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December 18th, 2008

Giving in to Ali Baba

Posted by: Bill Tarrant

I once paid a cop 30 ringgit (about $10 then) for making an apparently illegal left-hand turn in Kuala Lumpur. Scores of drivers in front of me were also handing over their “instant fines”, discreetly enclosed within the policeman’s ticketing folder. It was days ahead of a major holiday and the cops were collecting their holiday bonus from the public.

Malaysia opposition leader Anwar Ibrahim holds a disc he says contains evidence of judge-fixing in Malaysia 

I felt bad about this, of course. What I was doing was illegal, immoral and perpetuating an insidious culture that goes by many names in the East — “baksheesh” in India, “Ali Baba” (and his 40 thieves) in Malaysia, “swap” in Indonesia (means “to feed”).  But the policeman pointed out I would have to take off the good part of a day to go to court and pay 10 times as much to the judge. So I rationalised: “When in Rome…”

Alas it was not the first time, nor would it be the last that I have (ahem) paid an “informal levy” to officialdom. I’ve given baksheesh to the phone company in India to get a telephone installed, and to get a driver’s license without a test (no wonder there are so many accidents in India.)  I’ve paid the immigration officer at Jakarta airport to let me in with a nearly expired passport.

Many of my friends in Asia have similar tales to tell about bribing customs agents, power companies, hospitals, schools — anybody with the power to give a license or provide a service. A couple of bucks here, a couple there. Pretty soon you’re talking about real money. Daniel Kaufmann, who spearheaded the World Bank’s efforts to improve the study of governance and the rule of law estimates that $1 trillion of bribes are paid every year. A Reuters series on corruption in Asia found that perceptions of corruption in the emerging markets of Asia have not improved much over the years and have even declined in some cases. This is despite a growing revulsion among people in those countries for business as usual on the “demand” or government side, and a growing realisation from companies on the “supply side” of the bribery equation that payola is simply bad for business.

  Protester holds a  wanted poster for ousted Thai premier Thaksin Shinawatra at a mass anti-government rally in Bangkok.

Part of the problem is mindset and a major attitude adjustment might be needed. People may be fed up with “money politics” and crony capitalism in their countries, but they still pay off people in their neighbourhoods. A U.S. National Bureau of Economic Research study on unpaid parking fines issued to diplomats in New York, home to the U.N., showed Southeast Asian nations again among the league leaders and a remarkable correlation with more conventional measures of corruption. You can take the man out of his corrupt country, but you can’t take the culture of corruption out of the man. 

Anti-graft fighters model uniforms that those convicted of corruption offenses inIndonesia willbe required to wear in court and jail.

    For years, Indonesia ranked among the most corrupt countries in the world.  It permeates almost every level of society, reducing the country’s appeal to foreign investors, and curbing Indonesia’s potential for growth.  Today, Indonesia’s anti-corruption agency, known by its acronym KPK, has won plenty of media attention with its Jame Bond-like undercover exploits against corrupt officials.  The government is also trying to get at the root of the problem by sending officials and judges to “anti-corruption school.

    Passers-by in Jakarta walk past a poster that reads “fight corruption.” 

Some OECD countries will even let you take a tax deduction for providing “facilitation payments” to get routine services such as a phone installed. Facilitation payment? Hello, it’s called a bribe, payola, grease, ice, a backhander. It’s corruption, the dictionary definitions of which include moral perversion, depravity, debasement, not to mention rottenness. Okay, that’s a little harsh. We’re not talking about the moral equivalent of, say, paedophilia. But it’s surely a slippery slope from giving the cop some lunch money, to bribing the customs guy to look the other way on a smuggled shipment, to paying off politicians.

Ramon Navaratnam, 73, the Transparency International Malaysia President told me the battle for him started when he was a young man in the finance ministry and he came home one night from work to find a case of whisky on his doorstep from a company bidding on a government contract. “It took a lot of doing, but the company finally took the whisky away. “If I had taken that box of whisky, I can never say no later on.”

November 26th, 2008

Fighting graft in Africa. Or not.

Posted by: Matthew Tostevin

 A little while back, we asked who is and isn’t fighting corruption effectively in Africa. This week, a number of examples bring us back to the subject.

 

In Tanzania, two former ministers have been charged with flouting procurement rules over the award of a tender for auditing gold mining back in 2002. The pair, who deny wrongdoing, served in the government of President Jakaya Kikwete’s predecessor Benjamin Mkapa. One of them also served under Kikwete himself.

 

Tanzania’s pledge to fight corruption is under close donor scrutiny and given the level of aid that Tanzania gets - more than one tenth of GDP by 2005 figures - it has little choice but to show willing. There have been doubts in the past, however, about how serious the government really was about going after the most senior and the best connected.

 

“By hauling the long-serving politicians to court, the Government has dispelled the rumour that some influential personalities are being shielded,” commented The Citizen newspaper of the charges against the former ministers.

 

Is Tanzania’s anti-graft drive now fully on course or will these two turn out to be scapegoats while others are ignored?

 

Next door in Kenya, hit by a series of major corruption scandals over the years, it looks as though an official inquiry is likely to clear former finance minister Amos Kimunya of any wrongdoing in the sale of a luxury hotel and he told Reuters he hoped to get his job back.
 

But lawmakers who passed a vote of no confidence in Kimunya have vowed to stop him returning to the Treasury whatever that inquiry says - its findings have not yet been made public. Critics argue that the separate inquiry was duplicating the work of the parliament. Some warn of a possible tussle between parliament and President Mwai Kibaki if he does try to bring Kimunya back.
 
“The main risk, of course, is that the decision making process becomes overly politicized and that those on the losing side in the power struggle decline to bow out gracefully,” commented Richard Segal of UBA Capital. www.ubacapital.com

 

In Nigeria, the troubles of the former head of the anti-corruption agency are back in the headlines.

 

Nuhu Ribadu was sacked by President Umaru Yar’Adua’s administration despite winning favour from many Nigerians, foreign investors and western donors as head of the Economic and Financial Crimes Commission. He had targeted some senior politicians and was widely credited with doing more than anyone had previously, although critics accused him of pursuing only those out of favour with former President Olusegun Obasanjo.

 

Ribadu’s position has been getting ever rockier since he was sacked and demoted. At the weekend, he and his family were bundled out of a graduation ceremony from the government institute where he was sent after being fired from his top post – although the presidency later intervened to say he would get his certificate after all and ordered an inquiry into the incident.

 

“The entire Ribadu family must by now be wondering, as are millions of other Nigerians, if it’s a curse to serve this country with all one’s heart and whether it’s a country worth dying for,” wrote Thisday’s Funke Aboyade after the ceremony.

Ribadu may now face a police disciplinary panel next month. Meanwhile, a top official of the anti-corruption agency has resigned after failing to report suspicious payments, another setback for the troubled body.

 

The very different examples bring up the issue of how politics complicates the fight against corruption - something in no way exclusive to Africa. Is it possible to fight corruption without truly independent and trustworthy police and courts? And if not, how is it possible to put those in place when leaders promise to stamp out graft but fail to live up to their words?

 

As one Nigerian leader remarked not so long ago: “This administration will mobilise all resources at its disposal to fight the menace of corruption.”

 

President Yar’Adua? His predecessor President Obasanjo? No. That was General Sani Abacha, who died in suspicious circumstances a decade ago with billions of dollars thought to be stashed in foreign bank accounts (If you still get emails from people purporting to be his relatives, it’s probably best not to reply).

October 6th, 2008

Is Africa run better than before?

Posted by: Matthew Tostevin

“People look at headlines from two or three countries and forget there are 55 countries in Africa and in most of them life is normal.”

That is what Mo Ibrahim, a Sudanese-born telecoms entrepreneur and one of Africa’s best known business leaders, told Reuters at the launch of the 2008 Index of African Governance by his foundation.

Sudanese-born telecommunications entrepreneur Ibrahim speaks at a news conference - April 2008/Finbarr O'Reilly / Reuters

The index showed that governance had improved in almost two-thirds of the countries in sub-Saharan Africa since the 2007 index.

It follows weeks after the Transparency International corruption perceptions index, on which African states featured heavily among the worst offenders.

The Ibrahim Index is based on criteria including corruption, economic stability, security, rights, laws, elections, infrastructure, poverty and health.

The winner - Mauritius - will not be much of a surprise and nor will the fact that Somalia was in last place. Liberia had shown the most improvement.

Despite the dramatic headlines from Africa’s crisis zones, an overall improvement in governance is one of the reasons cited by investors for unprecedented financial flows to Africa in recent years.

“Africa is open for business,” Ibrahim told us. “Investors should look at our growth. And with the global financial situation the way it is, perhaps their money is safer in Africa than in the U.S.”

But how deep does any improvement in governance go? How long might it last? Who is doing well and who should do more? What do you think?