justice officials to discuss existing business practices which have become illegal. When public prosecutors beforehand would 'promise' to business officials, certified accountants, or auditors that under certain conditions such (illegal) payments would not be prosecuted, then there will be the occasion for an enormous diversity in the so-called 34 member states of the OECD Convention against Bribery (1997). This would not be a desirable state of affairs.
Business codes and professional codes
Voluntary anti-corruption codes of conduct adopted by the private sector stand on the shoulders of legal approaches, they implement legal commitments, and expand beyond current law. But for these codes of conduct to be effective and credible, they need to contain certain elements, as summarized above. Governments and non-governmental organizations can play important roles in supporting the use of such private sector approaches, through guidance as to what constitutes good codes of conduct, and input into code development and implementation.
The following emerge as essential components of effective voluntary codes of conduct:
Compliance programs need a compliance culture. The programs should cover the sources of corruption. There is a proper role for government even in totally private codes of behavior or systems of compliance, as the government should provide the necessary legal framework. However, compliance is not a substitute for the legal framework.
Another point concerns the so-called vulnerable professions, such as certified accountants, auditors, tax consultants, public notaries, and lawyers. These classical independent professions are bound to general professional codes, which do not cover the risk to which they nowadays are exposed. The UN-Convention has skipped these professions and their responsibilities. But the Charter of European Associations in the support to fight organized crime does have such self-regulating provisions. His may be considered as a good practice.
Bribe creating conditions
Contracts are often to be implemented under a strict time schedule. If there is to be a strict no bribe policy, one should proceed towards standards where such penalties will not be abused.
Members in the audience stressed that the government in many a developing country not only is on the demanding side but also on the supply side since many companies are controlled by military personnel or government officials.
Also the very fact of an undocumented economy creates opportunities since firms are continuously under pressure to keep the business afloat with formal licenses: the 'informal' licenses have a higher price and are to be paid as well. The tax officials do get perhaps the most opportunities for corruption in undocumented economies. The only remedy is to 'document' such an economy.
Around development projects there should be much more information concerning the budget of such projects and there should be set up offices where contractors may appeal to decisions made (in bidding contests, for example) by the management.
Vulnerability of multinational enterprises
Multinational companies use long chains of suppliers.
In three ways multinational companies face vulnerability:
Private to private corruption
Private corruption is not covered by the OECD Convention. Particular attention should be given to privatized companies. There need to be set up a culture of relative openness in contrast to the bureaucratic climate.
In the setting of management attention to i.a. environmental issues and quality issues also the integrity issues are to be included. Management systems are to be redesigned so as to incorporate integral attention to these vulnerabilities and social responsibilities.
The role of trade unions in these matters should not be underestimated. The top ten countries on the TI-corruption Index (the cleanest countries) do have free trade unions, free speech, etc. (with one exception). The last ten or twenty countries, down the list, do not have free trade unions.
Sub-session Financial Reporting, Accountancy and Taxes
Maintenance of proper books of accounts, the existence of a sound system of internal control and the conduct of audits by truly Independent external auditors cannot by themselves prevent bribery and corruption. But their absence facilitates corrupt behavior so that collectively they act as a deterrent and provide the basis for transparency. If sanctions are applied in cases of bribery and corruption the evidence provided by accurate accounting records will be an essential prerequisite for successful prosecutions.
Minimum requirements are:
An analysis of bookkeeping requirements in 16 countries, sponsored by TI and conducted by the big 5 accounting firms, showed they were frequently out of date and tax rules driven. They often do not apply to overseas affiliates or prohibit the use of "off-the-book" accounts or slush funds.
To improve international comparability between companies and thereby increase transparency of business activities the use of IAS or similar high level standards is strongly recommended. This includes the appropriate disclosure of contingent liabilities in financial statements.
Effective proportionate and dissuasive civil administrative and criminal penalties should be applicable in case of non-compliance with the bookkeeping and accounting requirements.
Audits should be conducted of all business entities, regardless of stock exchange listing and legal structure, where:
Audits should be conducted in all locations in accordance with highest international standards (ISA's), including the requirements for independence.
Properly implemented internal controls are essential to the generation of accurate accounting records and to the safeguarding of business assets. While it is difficult to legislate the adoption of internal controls in business entities, good corporate governance, stock exchange listing requirements and professional audit rules can require business to demonstrate that adequate internal control systems are in place. Reporting on internal controls in published annual reports and the existence of independently established audit committees can provide effective support and should be encouraged.
Bribes paid within each country and abroad should not be allowed as deductible expenses for tax purposes. Guidance needs to be provided to tax assessment officers to help them to distinguish bribes from legitimate business promotion and retention expenses.
Sub-session: Money Laundering, Offshore Jurisdictions and the Private Financial Sector
During these sub-sessions it was agreed that corruption of Public office usually involves the exchange of public trust for money. These funds, if they are to be used by the corrupt public official or the payment made to the official, it must be concealed from the authorities and the public and made to appear legitimate. The most desirable means to make payments and bribe proceeds appear legitimate is to use the legitimate financial institutions and services that can operate efficiently in the global economy. Corruption is more difficult if there are programs and laws that make such services less vulnerable to the facilitation (or money laundering) of corruption proceeds.
Therefore an extensive discussion took place on issues related to money laundering, the measures which have already been taken to address money laundering as well as the errors and mistakes which have been made in this area, particularly in the fight against drug money laundering. Specific topics which were discussed were inter alia, development of appropriate measures against money laundering, relevant practices developed in other areas, asset sharing, and the prevention of money laundering.
Furthermore there was discussion on offshore financial centers. This discussion focused on the work of the Basel Committee, Financial Action Task Force, and the work of the Offshore Group of Banking Supervisors. It was stressed that this term lacks definitions and that it would be more useful to consider all jurisdictions within the framework of a process for identifying compliant and non compliant jurisdictions in the application of established international standards. Especially in this area it was felt that the establishment of monitoring systems should be put in place, to monitor the formal compliance and effective implementation of international standards.
Participants looked forward to the conclusion of the UN Convention against Corruption and recommended that those charged with its elaboration ensure that:
At a more general level it was felt that a high priority ought to be devoted to the financial channels of corruption by calling on international organizations, national governments and the entire private financial services sector to take all necessary steps to address this problem.
In this context we recommend that the following general and specific steps be taken.
Sub-sessions: solicitation and extortion (passive corruption), whistle blowing, corruption in the private sector
Solicitation and extortion (business view)
Whistle Blowing (trade union view)
Attention to whistle blowing is important because:
Whistle blowing is symptom of changed relationship between employer and employee
Measures to be taken:
Private corruption (research)
Recommendation to OECD: Broaden scope of the convention to private corruption (in support of self-regulation).
(end Workshop V)