From Africa Recovery, Vol.11#1 (July 1997), page 26

Africans taking action on corruption

International community also begins to target corporate bribery

By Ernest Harsch

As more and more African countries move to curb corruption among their own officials, the UN and donor governments have begun throwing a spotlight on bribery and other international corporate and trading practices that contribute to the problem.

The importance of combating corruption in Africa was signaled in one of Mr. Kofi Annan's first interviews as UN Secretary-General, in which he stressed that economic development on the continent "implies good governance, competent elites and, above all, the disappearance of corruption." In early February he met with Mr. Peter Eigen, Chairman of the anti-corruption organization Transparency International, and pledged support for the campaign it is waging jointly with the Global Coalition for Africa. Mr. Annan noted the adoption by the UN General Assembly on 16 December 1996 of a declaration against international corruption and bribery (see box).

In line with the UN declaration, the industrialized countries' Summit of the Eight held in Denver in late June urged governments in developed countries to make the bribery of foreign officials illegal. In April, the Swiss government agreed to return $2.2 mn to Mali, the first time Switzerland will actually repatriate the funds of a former head of state (Gen. Moussa Traoré) in response to claims by a successor government that embezzled funds had been deposited in Swiss banks illegally. Switzerland also agreed in May to freeze any assets of former Zairean President Mobutu Sese Seko located in the country.

Such an emphasis on the international aspects of corruption marks a notable shift. Until recently, the tendency in the North was to bemoan corruption in Africa and other developing regions, but to virtually ignore the role of those abroad who give out bribes, launder corrupt proceeds or otherwise undermine the integrity of public institutions. In fact, bribes have often been considered "legitimate business expenses" and have been tax-deductible in many industrialized countries, noted Ms. Frene Ginwala, Speaker of the South African Parliament, at a European business ethics conference in Germany in September. She urged instead a more accurate and evenhanded portrayal of the problem: "Let us be honest and admit that there are two parties to the transaction, the giver and the recipient, the corrupt businessman or company, and the equally corrupt politician or official."

A 'cancerous' malady

Since the start of the 1990s, as Africa has moved more forcefully toward improved management of public resources and institutions, the need to actively counter corruption has taken an increasingly prominent place on many reform agendas. Democracy activists, the media, political leaders, entrepreneurs and others have strongly condemned the malady, noting that it not only drains scarce state resources, but also hampers efforts at broader economic and social development.

As non-governmental organizations (NGOs) from Eastern and Southern Africa noted at a November 1995 conference in Arusha, Tanzania, corruption has reached "cancerous proportions" in Africa, with an "extremely negative impact ... on development and on the fight against poverty."

Recent scandals in Brazil, France, Italy, Japan, Mexico, the US and other countries indicate that corruption is a worldwide phenomenon. But in Africa, the poorest continent, its effects have been especially harmful. In some African countries corruption has been so pervasive that even the most basic public services have been crippled and virtually no financing is left over for public investment. Corrupt officials and their external partners have siphoned away billions of dollars from the continent into secret foreign bank accounts, probably accounting for a significant share of the continent's stock of flight capital, which the UN Economic Commission for Africa has reported to be an estimated $148 bn. The new government of the Democratic Republic of the Congo (formerly Zaire) charges that Mr. Mobutu and his entourage had diverted some $8 bn into foreign accounts, businesses and real estate holdings.

Even in less extreme cases, corruption tends to inflate government expenditures. Economists estimate that in investment or development projects marked by corruption, between 10 and 20 per cent may be added to the final cost of goods and services because of bribes, sales "commissions" and the direct diversion of funds. Sometimes the projects themselves have collapsed because they were poorly conceived or used substandard materials. Where such projects have been undertaken with external financing, the additional or unnecessary expenditures brought about by corruption have contributed to Africa's foreign debt.

"It is the citizen in developing countries who bears the cost of bribery," said Ms. Ginwala, "directly through the increased costs of government procurement contracts, consumer products or economic infrastructure in the host country, and indirectly through loss of state revenue which the developing state can ill afford." Assessing the costs of corruption will be the focus of an upcoming meeting of the Global Coalition for Africa, to be held 31 October-1 November in Maputo, Mozambique.

Remedial measures

In recent years, an increasing number of African countries have been taking more resolute action to stem such losses. One factor has been the rise in political pluralism and public accountability, since opposition parties, independent newspapers, and other avenues for public expression make it harder to cover up high-level corruption or avoid action against officials suspected of misdeeds. "Democracy is fundamental to the battle against corruption," observed the participants at a September 1994 seminar on corruption organized in Benin by the Africa Leadership Forum and Transparency International.

A variety of measures and institutions have been introduced to facilitate corrective action, including special investigative and audit commissions, codes of conduct that seek to prevent a casual blending of public duties and private business, and mandatory disclosures of officials' assets, to make it harder to use public positions for self-enrichment.

In Tanzania, a special commission on corruption headed by former Prime Minister Joseph Warioba presented its 521-page report on 7 December 1996 to President Benjamin Mkapa, who promptly released it to the press the following day, despite the fact that it implicated a number of former and current high-level officials. The report urged immediate action to clean up the political leadership, judiciary and state organs, especially the police, and within a few days led to the resignation of a cabinet minister and the dismissal of two judges.

South Africa adopted an "ethics code" for all members of parliament (MPs) in August 1996. Proclaiming the need to "achieve a political order ... that is truly open, transparent and accountable," it provides for a public register of all incomes, properties and assets of MPs and their relatives and companions. By October 1996, the deadline for MPs to declare their assets, virtually all had complied.

Governments and parliaments in Mali, Mozambique, Burkina Faso and other African countries have adopted similar asset declarations, although not all are publicly released, making it difficult to verify their accuracy.

Regional cooperation among African countries is also increasing, aimed at countering trade malpractices and inhibiting the flow of illegal funds across African borders. In October 1996, under the sponsorship of the Commonwealth, 15 countries of Eastern and Southern Africa met in Cape Town to discuss action against the laundering of "dirty money." In February 1997, customs services from throughout the Economic Community of West African States (ECOWAS) gathered in Senegal and pledged to cooperate more closely in the fight against trade-related fraud.

Spurring international action

Africa's anti-corruption campaigners must also contend with external actors who often have perpetuated and aggravated the problem. In Benin, Mali, and several other countries in recent years, courts trying corrupt former officials have uncovered clear evidence of foreign involvement, but those implicated have been beyond the reach of national jurisdictions. At a November 1995 conference of the Global Coalition for Africa, African participants were shocked to learn that in many industrialized countries the bribery of foreign officials is not only legal, but sometimes tax-deductible. In addition, efforts in Africa to recover embezzled funds diverted into foreign accounts have often run up against the problem of banking secrecy, and Swiss authorities have professed difficulty in uncovering accounts set up by Mr. Mobutu and his relatives, announcing in early June that they had been able to identify only some $3.4 mn.

Because of such external influences and obstacles, Africa's anti-corruption efforts can make only limited headway on their own, argue Transparency International and other organizations. Gradually, the international community has come to acknowledge the problem.

In May 1994, the industrialized countries' Organization for Economic Cooperation and Development (OECD), headquartered in Paris, recommended that all member states "take effective measures to deter, prevent and combat the bribery of foreign public officials in connection with international business transactions." The Council of the OECD subsequently urged ending tax deductibility for foreign bribes and criminalizing the bribery of foreign officials (which only the US had previously done, in 1977). The OECD recommendations are non-binding, but they have spurred some governments to begin modifying their legislation.

The International Monetary Fund (IMF) and World Bank, at their joint annual meeting in Washington in September-October 1996, also addressed the issue of corruption more explicitly and extensively than before. They pledged to take determined action to eliminate corruption from their own lending programmes and to encourage governments to act against the malady.

"Let's not mince words," World Bank President James Wolfensohn declared, "we need to deal with the cancer of corruption. In country after country, it is the people who are demanding action on this issue." IMF Managing Director Michel Camdessus said that Fund officials would now regard it as their "duty" to press for anti-corruption reforms in countries seeking loans, although such changes would not be made an explicit loan requirement.

While welcoming the IMF and World Bank moves, Mr. Eigen of Transparency International cautioned donor institutions more generally against allowing "elements of conditionality" to creep into their anti-corruption initiatives. "Reforms have to be home-grown and self-administered," he said. "Any attempt to inflict anti-corruption policies from the outside would be doomed to fail."

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BOX 1:

Promoting social responsibility and ethics

The General Assembly, in its 16 December 1996 "UN Declaration Against Corruption and Bribery in International Commercial Transactions," stressed the need to "promote social responsibility and appropriate standards of ethics on the part of private and public corporations, including transnational corporations, and individuals...." Combating corruption and bribery are essential for all countries, it said, to "enhance fairness and competitiveness in international commercial transactions," transparent and accountable governance, and economic and social development. It noted that such efforts "are especially pressing in the increasingly competitive globalized international economy."

Toward that end, the member states committed themselves to "combat all forms of corruption, bribery and related illicit practices," among other steps by criminalizing the bribery of foreign officials, denying the tax deductibility of bribes, developing improved accounting standards, reinforcing international collaboration among investigatory and judicial institutions, and ensuring that bank secrecy provisions do not impede legal action.

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