Cleaning Up

Back to Contents of Issue: September 2004

The Asian Development Bank, headquartered in Manila, now estimates that one-third of public investment in many Asian and Pacific countries is spent on bribes or lines the pockets of officials. The ADB suggests that corrupt practices can cost as much as one-sixth of a country's potential gross domestic product.

by Gordon Feller

IN A NEW STUDY the World Bank Institute estimates more than $1 trillion is paid in bribes each year. Daniel Kaufmann, the Institute's director for governance, says the figure is for bribes paid worldwide in both rich and developing countries. It does not include embezzlement of public funds or theft of public assets.

The issue goes to the heart of the Millennium Development Goals. Because corruption robs funds from programs to improve health, education, and other basic services, the poor too often pay the price. The World Bank Institute estimates that child mortality can fall as much as 75 percent when countries tackle corruption and strengthen the rule of law.

"While one may think of examples in which some firms/people are made better off by paying a bribe, the overall effect of corruption on economic development is negative. This is just as true in Asia as elsewhere," writes Shang-Jen Wei, a Harvard economist, in a study of corruption published in 1998.

Reducing corruption is difficult and can take time. It requires leadership, the setting up of independent watchdogs, establishment of policies and laws that are adhered to and public sector reform.

"You will need many generations to deal with the problem. Things are bad, and some are saying'getting worse,' " says Jak Jabes, Director of ADB's Governance and Regional Cooperation Division. Just how long it takes, he says, will depend on setting up an "environment for change."

The ADB-Organization for Economic Cooperation and Development (OECD) Anticorruption Initiative, started in 1999 in response to the Asian financial crisis, is helping set the tone for change. Under this initiative, 21 countries have signed the Anticorruption Action Plan. They include Bangladesh, India, Indonesia and Philippines, which are ranked among the region's most corrupt nations by numerous surveys, including by Transparency International.

The ADB-OECD initiative aims to help build institutions and implement anticorruption strategies without interfering in internal corruption cases. It promotes an integrated approach to policymaking while respecting national differences, encourages partnerships between governments and civil society, and promotes international aid coordination.

Corruption in parts of Asia is rampant. Measuring corruption, however, is difficult. Serious study suggests, nonetheless, that it can be assessed, if not fully quantified. To make it easier, researchers use surveys that gauge expert opinion, sometimes that of businesspeople. Their perceptions matter because they will decide where in the region to invest their money .

Transparency International, an international non-governmental organization that brings civil society, business and governments together to combat corruption, provides respected assessments of corruption around the world. Through its International Secretariat and more than 85 national chapters, Transparency International works to raise awareness of the effects of corruption, advocates policy reform, works toward the implementation of multilateral conventions and monitors compliance by governments, corporations and banks.

Its last perceptions index ranked Singapore the fifth least corrupt country in its list of 133. Hong Kong, China, was 14th, and Malaysia was 37th. Bangladesh was last, tailing Nigeria. Most Asian countries were in the bottom half of the index.

The need for measurement, however, can be taken too far. "It does not matter what specific percent or level someone has measured. The more important issue is whether there relatively is a little or a lot," says Michael Stevens, ADB Principal Audit Specialist, Office of the Auditor General.

In Malaysia, the new Prime Minister, Abdullah Ahmad Badawi, has pledged to crack down on corruption. His government, a signatory to the ADB-OECD plan, has charged a minister and a prominent businessman with graft.

"Political will is absolutely essential. If you have strong leadership, then people will follow," says Stevens.

More and more Asian governments are acknowledging that fighting graft and bribery is fundamental to the fight against poverty. Hong Kong and Singapore -- once among the most corrupt -- turned around rapidly once there was the political will to do so. By raising civil service salaries and establishing strong anticorruption bodies such as Singapore's Corrupt Practices Investigation Bureau, governments are able to make a dent in corruptive practices.

Abuse of power for personal benefit will likely always exist. Recent high-profile cases of corruption in Canada and the United States show it is not just developing countries that suffer from the problem.

"We won't fool ourselves into thinking we will get rid of it completely. It is everywhere," says Stevens.

The question becomes one of how to work in a system where corruption is widespread, and how to reduce it. @

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