Speech
Hilary Benn, Secretary of State for International Development
Queen Elizabeth the 2nd Conference Centre
Transparency International
“Improving Governance, Fighting Corruption”
14th September 2006
Thanks Laurence [Cockcroft]. I’d like to thank Transparency International for the invitation to speak here today. You, more than anyone else, have put the problem of corruption in developing countries at the heart of the debate about development. Your corruption index is probably the most widely used measure of corruption in the world. And you help lead the fight to improve national standards in public life, with greater transparency as the single-most effective weapon we have.
You do this with great determination, and all too often, at risk to your staff. John Githongo. Once head of Transparency International in Kenya, who resigned from his government post having fled to the UK in fear of his life, but who then published his dossier that led to the resignation of three ministers. Or Dr. Devendra Raj Panday, ex-head of Transparency International in Nepal, imprisoned for 90 days in April this year, an Amnesty International Prisoner of Conscience. And many others too, who also believe in a fairer and more just world.
So why do governance and corruption matter? Why did we make governance the centrepiece of our recent white paper? Very simply because without good governance, and unless we beat corruption, we will never defeat poverty.
Good governance is about the capacity of governments to ensure safety and security for their people, to be able to get things done, to give people the chance to be heard and to respond to what they want.
It’s about creating a climate in which people – local and from abroad - will want to invest their money and get the economy going, creating jobs and opportunity for a better life.
It’s about ensuring the rule of law and effective policing.
And it’s also about fighting corruption, because corruption steals money that could otherwise be spent on health or education. And because corruption hits poor people hardest, and poor women worse of all.
Just yesterday I heard about research from India, just published by LSE, which shows that women have to pay more in bribes than men; that women have to wait longer than men to see officials, and that when they do they are three times more likely to be queue jumped than men. That’s one example of how corruption impacts on poor people.
And we, like you, care about all this. And the first thing we can do is to make sure our money is properly used. That every pound goes to where it is intended.
We use proper safeguards and a rigorous system of audit and inspection. When we see a problem, we take tough action - to prevent any repetition and to send a clear message that corruption will not be tolerated. Those guilty of criminal offences should be prosecuted and punished.
But we also try to take a wider view. Where problems arise some people argue that we should suspend our aid or withdraw it completely. I don’t agree. Why should a child be denied education, why should a mother be denied healthcare, or an HIV positive person AIDS treatment, just because someone or something in their government is corrupt?
If all poor people lived in well-governed countries fighting corruption would be much easier. But the truth is they don’t. Poor people live in countries affected by conflict, in countries with few resources and poorly paid public sector workers, and where governments and institutions are often weakest.
Walking away from our responsibilities to poor people is not, in my view, the right thing to do. If necessary, we will change the way we give our aid.
This is exactly what we did in Ethiopia last summer, following the dreadful violence on the streets of Addis Ababa after the elections, and the arrest and charging with treason of a number of opposition leaders who won a lot of seats in those elections.
Some argued we should end our aid to Ethiopia completely – thereby harming millions of innocent people. Rather than cut off aid, we ended budget support, as did all donors, and we redesigned it – we changed the way in which our funding was provided, with an increased number of safeguards.
One thing we need to acknowledge is that governance and corruption are not the same thing. Governance is about the way public officials and institutions acquire and exercise political power and authority to make public policy, and to provide goods and services.
Corruption is an outcome; it is one of the symptoms of poor governance and can involve the abuse of public office for private gain. It can also take place in the private sector.
Thus any plan to fight corruption in a country must be part of a programme to improve governance. The two go hand in hand. The best check on corruption is to strengthen the governance with which to prevent it from happening, and to fight it when it does.
And that means encouraging demand for good governance by supporting civil society and the media, parliaments and trade unions, and communities so that people’s voices are heard and governments are held to account.
All this means that the only long-term solution to fighting corruption is to improve governance.
The good governance we all want is, I think, based on three things – capability, responsiveness, and accountability.
First, capability. All governments need to be capable. Its simply about being able to get things done. Does government have the money, the will and the capacity to build wells, provide health services to villagers, offer good education to children and raise taxes to do all these things?
When those are absent, countries and their people suffer.
Secondly, governments must respond to the aspirations of their citizens through some kind of representative government, and that includes respecting peoples’ civil and political rights.
Thirdly there is accountability. This means having to explain what you are doing, and answer questions on what you have done. It applies to public officials, to ministers and to governments.
And if our shared goal of accountable government is to be realised, so that people in developing countries look to their own governments to sort out their problems, and not us, then we need to help build the capacity to do exactly that.
A free and independent media plays a hugely important role in helping to make this happen. In Kenya, the media – from newspapers to private radio stations to mobile phones - are doing a lot to uncover and expose malpractice at the highest levels of the state. And one of the people here who did just that, and it is good to see him tonight, is Edward Clay. Revelations from the Githongo dossier were first covered by both the major Kenyan newspapers.
Civil society matters too, when people come together and acquire a voice.
I also think that the tax system is crucial for accountability. Tax is at the heart of the social contract between state and citizen. And it is public opinion that is helping to change Kenya, but there is a long way to go. When citizens pay tax, they demand services back - “What have you done with my money?” And “are you going to spend some in my community?” As someone once said, “No taxation without representation!”
But the best way to ensure the accountability of governments is by giving the people the final say. The ability of citizens to elect and then get rid of their government and change its leaders is fundamental. I’ll talk more on my view of the role of democracy in development at Demos in next month.
Above all, it’s about legitimacy. The extent to which people think those who govern have earned the right to govern. And, in the long-term the best way to gain legitimacy is to rule justly in the public interest.
Now, this weekend I will be at the World Bank annual meeting in Singapore. We will be discussing a World Bank paper on Governance and Corruption. I and others asked for this paper to be prepared when we talked about this issue at the Spring meetings in Washington earlier this year.
I’m pleased that the World Bank is giving this so much attention. But we need to get this right. It means dealing with the problems of corruption firmly but also in a balanced way.
I want to see the World Bank develop an approach that does four things:
First, of course that takes the fight against corruption seriously, but which also puts development at the centre of the response. What do I mean by that? Well, our job, and the job of the World Bank, is to help eliminate poverty.
This means that we and the World Bank – and in my view other donors too - should not walk away from our responsibilities to poor people, whatever the behaviour of public officials and politicians in countries where they live.
The challenge of eliminating poverty means that we have got to:
- Help conflict affected countries achieve peace and stability.
- Help fragile states avoid becoming failed states.
- And help weak states transform themselves into well governed states.
Because these are the places where a lot of poor people live, and they’ll stay poor unless things change.
To do that we must work with these governments.
Not around them. Nor ignore them.
Now of course, in the most extreme of circumstances this may mean putting resources through other channels if the risks of corruption are known to be too high. We do have a duty to UK taxpayers to safeguard our aid, including UK aid that we spend through the World Bank. And we will absolutely not hesitate to do that.
For our part, and one of the things we put in the white paper, is that we will prepare a Country Governance Analysis to monitor governance and to help us judge how to give our aid. Formalising what we already do. This analysis will be part of our published Country Assistance Plans. It is not intended to determine the amount of aid. Rather it will inform DFID’s view about the ways, and with what constraints, partner countries are committed to three basic principles:
- reducing poverty;
- upholding human rights and international obligations; and
- improving public financial management, good governance and transparency, and fighting corruption.
Based on the answers, we will give our aid in different ways. In Zimbabwe, we don’t give aid to the government; but we do provide food and we run an AIDS programme. Zimbabwe has been bought to its knees by monumental bad governance, and so instead of being the bread-basket of Africa, it now relies on food aid. We don’t fund the government, but we have not walked away from the people of Zimbabwe.
Second, the World Bank must ensure the fight against corruption is not seen in isolation from strengthening governments and institutions. If we recognise that better governance is the solution to corruption, then we must also make a much greater effort to help build more capable, responsive and accountable states.
I think the World Bank should take governance more seriously than it has done to date, because we know in the end it is how the problem will be solved in the long term.
It is only with capable, responsive and accountable states that we will manage to build the long-term demand and capacity for improved governance and effective efforts to fight corruption. I think this is what we have seen happen in those countries that are doing well.
The foundation must be a shared understanding between those who govern, and those who give their consent to be governed – the “deal” between citizen and state. And this foundation has to be laid by each country itself.
Look at our own history. A thousand years of progress, sometimes moving forward, sometimes back. Magna Carta. A bloody civil war between Parliament and King in the 17th century. The rotten boroughs and rotten politicians at the start of the 19th century – a culture of patronage that finally gave way after a long struggle to the universal franchise, as people demanded a voice in how they were governed.
And quite a lot of corruption along the way.
When people say I’m being ambitious for other countries – I say – I just don’t want you to take as long as we did! And we want to share our experience.
It’s a process. It takes time. And it means that as donors we need to have realistic expectations. Ultimately, good governance has to come from within. Only developing countries - led by their own people and their own governments - can make the changes that are needed to fight poverty.
And this cannot be done by simply transferring models from rich to poor countries. People need to do it for themselves. And the roads they travel will be as varied as the countries themselves.
Look at Georgia. The “rose revolution” of 2003 was fought on an anti-corruption platform following fraudulent elections. And the new government has pushed really hard with strong reforms, showing that with political will you can make progress.
They’ve reformed the tax system, improved the transparency of the budget, including a single treasury account for central government. Many tax and customs officials, and a large part of the police, including all the traffic police, have been dismissed. And business regulations have been simplified.
As a result Georgia jumped from 112th in the World Bank’s “Doing Business 2007” report, to 37th place, making more progress than any other country.
Third, donors also need to get their act together – a big challenge in development - working more consistently and effectively. We need an approach that helps coordinate donor action through a clear framework.
In Nigeria we have a joint Country Partnership strategy with the World Bank and the Nigerian government, with governance being one of the parts of it. Both of us also work closely with USAID on governance. It means we can speak with one voice to the government when problems happen, and be more effective in giving support as progress is being made.
And we have seen progress in Nigeria; things are better. And Nigeria would not have got its debt deal without this progress. The leadership of Obasanjo and Ngozi has been vital in this, and they deserve credit for these achievements.
In Cameroon, donors have been asked to help the government, under the umbrella of the OECD, to address corruption. We have been working with Canada, France, Germany, Netherlands, the US, and the World Bank to do this, coordinated by UNDP.
But the World Bank must take the lead in all this. Their role in convening government-donor Consultative Groups in many countries gives them an obvious platform. But that doesn’t mean it should try to do everything. Bilaterals and multilaterals have varying skills and experience – whether at project, country or global levels.
So it means that the World Bank must be more selective and work in partnership with others who may have more skills and experience. Now, in fact its Articles of Agreement prevents it from working explicitly in political governance – on how the political system works and how it is organised.
Bilateral donors have an important role to play here – and they have a lot of experience of working in many of these more political areas – the media, political groups, parliaments, democracy, security sector reform and so on – so in many cases they should take the lead. Helping to generate the “demand side” of good governance.
Multilaterals – especially the World Bank and the IMF - currently have more expertise in areas such as public expenditure – transparency, accounting and auditing, codes and standards and so on. More on the “supply side” of good governance.
And of course there is much in-between – so the World Bank should be working with others beyond government as well, such as civil society and the private sector to promote good governance.
And finally, we need a strong approach to action at a global level. Because governance is also an international issue. Bad governance can be caused or made worse by the actions of rich countries and their companies.
It is often called the “supply-side” of corruption – those who provide the bribes or offer opportunities to hide stolen assets. All of us must take strong action to address these problems, and that’s why in the UK we now have an action plan. And one of the reasons we have it – it joins us up as government.
We’ve ratified the UN Convention against Corruption – and unlike some other countries we put in place the necessary legislation before we ratified it - and the OECD Bribery Convention. And as a signatory, the UK is committed to establishing effective anti-corruption legislation and practices.
And I have been asked by the Prime Minister to take on the responsibility of leading the UK fight against international corruption, working with other UK ministers, and with the international community. Our new Anti-Corruption Action Plan focuses on doing more in 4 key areas –
1. to investigate and prosecute bribery overseas;
2. eliminate money laundering and recover stolen assets;
3. promote responsible business conduct in developing countries, and
4. support international efforts to fight corruption.
As a first step, we will create a new Overseas Corruption Unit by November this year. And it’ll be staffed by both the Metropolitan Police, and City of London Police. It will help the UK increase its capacity to investigate and prosecute those guilty of these crimes.
And DFID is helping to pay for it. Richard Dowden thought it was scandalous that DFID was paying for police! I fundamentally disagree. If you realise just how much corruption undermines the fight against poverty, then getting more police on the job is obviously a good thing. And all credit to the All Party Parliamentary Africa Group, for their report, “The Other Side of the Coin”. It has had a profound influence. Part of a process of debate and discussion, and I pay tribute to them.
Other steps we plan to undertake include fully implementing the Third EU Money Laundering Directive by December next year. The consultation document on policy options is currently out for discussion. This directive puts the obligation on the financial services industry and others to inform the Serious Organised Crime Agency if they know or suspect money laundering is taking place.
With regards to business, we all know that it plays a major role in international development.
It is the private sector – and poor people are the private sector – the farmers, the shopkeepers and entrepreneurs – that will help create the jobs that people need and growth in their economies.
So it is vital that the private sector – small, medium and large – can flourish in developing countries and provide jobs, investment, good and services, and of course, the tax revenue that can help pay for public services and improve peoples lives.
And that is why we have to act if companies behave in ways that are corrupt or which undermine those who behave responsibly. This action must be taken primarily by the governments of those countries where such actions take place. But the international community also has a role to play.
We are committed to strengthen implementation of the OECD Guidelines for Multinational Enterprises – which are, as you know, a set of recommendations for business on human rights, environment, consumer protection and labour rights.
And to take this forward, DFID and FCO have now become part of the UK National Contact Point, alongside DTI. The Contact Point is responsible for promoting the guidelines and for investigating complaints of irresponsible behaviour. We will soon agree a Board to oversee implementation of the guidelines, with members to include independent experts - those who have commented on its work and on the changes needed. It’s a big step forwards and shows we are listening. But this is not just about acting where abuse takes place, it’s also about creating the right conditions to support responsible companies.
I’m pleased with the progress made by the Extractive Industry Transparency Initiative. It brings together oil, gas and mining countries and companies, along with civil society to create greater transparency around the flow of money from companies to governments. A very simple principle – publish what you pay and receive, and then people can ask – “what happened to the money?”
Revenues from Extractive Industries should be a blessing and not a curse in poor countries, but all too often poverty, conflict and corruption go hand in hand with the wealth of oil and gas and minerals. I was in DRC earlier this week discussing the elections with prospective presidential candidates – a country which has been raped and pillaged for years for its mineral wealth. EITI could make a huge difference to the people of DRC.
Since its launch in 2002 more than twenty countries have signed up to implement the EITI. Two countries are now reporting regularly - Azerbaijan and Nigeria. A further three have produced EITI reports - Guinea, Gabon, Kyrgyzstan, and we expect four more to report by the end of 2006 - Ghana, Cameroon, Kazakhstan and Mauritania.
Now, we will continue to support EITI, politically, financially and technically, and to encourage all resource rich countries to implement the initiative. We will also sponsor a UN General Assembly Resolution to make EITI an international standard of good management. And we hope other countries will support us in this.
It is of critical importance that the EITI approach becomes the global standard for the oil, gas and mining sectors. Emerging market countries - notably China, Russia, India and Brazil - and their state owned companies, are increasingly important. Without their engagement the progress we have made to date will be undermined.
We have learned a great deal from the process of implementing EITI, including about the power of these partnerships that bring together groups who have often been shouting at each other, but who can achieve a great deal when working together.
For this reason, we have committed to increase our support to developing countries to improve transparency and value for money in public procurement. We want to develop with other governments, companies and civil society, new transparency initiatives in important areas – high on the Transparency International list of sectors where much corruption exists - to increase the scrutiny of public spending on weapons, construction and health sectors.
Finally we will continue to support international efforts to fight corruption. We’ll press for the first conference of state parties to the UN Convention Against Corruption in December this year to agree guidelines for technical assistance to assist implementation and effective monitoring; including drawing up proposals for an international investigation support centre. We will continue to push all G8 countries to ratify the Convention.
Within all of this – in developing countries, here in the UK, and internationally, civil society has a hugely important role to play. I announced earlier this week the launch of a consultation on the design of our new £100 million Governance and Transparency Fund – one of the other proposals in our white paper - that is intended to help media groups, civil society and others play their part in improving governance – in demanding good governance, and in helping poor people to hold their governments to account.
I hope you will all contribute to that consultation and to helping us do the best that is possible.
We can play our part, and we can work with other donors and with the World Bank to improve what the international community does. But above all what is needed is political leadership, and greater political leadership in developing countries. We know from our own history, you know from the experience of Transparency International, that it is only when that happens that we will win, not just the fight against corruption, but the fight against poverty too.
