43410 MIDDLE EAST AND NORTH AFRICA JANUARY, 2008 GOVERNANCE NEWS & NOTES VOLUME 2, ISSUE 1 IN THIS ISSUE: riven by a host of domestic and international factors, the challenge of improving the quality of governance and combating corruption has A Note from the risen to the forefront of the development debate. This close linkage of Publisher........................ 1 the "good governance" and "anticorruption" agendas is understandable Corruption in the MENA and probably unavoidable. In many ways, it is also unfortunate. Region: Declining Trend or Governance is about much more than combating corruption. It is about More of the Same?...............2 making sure that human and financial resources are used efficiently towards the attainment of valued social ends. It is about ensuring that services are delivered effectively to all citizens. It is about creating an Dr. Muhiyeddeen Touq enabling environment for private sector led growth. Interview........................6 Morocco: Pressing for Progress Yet within MENA and beyond, it is often corruption that garners the on Anticorruption.............7 headlines and causes ears to prick up. Governance reforms can be dry and technocratic, as financial management experts debate whether there Yemen Moves Aggressively is adequate scope and comprehensiveness in the budget or systems engineers ponder whether all of the steps in a permit application process to Tackle Corruption..........9 are really necessary. In contrast, "corruption" conjures up images of suitcases of cash illicitly changing hands and guilty officials shielding Corruption Terminology in the Arabic Language.........11 their faces from the camera as they are hauled off to jail. Not being immune to such excitement ourselves, this newsletter addresses the Checklist of Key Actions problem of corruption in MENA and highlights measures that a number Required of a Government of countries are taking to address it. Adhering to the UNCAC....13 Of course, the problem of corruption is far more than a matter of public relations, or even ethics. A growing body of empirical evidence indicates TI 2007 Corruption that, rather than "greasing the wheels," corruption in fact exerts a heavy Perceptions Index for MENA cost upon development. (See Figure 1 in the newsletter for a few ..................................14 examples.) Corruption compromises the delivery of critical government services in areas such as health and education. It channels resources Upcoming Events and away from government coffers and increases the cost of public goods and Activities.......................15 services. It reduces the flow of private investment and diverts managerial attention towards coping with regulators and away from more productive Noteworthy pursuits. Corruption exerts a particularly pernicious impact upon the Links.................................15 poor, who are often forced to pay larger sums in relation to their income for services that they should receive for free. When sub-standard housing and infrastructure collapses because corrupt officials ignore or fail to enforce building code violations, the metric for calculating corruption's cost can shift from millions of dollars to thousands of lives. Globally, the anticorruption movement began to gain momentum in the mid-1990s. Yet it has historically been rather slow to develop in MENA. Over the past two years, this has changed markedly. From the Atlantic to the Red Sea and Persian Gulf, a number of MENA countries have recently taken bold steps to enhance integrity, combat corruption, and improve the quality of governance. A few of their stories are highlighted GOVERNANCE NEWS AND NOTES Page 2 VOL. 1, ISSUE 2 below. These efforts are not perfect, and experts and the general public alike can debate their efficacy and Cost of Corruption likely impact. But they clearly signal renewed commitment to tackle a very ancient problem. v Over the last 20 years, one East Asian country is estimated to have lost $48 billion due to corruption, surpassing its entire foreign debt of $40.6 billion. We are also privileged to include an interview with Muhiyeddeen Touq in this issue, who has served as v In one South Asian country, recent government both Minister of Administrative Reform and more reports indicate that $50 million daily is recently as Minister for Prime Minister Affairs in misappropriated due to mismanagement and Jordan. He was also a major force behind the corruption. creation of the United Nations Convention against Corruption (UNCAC) in 2003, which stands along v Corruption adversely affects export potential. In with the 1997 OECD Anti-bribery Convention as one study of differences in corruption levels between one of the landmark pieces of international China and India, authors concluded that "if Calcutta legislation in the field. He has been a tireless could attain Shanghai's level of transparency, the share of firms...exporting would nearly double from advocate for this cause and played a major role in current 24 % to 47 %, comparable to coastal Chinese helping to advance the anticorruption agenda cities." throughout the MENA region. His insights will no doubt be of value to academics and practitioners v Studies of corruption in government procurement alike. We would particularly encourage our readers in several Asian countries reveal that they have paid to go beyond the summary provided in this from 20 % to 100% more for goods and services. newsletter and read the full interview. It can be found on the Bank's MENA Governance website at: v Estimates indicate that African countries lose www.worldbank.org/mena/governance nearly 25 % of their combined income or $148 billion each year to corruption. During the next four weeks, we will be moderating an online discussion on the challenge of combating v In Eastern Europe, bribery is akin to a regressive tax. Smaller firms reportedly pay 5 % percent of their corruption in MENA. Please join us in expressing annual revenue in bribes compared with 3 % of your views. To access the discussion forum, visit: medium-sized enterprises. http://menagovforum.worldbank.org v In Africa, smaller firms up pay up to 8 % of total revenue in bribes. CORRUPTION IN THE MENA REGION: A DECLINING TREND OR MORE OF THE v Corruption threatens government legitimacy. SAME? Surveys in Latin America showed that countries with greater levels of corruption also have the lowest reported level of trust and weaker tax compliance. BY ROBERT BESCHEL v In one North American city, businesses were able At first glance, MENA countries would not appear to to cut $330 million for an annual waste disposal bill of be particularly well-positioned to combat corruption. $1.5 billion by ending the domination of regulatory Although the story is more varied and nuanced than bodies by organized crime. this brief description will allow, the region is v In one European city, anti-corruption initiatives characterized by relatively weak formal systems of have reduced the cost of infrastructure outlays by 35- checks and balances. In country after country, a 40%, allowing the city to increase spending on strong executive predominates over the judicial and maintenance, schools and social services. legislative branches. There is a relative lack of accountability institutions that are truly independent, such as supreme audit agencies, the cours des comptes, ombudsmen or anticorruption agencies. A GOVERNANCE NEWS AND NOTES Page 3 VOL. 1, ISSUE 2 strong service culture with countries such as within the public sector is Italy, Malaysia, Hungary generally lacking. With a and South Korea. A few exceptions, civil second tier of countries is society is relatively weak in the middle-- and under-developed. In somewhere in the 70s to some countries, the press the 90s range--including operates with relative Morocco, Lebanon and autonomy; in others less so. Algeria. They are There is a general dearth of comparable with China, transparency, particularly India and Brazil. A final with regard to revenues set of countries falls derived from hydrocarbons, towards the bottom and along with occasional are perceived to struggle commingling of personal significantly with these and state funds among the issues, including Yemen, ruling elites. Syria, and Iran. Iraq comes in at 178th Yet if global indices are to position, just above be believed, in comparison Myanmar and Somalia. with other parts of the world, the MENA region does not fare badly on indicators of corruption. As the While useful in providing a general overview, such attached graph indicates, according to the Kaufmann, rankings can at times obfuscate more than they Kraay and Mastruzzi indicators, as a whole the clarify. The term "corruption" is but a short-hand region lags behind only the OECD and countries of reference to a large number of administrative Eastern Europe in terms of controlling corruption. dysfunctions and pathologies. Some may cut across Such indices are not without their conceptual and the public sector, or at least large sections of it; methodological problems. But an interesting and others are concentrated in certain agencies and perhaps even surprising lesson is that things are not departments. Corruption is not equally dispersed as bad as could be expected. Undoubtedly many in throughout the public sector, but tends to be found in the region take seriously the Koran's injunction: ministries with a strong revenue, expenditure or "And do not eat up one another's property unjustly, regulatory function. It is seldom a major issue for nor give bribery to the rulers that you may knowingly eat up a part of the property of others sinfully." Alas, lest one become too sanguine, any assessment of the region's ability to effectively address corruption requires much more rigorous scrutiny and analysis. Corruption is hardly uniform throughout MENA, and regional indices indicate a great deal of variation between countries. Take the TI index for 2007, which is reproduced on page 14 of this newsletter. MENA countries can be loosely grouped into three categories. At the top are countries such as Jordan and the Gulf sheikdoms, which in relative terms are doing fairly well on this agenda. They rank in the 30s and the 40s on the TI index, roughly comparable GOVERNANCE NEWS AND NOTES Page 4 VOL. 1, ISSUE 2 the department of meteorology, for example, but may very well be a concern for customs, public works or the police. Further unbundling is needed to clarify the specific problems and challenges confronting various governments and the individual agencies and departments within them. Do the fundamental challenges involve extortion in tax collection? The deliberate misrepresentation of standards in bid documents? Collusion in pharmaceutical procurement? Favoritism in recruitment and promotion? The payment of "speed money" for permits and licenses? Pressuring companies to take on a well-connected silent partner to facilitate private investment? The Arabic language itself reflects this diversity and has devised a number of terms to address various problems, ranging from bakshish (small facilitation payments) to wasta (connections) to fassad (corruption or "rot"). Interestingly, many of these terms can also have As the interview with Muhiyeddeen Touq indicates, neutral and less pejorative connotations. efforts to combat corruption often seek to move forward along multiple dimensions. Taking the lead There are reasons to suspect that perceptional indices from Hong Kong's highly successful Independent such as TI's Corruption Perception Index are Commission Against Corruption (ICAC), many weighted towards petty corruption and may not governments have sought advance the anticorruption adequately reflect broader problems of "state agenda along three major dimensions: prevention, capture" or the use of state machinery to direct prosecution, and public awareness raising. The economic rents to favored parties--a problem many UNCAC adds additional elements to this mix-- sophisticated observers have argued may be including asset recovery, international cooperation particularly acute in some MENA countries. During and technical assistance--and obligates its the Bank's recent discussions surrounding the signatories to take a number of important steps to implementation of our governance and enhance integrity and combat corruption. Taken anticorruption strategy, many within the region also together, they represent a rich agenda that will take expressed concerns about "bright lines" and the years to fully implement. belief that the rule of law often is not fully implemented against those with strong political The prevention dimension is vast and much of it is connections. Others lamented the pervasive role of the agenda of sound public management. It includes wasta in attaining access to public goods and creating robust accountability mechanisms, such as services or in securing a job within the public sector. internal and external audit systems; making procurement practices more open and transparent; The past eighteen months have witnessed a major strengthening meritocracy in civil service expansion in efforts to combat corruption in many recruitment and promotion; streamlining and countries of the region. There are numerous reasons reengineering business processes within the public for this expansion, but one of the most important has sector to reduce opportunities for corruption; and the been the ratification of the UNCAC Treaty. During like. Reforms in this area can help combat the period from December 2003 through December corruption, but they often have other important 2005, virtually all countries of the region became benefits, such as improving the efficiency and signatories to the UNCAC Treaty, and 10 countries quality of service delivery. A number of MENA have subsequently ratified it. countries have made impressive progress in this GOVERNANCE NEWS AND NOTES Page 5 VOL. 1, ISSUE 2 regard. To cite an example from our last newsletter, To Create or Not Create ­ Egypt's General Authority on Investment and Free The Dilemma of Independent Anticorruption Zones (GAFI) was able to reduce the number of Agencies procedures facing a potential investor from 19 to 3, reducing the average time to register a company During the past decade, a number of countries have from 34 days to 3 days. sought to establish an independent anticorruption commission, along the lines of Hong Kong's ICAC or The prosecution agenda involves a number of Singapore's Corrupt Practices Investigation Bureau measures to strengthen the legal and institutional (CPIB), widely believed to be among the most effective agencies of their kind. This experience has framework for combating corruption. It can involve been mixed. Occasionally, such agencies have been the creation of a dedicated anticorruption agency, set up as essentially window dressing and, not although experts are divided about the effectiveness surprisingly, have failed to deliver against the of such a measure. It can involve passing legislation expectations surrounding them. But even sincere on topics such as income and asset declaration; efforts have occasionally come up wanting. Critics conflict of interest; bribery, illicit enrichment, have identified a number of problems that typically embezzlement and the misappropriation of funds; or surround the creation of such agencies. By money laundering. It can involve strengthening the themselves, they are seldom a panacea when the investigative function within government; improving broader governance environment and public sector disciplinary procedures and codes of conduct within are weak. Problems of staffing and ensuring that they have adequate financial resources can loom large. the civil service; improving the linkages between the Another important concern is their ability to coordinate investigation and prosecution functions; and even effectively with the many different entities in creating new courts to address corruption related government that must be involved in a serious issues. anticorruption effort. These include the police, the prosecutors, the financial intelligence units, customs, A number of Arab countries have recently taken tax, and the courts. steps forward recently along this dimension. Morocco has passed legislation addressing both On the other hand, while few would argue that the income and asset disclosure, as has Yemen. New establishment of such agencies will automatically institutions specifically dedicated to combating ensure their independence or effectiveness, there are corruption have been established in Morocco, numerous examples where the lack of independence Jordan, Iraq and Yemen, and one is currently under has crippled or compromised an effective investigative function. In environments where the anticorruption consideration in Kuwait. Algeria has also recently function is fragmented among a large number of passed comprehensive new legislation on small, under-resourced agencies with vague and anticorruption. This newsletter covers the efforts of overlapping mandates, some consolidation can be two countries--Morocco and Yemen--to improve helpful. In small states, a single agency may be the their anticorruption efforts through recent legislative most simple and cost effective approach. It can also and institutional changes. make a useful contribution in situations where it is difficult for other entities such as the police to It is in the final dimension, public awareness, where investigate examples of internal corruption. the most work remains in MENA. Governments throughout the region typically do not fair well in At the end of the day, there is no one right answer. terms of transparency and openness, although this is Any decision will need to be carefully crafted to fit beginning to change. Jordan has recently passed within a given country's legal and institutional Freedom of Information legislation, and Egypt is framework, and thorough consideration will need to be currently considering such legislation. Other given to the specific functions that should be performed by such an agency vis-à-vis other units of countries, such as Lebanon and Palestine, have government. active civil societies and a growing number of NGOs interested in the good governance agenda. GOVERNANCE NEWS AND NOTES Page 6 VOL. 1, ISSUE 2 In many of the examples cited above, the reform movement whose success will require progress on agenda is incomplete and occasionally imperfect. In two simultaneous fronts: establishing independent the eyes of some, such changes constitute little more corruption-fighting bodies while also implementing than window dressing. Yet it would be wrong to broad public sector reforms. dismiss them out of hand, in part because legislative and institutional change is never easy--particularly Former Jordanian Minister of State for Prime when there are those who are profiting, occasionally Ministry Affairs Dr Muhiyeddeen Touq said in an handsomely, from a dysfunctional status quo. Such interview with MENA Governance News and Notes criticism also misses the dynamic trajectory of in Amman in October that he hoped three specific institutional change, which is far more often things would emerge from regional action plans now stumbling and incremental than relentless and being drawn up by MENA and others to translate the sweeping. The UNCAC treaty has helped to give Convention into action: establishing independent shape and form to a far-reaching reform agenda; anti-corruption bodies with comprehensive and important domestic constituencies are pressing hard coherent policies, achievement benchmarks, and for change; and many MENA countries are rapidly follow-up mechanisms; identifying areas where making up lost ground. We are likely to see the speedy results can be achieved in order to bolster good governance and anticorruption agendas to public confidence in the fight against corruption; continue to grow and expand throughout the Middle and, bringing civil society and media groups into the East and North Africa over the next decade. battle against petty and major corruption alike. DR. MUHIYEDDEEN TOUQ INTERVIEW Dr. Touq was acting chairman of the Vienna-based Ad-Hoc Committee for the Negotiation of UNCAC. BY RAMI G. KHOURI He became vice chairman of its sub-committee on preventative actions, he said, because his initial Fighting corruption requires governance reforms experience as Jordan's minister for administrative alongside criminal clampdown development in 1995 quickly clarified for him the link between public sector reform and fighting Dr. Muhiyeddeen corruption. Touq: Former ambassador to Based on his decade of experience in Jordan's often several European inconsistent public sector reform efforts, he feels that countries, Dr. a successful national anti-corruption strategy must be Muhiyeddeen Touq immune from frequent government and policy currently serves as changes. This can be achieved by forging a national Minister of State for coalition of public, private and civil society forces Prime Ministry that agrees on an anti-corruption strategy, and then Affairs. He holds a BA degree from the University of implements it over time regardless of changes in Jordan and obtained an MA and PhD from US governments or ministers. universities. Dr. Touq has taught and occupied academic and administrative posts at the University "This is why economic and education reform have of Wisconsin, the University of Jordan and the succeeded in Jordan and other Arab countries," he United Arab Emirates University. He also served as suggested, "and we should learn the lessons of this Minister of administrative reform and managed the for fighting corruption." UNRWA/UNESCO education program. A comprehensive, across-the-board strategy with AMMAN: A Jordanian minister who is one of the technical assistance from foreign partners is also key figures behind the adoption of the United crucial for success. Nations Convention against Corruption (UNCAC) believes the convention has sparked a global "The Convention is comprehensive because you have to work on all fronts if you wish to reduce or GOVERNANCE NEWS AND NOTES Page 7 VOL. 1, ISSUE 2 eliminate corruption, which is a trans-boundary Dr. Touq is also a member of the recently named phenomenon that sees money routinely laundered FStAR group (the Friends of Stolen Asset across borders," he said. Recovery), which aims to advise the pertinent international organizations on how to implement "The Convention therefore talks about five broad UNCAC articles related to asset recovery as well as areas that need to be tackled simultaneously: on the best ways to recover money stolen by corrupt prevention, criminalization, asset recovery, public offic ials. As it prepares for its initial meeting, international cooperation, and technical assistance." Dr. Touq suggests that it should stress several preventative measures. These could include: Most Arab countries have room to improve their strengthening international cooperation to constrain ranking in global corruption assessments, such as laundering of stolen assets internationally, and, World Bank reports or Transparency International's providing technical and other assistance to improve annual report. Dr. Touq suggests this partly reflects Third World countries' capability to investigate, the paucity of democratic systems in the MENA deter and indict corrupt individuals who send their region. Fighting corruption, promoting democracy, stolen assets abroad. and undertaking public sector reforms ideally should go hand-in-hand, he believes, because the good MOROCCO: PRESSING FOR PROGRESS governance/low corruption link is abundantly clear. ON ANTICORRUPTION He explained: "Democratic systems with well BY EDOUARD AL-DAHDAH & developed checks-and-balances help create situations FLORENCE BRILLAUD where resorting to corruption becomes more and more difficult. Conversely, fighting corruption in the The debate on corruption has featured prominently MENA region and other developing areas requires in the Moroccan public sphere for more than a public sector reforms leading to a government that decade now. The kingdom's relatively free press functions transparently, efficiently and effectively, and its vibrant civil society, the latter perhaps best where public officials are chosen by merit, and are embodied by one of the oldest and most dynamic adequately trained and compensated, with good chapters of Transparency International (founded in health insurance and pension plans." 1996), have no doubt helped raise the profile of the anticorruption agenda. The kingdom falls in the Asked where Arab governments should start tackling middle of most governance indicators for both the corruption, he named two specific areas. The first is Maghreb and the MENA region as a whole, and reducing petty corruption that largely stems from domestic polls reveal a fair amount of concern low public sector salaries, by raising public sector among the citizenry about the extent to which pay and simplifying government procedures, corruption is perceived to be a problem. including through e-government. The second is going after "big corruption" by improving the Morocco Governance by the Numbers investigative capabilities of law enforcement agencies, so that they can gather the evidence needed Morocco remains hampered by modest ratings on global to indict and convict corrupt officials and private governance indicators, which have not witnessed citizens. significant improvement over the past few years. In Transparency International's Corruption Perception Index, "If corruption cases are not brought to trial and Morocco's rating was 4.7 in 2000. It stood at 3.2 (79th guilty people convicted," he said, "society faces two position) in 2006. For 2007, Morocco was ranked at 3.5, dangers: corrupt people persist in their crimes or 72nd position. According to the Global Corruption because they know they can avoid punishment, and Barometer 2006, 60 percent of respondents stated that the public loses confidence in the government." they had to pay a bribe in the past twelve months. Around 62 percent consider the government's action in the fight against corruption to be ineffective or nonexistent and only 20 percent find it effective. GOVERNANCE NEWS AND NOTES Page 8 VOL. 1, ISSUE 2 disclose their incomes and assets. While both pieces Over the last two to three years, the government has of legislation represent important steps forward in taken a number of important measures to step up its Morocco's struggle against corruption, they remain engagement to fight corruption. The ratification of to be officially voted into law. the United Nations Convention against Corruption (UNCAC) on May 9, 2007 is a testimony to the The legislation establishing a central body creates a government's responsiveness to the global wave of unit within the Prime Minister's Office tasked with advocacy and awareness-raising in this realm. The playing an important coordination function. Its treaty is both a declaration of intent and a mission would include collecting and disseminating commitment to making progress on a wide array of information relating to corruption; helping to issues. coordinate policies along several dimensions at both the central and sub-national levels; educating and On the domestic front, Morocco has equipped itself sensitizing the public to corruption related issues; with a broad array of legislative instruments, many and serving as the focal point for monitoring of which remain at the draft stage. Whether this law- progress in implementing the United Nations making effort will translate into concrete results is an Convention Against Corruption (UNCAC). It would open question. Critics see these laws as a form of not play a role in the investigation and prosecution window-dressing to fend off local and international of corruption, which would reside with the criticism, while supporters see them as key steps in traditional authorities--presumably first and the right direction. foremost with the Ministries of Interior and Justice. In March 2007, parliament passed a law on money Experts and members of civil society have noted that laundering and financial crime that prohibits the use the Moroccan legislation raises a number of of the financial system for criminal purposes, as well important questions. If the primary function of the as addressing the transfer of funds stemming from "Central Body" is that of coordination, then the illicit sources. The law punishes offenders with complex governance structure envisioned under the prison sentences and large fines. A new financial decree--which includes a plenary assembly, investigation unit answering to the Office of the executive commission and general secretariat--may Prime Minister has been established with a mandate prove to be too detached and elaborate. This to receive, analyze and disseminate information on function needs to be embedded directly under the suspicious transactions, and collect data on money prime minister and/or cabinet and reflect their laundering operations. central authority for the line departments to take it seriously. A government decree on public procurement was enacted on February 5, 2007. The decree increases A second issue surrounds the independence of such the time allowed for the submission of large bids, an agency. As noted above, the decree envisions an requires online publication of all call for bids notices elaborate governance structure, which is presumably and bidding process results, and to some extent, intended to help protect the central anticorruption establishes the preeminence of quality over price for body against political interference and manipulation. consultant service contracts. However, some crucial Yet the entire edifice upon which it is established--a points remain to be addressed, such as the ministerial decree--provides relatively little legal establishment of an efficient and independent protection against the central body's mandate and mechanism for alternative dispute resolution. governing practices being modified or even abolished if the prime minister finds them In November 2006, the Government adopted a draft inconvenient. It is also uncertain how much decree establishing the Central Body for the influence the plenary assembly and executive Prevention of Corruption (Instance Centrale de commission will have upon the overall functioning Prevention de la Corruption), as well as a draft law of the body. The secretary general will be appointed requiring certain categories of civil servants to by the prime minister and tasked with assisting the GOVERNANCE NEWS AND NOTES Page 9 VOL. 1, ISSUE 2 president of the central body, creating a dual National Procurement Act 2007, and joining the reporting relationship that could be awkward. The EITI. Other relevant measures include the prime minister approves the organization of work strengthening of Yemen's external and internal audit procedures and budgets. The issue of who is functions and enhancing capacity in civil service responsible for overseeing staffing is not made administration. The implementation of this explicit in the underlying regulations, although legislation is underway, and the progress so far is Article 11 notes that the president can appeal to encouraging. external experts and service providers. The roots of these anti-corruption initiatives go back The draft law on income and asset declaration could to Yemen's signature of the UN Convention against consider extending the scope to assets owned Corruption (UNCAC) on December 11, 2003. As separately by wives and children. A more important one of the first legally binding international anti- change would involve making the disclosures public, corruption instruments, the UNCAC treaty provides in the case of senior officials, to allow for more a unique opportunity to mount a global response to a public fact checking. To avoid problems of conflict global problem. It deals with the core themes of of interest, it is important that supervisors be made prevention, prosecution and international aware of the income and asset disclosure statements cooperation as well as the recovery of illicit assets. for their senior staff, particularly those handing important and/or sensitive portfolios. One of the landmark recent developments in Yemen is the creation of an 11-member Supreme Authority Although imperfect, such legislation marks an to Combat Corruption (SNACC). As per the important effort on the part of the government to National Anti Corruption Law of 2006, the SNACC address a set of issues that are important for the has its primary role to combat corruption along three country's overall development trajectory. In light of major dimensions. The first involves preventive the government's commitment to reform, as well as measures to minimize chance of corruption. The Morocco's lively press and relatively open dialogue second is investigation of reported cases of between government and civil society, the corruption; and the third is education and raising anticorruption agenda will undoubtedly continue to awareness among the citizenry about their rights and evolve. obligations under the new legal framework. The SNACC has its own corporate and legal YEMEN MOVES AGGRESSIVELY TO framework, along with financial and administrative TACKLE CORRUPTION autonomy. It is responsible for developing and approving its own anti-corruption policies, plans and BY ARUN ARYA programs and preparing its regulations. The authority performs its functions independently and Yemen does not fare particularly well in global no agency can intervene in its affairs--in fact such indices of corruption. In Transparency interventions are considered a punishable crime. International's 2007 Corruption Perceptions Index, The authority has a separate budget, to which the the country ranked 131st overall out of 179 countries standard budgeting rules and procedures are applied. in the world and 14th out of 18 in the MENA region. The authority's chairman enjoys the same power as However, in the course of last two years, Yemen has that granted to the Ministers of Finance and Civil made significant progress in addressing this Service and Insurance in terms of using funds important problem and some of the root issues that allocated for its budget and managing its activities contribute to it. The country has strengthened its and personnel. The authority will soon have a control over corruption, regulatory quality, and the general secretary to be appointed by the chairman rule of law. It has taken important steps in terms of who will be responsible for running day-to-day passing legislation likely to affect the problem of work. The authority will select its administrative corruption, including the National Anti-Corruption and technical staff through a transparent selection Act 2006, Financial Disclosure Act 2007, the process, in accordance with criteria set by its organic GOVERNANCE NEWS AND NOTES Page 10 VOL. 1, ISSUE 2 legislation. The chairman will have authority similar Looking forward, care needs be taken to not to that of the prime minister on his personnel and overburden the government's capacity to implement staff. the Financial Disclosure Act. It is important that implementation be phased in over a couple of years, While the process of locating office space, preparing particularly in view of large numbers of by-laws and recruiting staff has barely begun, the administrative, financial and procurement staff. SNACC has already started functioning at full Also, the law's efforts to deal with "hidden assets" swing. On reading a report in the media that the will need to be strengthened. Experience in other Ministry of Power has signed a MOU with a U.S. countries suggests that the practice of hiding assets based company for constructing five nuclear power by titling them in other's names is minimized by a plants valued at roughly $15 billion, the SNACC provision focusing upon the one who derives use and took "suo-moto" cognizance of the deal and benefit from the asset. conducted a preliminary investigation. Based on its findings, the SNACC wrote to the Power Minister to Reform is starting to occur in Yemen's procurement furnish all documents related with this deal. It asked process also. In recent history, procurement was the Prime Minister to stop all government often done without open and competitive bidding, commitments regarding this deal. The Prime and with little transparency or accountability. As a Minister placed this issue before Cabinet, which result of the enactment of National Procurement Law decided to cancel the contract in October 2007. 2007, along with preparation of standard bidding However, the SNACC has decided to carry on with documents and a national procurement manual, its investigation to fix responsibility within the procurement should become more transparent and government for signing this allegedly dubious the opportunities for the capture or diversion of contract. payments would be limited. Additionally, reform efforts have begun towards the establishment a new This investigation has helped to solidify SNACC's High Tender Board (HTB) for major procurements. reputation as an institution for fighting corruption in If implemented appropriately, such a reform could the eyes of common man. It has also sent a strong deny income to major beneficiaries of corruption signal to others in the government to treat this while creating new sources of revenue for the state institution with caution and respect. One indication by inspiring confidence in new potential investors. of this is the fact that almost all Ministers have filed their Financial Disclosure Statements with the Influence peddling for public jobs is a major source SNACC in compliance of the mandatory provisions of corruption, and the Ministry of Civil Service has of the newly enacted Financial Disclosure Act 2007, taken some positive steps to curb this practice. under which all proceeds accruing to a person due to Notable initiatives include returning people to their abuse of a public position or attribute shall be legitimate grade based on their qualifications, considered an illicit gain. centralizing hiring and implementing biometric systems to reduce double-dippers and ghost-workers. According to the Financial Disclosure Act, the The progress of the biometrics system is about 69 SNACC has the right to analyze financial disclosure percent complete, and about 32,000 ghost-workers statements and send cases for prosecution if there is and double-dippers have been already identified. violation of this law. Any addition to a person's There is a potential to identify about 60,000 once the finance or property, which is subject to this law, or biometrics system is fully implemented. proceeds yielded from public finance due to illegal abuse of public position or attribute, shall be The government has also recently taken a decision to considered illegal wealth. It is also pertinent to note join the Extractive Industries Transparency Initiative that any person who provides either incorrect, false (EITI) for improved transparency of oil reserves or forged information against others concerning revenues. In Yemen, the hydrocarbon sector illicit wealth could be fined or imprisoned for a accounts for about 70 percent of fiscal revenues; 90 period not exceeding three years. percent of merchandise exports; and a third of its GDP. With good governance, the exploitation of GOVERNANCE NEWS AND NOTES Page 11 VOL. 1, ISSUE 2 these resources can generate large revenues to foster countries, words with different meanings are used as growth and reduce poverty. The EITI aims to code words to represent bribes that are mostly small strengthen governance by improving transparency in amount. The following is a selection of the most and accountability in the extractive sector. The EITI commonly used terms for corruption, in addition to sets a global standard for oil companies to publish some code words used in some countries. what they pay and for the government to disclose what they receive. Benefits for implementing v Fassad O?d? is the most literal translation of the countries include an improved investment climate by word corruption. It is also the most commonly providing a clear signal to investors and the used term to refer to the concept of corruption as international financial institutions that the used in the discipline of good governance. Just government is committed to greater transparency. as in the English use of the term, the Arabic use EITI also assists in strengthening accountability and has a much broader connotation than political or good governance, as well as promoting greater administrative corruption; most broadly it means economic and political stability. This, in turn, can moral corruption or practicing anything that is contribute to the prevention of conflict based around forbidden by God or religion. The associated the oil, mining and gas sectors. verb, fassouda ??d? , is quite commonly used to refer to any process of deterioration, The Bank, in alignment with other donors working disintegration or rotting. on this agenda, has agreed to provide technical assistance to SNACC for conducting a baseline v Rashwah G??? is the literal meaning of bribe. survey on the incidence of corruption, a review of It can be used for petty or grand bribes. the existing legal and regulatory framework, Whenever penal codes in Arab countries refer to developing a national strategy and action plan to corruption, it is under this form bribery. A more combat corruption, development of an investigation colloquial translation of the term "bribe" and a mechanism, and conducting training to build synonym of rashwah is the term barteel ??s?? , capacity of SNACC. This is an important window of which is more commonly used in slang. In opportunity to help both the government and country Maghreb countries such as Morocco, rashwah as a whole to move forward on this important G??? is used to refer to corruption in order to agenda. avoid confusion with the broader connotations of the term fassad O?d? . Proponents of this nuance have been increasingly CORRUPTION concerned with the use of TERMINOLOGY IN the anti-corruption slogan THE ARABIC by fundamentalist LANGUAGE movements to denote the need for stricter BY CHARLES D. implementation of ADWAN religious teachings. The implications of such use As for most concepts, the would limit personal Arabic language is rich in privacies by restricting terms and phrases related to alcohol drinking, gender- corruption and its various mixing and other social forms. Although the uses of patterns considered as different terms may vary corrupting vices by some depending on contexts and interpretations of geographical specificities, religion. the basic terms referring to corruption or bribe are v Wasta ?t??? is a form understood across the Arab countries. In some of nepotism associated with family and tribe GOVERNANCE NEWS AND NOTES Page 12 VOL. 1, ISSUE 2 members and quite common in MENA. In its v Mouhabat G????? translates into favoritism. The simplest form, it means using a common term uses the root of the word love, hobb ? S , connection in order to receive undue benefits. which is the same as the verb to love, to prefer While it is used to cut through lines in or to favor. As the meaning indicates, it refers to government agencies, or speed up an the act of favoring someone in treatment, administrative process, its most common use is recruitment or promotion based on reasons other for entry into the job market, namely in the than merit. public administration. Although the origins of wasta ?t??? are more positive than its current v Hadr ??? means waste. At face value, the term use, it has become such an endemic problem that is used to refer to waste of public resources; many youths cite it as a main reason they however, it is also commonly used as consider immigration. Both the term and the use euphemism for corruption. When public officials of wasta ?t??? have evolved from the want to speak of corruption without being mediation practiced by tribe leaders to resolve critical or offensive to their colleagues who may conflicts within and among tribes. Mediation, be practicing it, they refer to waste rather than wassata ?s??? , which continues to be practiced corruption to avoid a defensive reaction. Unlike by elders in tribes and clans, mutated (in spelling corruption, which implies an intentional act, and use) at the time of transition from the loose waste remains vague and largely unintentional. system of tribes to the more institutionalized systems of nation states. In order to secure the v Kahwa G??? literally means coffee. It is used in allegiance of tribes, state-founders would give Morocco as a code word to say a small their leaders stakes in the government and the bakshish ? ???? or tip in return for a "favor". It administration to distribute to tribe members. is mostly used when the civil servant is asking Tribal leaders became mediators between the for the bribe. The implicit meaning is "I want a state and their members, which later became reward so small it can only buy you a cup of their constituents as they transformed to modern coffee". politicians. v Koussa ???? literally means zucchini. It is a v Bakshish ? ???? is a Turkish term that code word in Egypt to refer to corruption or survived the times of the Ottoman Empire, in the bribery. It may have originated from the lands of its former influence. In its benign form, tendency to avoid making political accusations the term means tip or small financial reward openly and be liable to the retaliation of given to waiters or parking attendants. When authorities. applied to the administration or the public bureaucracy, it means kickback or small bribe v Helwayneh ?????S isalittlegiftorrewardgiven that a civil servant expects in return for to children on holidays. It literally means small performing their duties in a speedier way, in a sweets or candies. It is commonly used in timely way or at all. Lebanon and Syria as a code word for bakshish ? ???? or tip. The use of this term v Mahsoubiah ????d?? is the general translation makes the bribe sound less demeaning and for nepotism or cronyism. It refers to a system harmful than its other synonyms. Although it is where powerful politicians or individuals use used by civil servants requesting a bribe, it is their positions to further the interests of people most commonly used as a promise by the citizen who count on them; in return, politicians can if their business was handled "smoothly"; one "count on" the beneficiaries. The stem of the example is: "I'm saving you a helwayneh word is mahsoub ??d?? , which means (reward) if you finish this transaction before the counted, accounted for or considered on others." someone's account. GOVERNANCE NEWS AND NOTES Page 13 VOL. 1, ISSUE 2 CHECKLIST OF KEY ACTIONS REQUIRED OF A GOVERNMENT ADHERING TO THE UNITED NATIONS CONVENTION AGAINST CORRUPTION BY RICK MESSICK ü Establishameritsystemforthe civilservice ü Promulgateacodeofconductforallpublicofficials andendeavortorequireofficialstodiscloseoutside activities, employment, investments, assets, and gifts that may give rise to conflicts of interest ü Createapublicprocurementsystembasedontransparency,competition,andobjectiveselectioncriteria with legal recourse for violations ü Enhancetransparencyintheorganization,functioninganddecision-makingprocessesofthepublic administration by such measures as freedom of information legislation ü Instituteacomprehensiveregulatoryschemetopreventmoneylaunderingandconsidercreatingfinancial intelligence unit to receive, analyze, and disseminate reports of suspicious transactions ü Outlawtheofferingorsolicitingofabribebyapublicofficial,influencepeddling,theabuseofapublic position, and illicit enrichment ü Ensuretheconcealmentoftheseacts,theobstructionofcorruptioninvestigations,andattemptstocommit corrupt acts are criminal offenses ü Providealongstatuteoflimitationsforbribery andothercorruptactsandprovideforitssuspensionwhen an offender has evaded prosecution ü Makesurethepenaltiesforcorruptactsreflectthegravityoftheoffense,thatimmunitiesforpublic officials are not overbroad, and that if there is discretion to prosecute it is exercised with due regard for the need to deter corruption ü Establishprocedurestofreeze,seize,andconfiscatetheproceedsofcorruptactsand permitthoseinjured by corrupt acts to initiate an action for damages ü Removeanyobstaclesposedbybanksecrecylawstoinvestigatingcorruption ü Takeadequatemeasurestoprotectthosewhowitnessorreportcorruptacts ü Establishmeasuresthatencourageparticipantsincorruptactstodisclosetheiractions;considerproviding such individuals with immunity or reduced sentences in return ü Cooperatewithothergovernmentsonanticorruptioninvestigationsandprosecutionsthroughproviding information requested by another government and complying with extradition requests, or in the case of its own nationals either extraditing or prosecuting them ü Ensurethattheproceedsofcorruptactscommittedinotherstatesandlocatedinitsterritorycanbe promptly returned GOVERNANCE NEWS & NOTES Page 14 VOL. 1, ISSUE 2 Transparency International 2007 Corruption Perceptions Index for MENA Countries World Regional 2007 CPI 2006 CPI Confidence Surveys Rank rank Country Score Score range Used 32 1 Qatar 6.00 6.00 5.4 - 6.4 4 34 2 United Arab Emirates 5.70 6.20 4.8 ­ 6.5 5 46 3 Bahrain 5.00 5.70 4.2 ­ 5.7 5 Oman 4.70 5.40 3.9 ­ 5.3 4 53 4 Jordan 4.70 5.30 3.8 ­ 5.6 7 60 6 Kuwait 4.30 4.80 3.3 ­ 5.1 5 61 7 Tunisia 4.20 4.60 3.4 ­ 4.8 6 72 8 Morocco 3.50 3.20 3.0 ­ 4.2 7 79 9 Saudi Arabia 3.40 3.30 2.7 ­ 3.9 4 99 10 Lebanon 3.00 3.60 2.2 ­ 3.6 4 Algeria 3.00 3.10 2.7 ­ 3.2 6 Djibouti 2.90 - 2.2 ­ 3.4 3 105 12 Egypt 2.90 3.30 2.6 ­ 3.3 7 Yemen 2.50 2.60 2.1 ­ 3.0 5 Libya 2.50 2.70 2.1 ­ 2.6 4 131 14 Iran 2.50 2.70 2.0 - 3.0 4 138 17 Syria 2.40 2.90 1.7 ­ 2.9 4 178 18 Iraq 1.50 1.90 1.3 ­ 1.7 4 - - Average Score 3.80 3.96 - - Transparency International has been launching its yearly Corruption Perceptions Index (CPI) since 1995. Despite some methodological limitations and the fact that it is based upon perceptions, not actual evidence of corruption, the CPI remains one of he most widely used indices on corruption. In 2007 the CPI ranked 180 countries based on scores t derived from data collected from surveys conducted by several sources, including the World Bank's CPIA and the World Economic Forum's Global Competitiveness Report. Because countries are frequently added or removed from the Index due to availability of data, it is not appropriate methodologically to compare country rankings from one year to the next (i.e. Jordan slipped from 40th in 2006 to 53rd in 2007 in overall world rankings), although such comparisons are common in the popular press. The CPI score, which provides a numerical ranking on a scale of 1 to 10, is a more accurate way to compare countries, while taking into consideration that the number and kind of sources used may affect this score as well. For 2007, most MENA countries showed declines in their CPI scores on the index. Out of the 18 ranked MENA countries, the Index recorded declines of more than 0.3 on the scores of 10 countries, 4 out of which showed declines of more than 0.6 (out of 10). These changes in scores fall within the margin of error, which reduces their statistical significance. The MENA average regressed by about 0.2 points. The distribution remained largely unchanged, with countries being divided into roughly three thirds: the upper, medium and the low performers. For further information, please visit: http://www.transparency.org GOVERNANCE NEWS & NOTES Page 15 VOL. 1, ISSUE 2 UPCOMING EVENTS AND ACTIVITIES NOTEWORTHY LINKS Ø January21-23,2008:GfDRegional World Bank MENA Governance Website Conference on Supporting the http://www.worldbank.org/mena-governance Implementation of the "United Nations Convention against Corruption" (UNCAC) in World Bank General Governance Website: Arab Countries: Dead Sea, Jordan. In http://www.worldbank.org/governance cooperation with the Ministry of Justice and the Arab Region Parliamentarians Against Anti-Corruption Commission in Jordan. lina.ghoussoub@undp.organd www.undp.org Corruption:www.arpacnetwork.org The Arab Anticorruption Organization: Ø January28-February1,2008:2ndSessionof www.arabanticorruption.org the Conference of the States Parties to the The Coalition for Accountability and Integrity - United Nations Convention against AMAN: www.aman-palestine.org Corruption: Bali International Convention Center, Nusa Dua, Transparency International: Indonesia. www.csp2indonesia.org www.transparency.org UNDP-POGAR: Programme on Governance in Ø February3rd, 2008:StrategyMeetingwith the Arab Region: www.undp-pogar.org Corporate Governance Steering Committee of Bahrain: Manama, Bahrain, Facilitated by the Center for International Private To subscribe or to change your subscription Enterprise (CIPE) and the Commercial Law status, please contact: Development Program (CLDP) Hosted by the Ministry of Industry and Commerce. Ms. Alexandra Sperling mkortbawi@cipe.org and www.cipe.org Economic and Social Development Unit Middle East & North Africa Vice Ø February3-5,2008:FourthGlobalCongress Presidency on Combating Counterfeiting and Piracy: The World Bank Mina A'Salam Hotel, Madinat Jumeirah, Dubai, 1818 H. Street N.W. UAE. Organized by the WCO and Dubai Washington, D.C. 20433 Customs, convened by Interpol, the World +1 (202) 473-7079 Intellectual Property Organization (WIPO), the +1 (202) 477-0432 (fax) International Chamber of Commerce (ICC) asperling@worldbank.org through its BASCAP Initiative, the International Trademark Association (INTA) and the International Security Management Association (ISMA). jerome.auchere@iccwbo.org and www.ccapcongress.net Ø February6th, 2008:Conferenceon"Building a Corporate Governance Framework for Yemen" with key stakeholders from the public and private sector: Sana'a, Yemen. Organized by the Yemen Businessmen Club (YBC) and CIPE in cooperation with the Hawkamah Institute and the Global Corporate Governance Forum. mkortbawi@cipe.org and www.cipe.org GOVERNANCE NEWS & NOTES Page 16 VOL. 1, ISSUE 2 FOR FURTHER READING Bardhan, Parnab. 1997. "Corruption and Development: A Review of Issues." Journal of Economic Literature 35: 1320-1346 Dollar, David, Mary, Hallward-Driemeier, and Taye Mengiste. 2003. "Investment Climate and International Integration," draft paper prepared for Conference on the Future of Globalization, Yale Center for the Study of Globalization, October 11, Washington DC: World Bank. Heilbrunn, John R. 2004. "Anticorruption Commissions: Panacea or Real Medicine to Fight Corruption," World Bank Institute, Washington D.C. Kaufmann, Daniel, Sanjay Pradhan, and Randi Ryterman. 1998. "Diagnosing and Combating Corruption: A Framework with Application to Transition Economies." Washington DC: World Bank. Kenny, Charles. "Measuring and Reducing the Impact of Corruption in Infrastructure. 2006. World Bank Policy Research Working Paper 4099. Washington DC: World Bank. Knack, Stephen. 2006. "Measuring Corruption in Eastern Europe and Central Asia: A Critique of the Cross-Country Indicators," World Bank Policy Research Working Paper No. 3968. Mauro, Paolo. 1997. "The Effects of Corruption on Growth, Investment, and Government Expenditure: A Cross-Country Analysis" in Kimberly Ann Elliott, ed. Corruption and the Global Economy, Washington DC: Institute for International Economics, pp. 83-108. Meagher, Patrick. 2005. "Anticorruption Agencies: Rhetoric Versus Reality," The Journal of Policy Reform, Vol. 8, No. 1 March, pp. 69-103. Rose-Ackerman, Susan. 1996. "The Political Economy of Corruption--Causes and Consequences." Viewpoint 74. Washington DC: World Bank. Rijckeghem, Caroline Van and Beatrice Weder, 1997. "Corruption and the Rate of Temptation: Do Low Wages in the Civil Service Cause Corruption?", IMF Working Paper. Washington DC:International Monetary Fund. United Nations Convention against Corruption, Disclaimer: views expressed in this publication reflect those of their authors and do not necessarily represent the views of the World Bank Group, its Board or its management.