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Global Corruption Report 2006

Global Corruption Report 2006: Special Focus: Corruption and Health

Transparency International
Copyright Date: 2006
Published by: Pluto Press
Pages: 384
Stable URL: http://www.jstor.org/stable/j.ctt184qq53
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    Global Corruption Report 2006
    Book Description:

    "TI has once again shown its ability to combine research and policy analysis not just to shine a light on the deeply embedded problems of corruption ... but to propose progressive solutions." Former World Bank President James Wolfensohn on the Global Corruption Report In the health sector, corruption is a matter of life or death. It can take many forms: from medical professionals who sell medicines or services that should be freely available, to high-level government officials who embezzle money from health budgets, to pharmaceutical companies that buy influence over research agendas. The impact of corruption is always felt by the end user -- the sick person who is forced to pay over the odds or who is given unsafe, counterfeit medicines. The 2006 edition of Transparency International’s Global Corruption Report shows the impact that corruption has on health care in rich and poor countries. From high-level bribery in Costa Rica to informal payments in Hungary, case studies from around the world explore the characteristics of the health sector that make it so prone to corruption. In a special section dedicated to corruption in HIV/AIDS, the report warns that the large sums being poured into fighting the world’s deadliest diseases need to be safeguarded against abuse. There is also a detailed analysis of the problems of the pharmaceutical system. The report also offers an annual round-up of worldwide developments and tracks major trends in more than 40 countries. The Global Corruption Report 2006 is the only report of its kind, and is an essential reference source for anyone who wants the latest research on how corruption affects everything from health to education and the oil and gas industries.

    eISBN: 978-1-84964-311-5
    Subjects: Political Science
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Table of Contents

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  1. Front Matter (pp. i-iv)
  2. Table of Contents (pp. v-ix)
  3. Acknowledgements (pp. x-xi)
  4. Preface (pp. xii-xiii)
    David Nussbaum, Chief Executive and Transparency International
  5. Foreword (pp. xiv-xv)
    Mary Robinson

    The human rights community needs to pay even more attention to corruption.

    The highest attainable standard of health is one of the fundamental rights of every human being, incorporated in article 12 of the International Covenant on Economic, Social and Cultural Rights. Corruption – alongside poverty, inequity, civil conflict, discrimination and violence – is a major issue that has not been adequately addressed within the framework of these basic rights. It leads to the skewing of health spending priorities and the leaching of health budgets, resulting in the neglect of diseases and those communities affected by them; it also means that poor...

  6. Executive summary (pp. xvi-xxii)
    Transparency International

    Every year, the world spends more than US $3 trillion on health services, most of which is financed by taxpayers. These large flows of funds are an attractive target for abuse. The stakes are high and the resources precious: money lost to corruption could be used to buy medicines, equip hospitals or hire badly needed medical staff.

    The diversity of health systems worldwide, the multiplicity of parties involved, the paucity of good record keeping in many countries, and the complexity in distinguishing among corruption, inefficiency and honest mistakes make it difficult to determine the overall costs of corruption in this...

  7. Part one: Corruption and health
    • 1 The causes of corruption in the health sector: a focus on health care systems (pp. 3-24)
      William D. Savedoff, Karen Hussmann, William D. Savedoff, Malcolm K. Sparrow and Lisa Prevenslik-Takeda

      Corruption exists in all types of health care systems. William Savedoff and Karen Hussmann look at the reasons why the health sector is especially vulnerable to corruption, and ask whether the vulnerabilities are different in kind and in magnitude, depending on the type of system chosen. An analysis of Colombia and Venezuela shows that very different manifestations of corruption emerged as the two countries’ health care models diverged.

      If there is corruption, no matter which system is opted for, and how well it is funded, health spending may not lead to commensurate health outcomes. In the United States, Americans spend...

    • 2 The scale of the problem (pp. 25-47)
      Emilia González, Magnus Lindelow, Inna Kushnarova, Kai Kaiser, Omar Azfar, Tugrul Gurgur, Richard Rose, Helena Hofbauer and Jim Gee

      While it is impossible to determine the overall costs of corruption in the health sector worldwide, it is evident that it amounts to tens of billions of dollars. Indeed one US estimate of annual earnings from the sale of counterfeit drugs alone puts the annual cost at more than US $30 billion, which is just the tip of the iceberg of health care corruption.

      In this chapter, the World Bank’s efforts to track expenditure in health give an indication of costs by tracking how much money dispersed by higher levels of government fails to reach its intended recipients. New data...

    • 3 Corruption in hospitals (pp. 48-61)
      Taryn Vian, Ana First and Michael Smith

      As the loci of a large proportion of health spending – and given their size and complexity – hospitals provide many opportunities for corruption, as Taryn Vian describes. Money leaks from hospitals through opaque procurement of equipment and supplies, ghost employees, exaggerated construction costs and inflated hospital price tags. In developing countries the result is a depleted budget for other necessary health care services such as primary health care programmes.

      Ultimately it is patients that suffer, either because they are asked to pay bribes for treatment that should be free, or because treatment decisions are based on financial motivation rather than medical...

    • 4 Informal payments for health care (pp. 62-75)
      Sara Allin, Konstantina Davaki, Elias Mossialos, Péter Gaál, Azeddine Akesbi, Siham Benchekroun and Kamal El Mesbahi

      Informal payments – charges for services or supplies that are supposed to be free – are common in many parts of the world, especially in developing and transition countries. While it is difficult to draw a line between voluntary gift and mandatory payment, and between payments that should be considered bribes or extortion, and those that are better understood as a coping mechanism for underpaid caregivers, there is less disagreement about the damaging effects these payments have on health systems worldwide.

      Sara Allin, Konstantina Davaki and Elias Mossialos look at the causes and consequences of informal payments in Central and Eastern Europe...

    • 5 Corruption in the pharmaceutical sector (pp. 76-102)
      Jillian Clare Cohen, Transparency International, Jerome P. Kassirer, Harvey Bale, John R. Williams, Dora Akunyili and Stuart Cameron

      The pharmaceutical sector faces many challenges that are not addressed in this volume, including patterns of research and patent systems that do not seem to be meeting all public health needs, particularly in eradicating devastating tropical diseases. Corruption adds a potentially deadly element when patients cannot afford extortion payments for the drugs they need, or they are sold counterfeit medicines.

      In this chapter, Jillian Clare Cohen argues that heavy government regulation in the pharmaceutical chain – while essential to safeguard the population against sub-standard drugs and unfairly priced goods – makes this sector particularly prone to corruption. In recent years, much discussion...

    • 6 Corruption and HIV/AIDS (pp. 103-116)
      Liz Tayler, Clare Dickinson, Toby Kasper, Kipkoech Tanui and Nixon Ng’ang’a

      While the corruption that affects HIV/AIDS prevention and treatment does not look very different from corruption found in other areas of the health sector, the scale of the pandemic, the stigma attached to the disease and the high costs of drugs to treat it magnify the problem. The response to HIV/AIDS must involve an increase in funds available to purchase drugs. But scaling up budgets without paying due regard to the anti-corruption mechanisms needed to ensure their proper use provides further opportunity for corruption. A case study from Kenya shows a worst-case scenario, of corruption and profligacy at the national...

  8. Part two: Country reports
    • 7 Lessons learned from anti-corruption campaigns around the world (pp. 119-122)
      Cobus de Swardt

      The past year saw the unfolding of several dramatic corruption scandals, including the removal of the vice-president in South Africa after corruption allegations; investigations of heads of state or former political leaders in Israel and Costa Rica; and major corruption trials in France, Nepal and Venezuela. No country is immune to graft. As New Zealand and Finland demonstrate inthe Global Corruption Report 2006, even countries that are consistently ranked in the top 10 in Transparency International’s Corruption Perceptions Index experience lapses in accountability. Corruption affects all sectors of society, from construction (France and Malaysia in this book), education (Uganda)...

    • 8 Country reports
      • Algeria (pp. 123-126)
        Djilali Hadjadj

        AU Convention on Preventing and Combating Corruption (signed December 2003; not yet ratified)

        UN Convention against Corruption (ratified August 2004)

        UN Convention against Transnational Organized Crime (ratified October 2002)

        A unit to process financial information, appointed by presidential decree in April 2004, became operational in the Ministry of Finance in December 2004. The unit is an independent body with responsibility for receiving, analysing and dealing with suspicions relating to banking or financial operations that may constitute money laundering or the financing of terrorism.

        A draft anti-corruption law that brings legislation into line with the UN Convention against Corruption had its...

      • Bangladesh (pp. 126-130)
        Iftekhar Zaman, Sydur Rahman and Abdul Alim

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (not yet signed)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001) The long-awaited Anti-Corruption Commission was set up in November 2004, allowing the government to claim credit for meeting its electoral commitments, as well as responding to the demands of civil society and international donors (seeGlobal Corruption Report 2005). But a troublesome takeoff, questionable staff policies and curbed financial independence led TI Bangladesh and other NGOs to question the commission’s potential to curb graft (see below).

        A cabinet meeting in December 2004 approved the appointment of...

      • Bolivia (pp. 130-132)
        Guillermo Pou Munt Serrano

        OAS Inter-American Convention against Corruption (ratified February 1997)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        Members of the justice department and presidential anti-corruption delegation are drafting a conflict of interest law that is expected to be approved in 2005. The law is aimed at bringing Bolivian legislation on the issue into line with the Inter-American Anti-corruption Convention and is being drafted with the support of a US-funded anticorruption programme.

        An amendment to the penal code is being drafted under the same process as above, and...

      • Brazil (pp. 133-135)
        Ana Luiza Fleck Saibro

        OAS Inter-American Convention against Corruption (ratified July 2002)

        OECD Anti-Bribery Convention (ratified August 2000)

        UN Convention against Corruption (ratified June 2005)

        UN Convention against Transnational Organized Crime (ratified January 2004)

        New legislation regulating public–private partnerships (PPPs) was approved in December 2004. The PPP is a relatively new method of financing and developing infrastructure in Brazil. Mechanisms were introduced into the new law to curtail opportunities for private sector companies to unduly influence the terms of a PPP tender.

        After 13 years of discussions and negotiations, congress passed a constitutional amendment in December 2004 aimed at streamlining the judiciary and...

      • Burkina Faso (pp. 136-139)
        Luc Damiba

        AU Convention on Preventing and Combating Corruption (ratified March 2005)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified May 2002)

        In March 2005, the National Ethics Committee submitted its report for 2003 to the prime minister after a delay of one year. It highlighted the lack of professionalism, weak governance and corruption in public service, and recommended the adoption of public sector codes of conduct for the departments of public administration, health, education, security and finance. The nine-member committee also conducted ethics training with parties, ministries, parliamentarians and civil society organisations...

      • Cameroon (pp. 139-142)
        Jean-Bosco Talla and Maurice Nguéfack

        AU Convention on Preventing and Combating Corruption (not yet signed)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        A law passed in September 2004 instituted a new procurement code (see below).

        A decree in February 2005 laid down the rules for a new committee to coordinate the fight against fraud, smuggling and forgery. Its remit is to review existing regulations and propose changes; initiate administrative investigations; combat the import and sale of products derived from fraud, smuggling or forgery; devise and monitor the implementation of prevention...

      • China (pp. 142-146)
        Guo Yong and Liao Ran

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2003)

        ADB-OECD Action Plan for Asia-Pacific (endorsed April 2005)

        On 19 September 2004, the Fourth Plenary Session of the 16th Central Committee of the Communist Party of China (CPC) adopted a resolution on governance capacity building that called for more accountability of members through broader citizen participation, greater separation of government from the management of businesses and the creation of more democratic evaluation systems. The resolution included a call for whistleblowers’ protection, a right officially enshrined in an ordinance that came into...

      • Costa Rica (pp. 146-148)
        Roxana Salazar

        OAS Inter-American Convention against Corruption (ratified June 1997)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified July 2003)

        A law against corruption and illicit enrichment in the public services was approved in October 2004. The law defines and provides sanctions for crimes including influence peddling, international bribery and appropriation of gifts to the state, which formerly were not defined and therefore rarely prosecuted. The new law also provides detailed requirements for public officials to declare their assets.

        The Office of the Special Attorney for Ethics and Public Services, established by law...

      • Croatia (pp. 149-152)
        Ana First

        Council of Europe Civil Law Convention on Corruption (ratified June 2003)

        Council of Europe Criminal Law Convention on Corruption (ratified November 2000; Additional Protocol ratified May 2005)

        UN Convention against Corruption (ratified April 2005)

        UN Convention against Transnational Organized Crime (ratified January 2003)

        In September 2004, parliament passed a law on the financing of the presidential campaign that prohibits campaign donations from foreign powers, state-owned and public companies, unions, employers’ associations, civic organisations, public institutions and companies partly or entirely owned by local governments. A significant innovation is article 6, which requires candidates to declare the amount and sources of...

      • Ecuador (pp. 152-154)
        Andrés Tobar

        OAS Inter-American Convention against Corruption (ratified June 1997)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2002)

        Secondary legislation implementing the Law on Transparency and Access to Public Information has been drafted by a working group comprising the attorney general, auditor general, prosecutor general, defence minister, secretary general for national security, national archive, commission for women, tax and telecommunications offices and civil society representatives. The law, which entered into force in May 2004, requires all public entities, government contractors, trade unions, and public secondary and higher education establishments to make...

      • Finland (pp. 154-157)
        Santeri Eriksson

        Council of Europe Civil Law Convention on Corruption (ratified October 2001)

        Council of Europe Criminal Law Convention on Corruption (ratified October 2002)

        OECD Anti-Bribery Convention (ratified December 1998)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified February 2004)

        In May 2005, parliament passed a law that criminalises accepting a bribe. A company found guilty of accepting a bribe can be sanctioned, but only if the bribe has caused damage to another company. The law was expected to come into effect in July 2005.¹

        An amendment to the public procurement act came...

      • France (pp. 157-160)
        Antoine Genevois

        Council of Europe Civil Law Convention on Corruption (signed November 1999; not yet ratified)

        Council of Europe Criminal Law Convention on Corruption (signed September 1999; not yet ratified; Additional Protocol signed May 2003; not yet ratified)

        OECD Anti-Bribery Convention (ratified July 2000)

        UN Convention against Corruption (ratified July 2005)

        UN Convention against Transnational Organized Crime (ratified October 2002)

        In July 2005, a law was passed to align the judicial system with EU legislation in the following areas: improving access to cross-border justice; introducing the concept of international repeat offences in the field of counterfeiting; rules on combating corruption in the...

      • Georgia (pp. 160-164)
        Daria Vaisman

        Conventions: Council of Europe Civil Law Convention on Corruption (ratified May 2003)

        Council of Europe Criminal Law Convention on Corruption (signed January 1999; not yet ratified)

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified) Two sets of laws adopted as part of a package on judicial reform are intended to augment the independence of the courts and strengthen the government’s ability to prosecute corrupt judges. A law passed in February 2005 elaborated the government’s disciplinary response to violations by judges. Two other laws adopted in December 2004 raised the...

      • Greece (pp. 164-167)
        Markella Samara

        Council of Europe Civil Law Convention on Corruption (ratified February 2002)

        Council of Europe Criminal Law Convention on Corruption (signed January 1999; not yet ratified; Additional Protocol signed May 2003; not yet ratified)

        OECD Anti-Bribery Convention (ratified February 1999)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        In response to a wave of corruption scandals involving the judiciary, parliament adopted a new law in March 2005 that introduces increased monitoring and transparency within the branch.¹ Under the new legislation, the bribing of judges will no longer...

      • Guatemala (pp. 168-171)
        Alejandro Urizar

        OAS Inter-American Convention against Corruption (ratified July 2001)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2003)

        A proposal to reform the penal code, drafted by the Presidential Commission for Transparency and against Corruption, the public prosecutor’s office and the NGO Acción Ciudadana, was made public in February 2005. It has yet to be submitted to the legislature. The reforms would bring the legal framework into line with the Inter-American Convention against Corruption by defining existing corruption crimes, adding new crimes such as transnational bribery and illicit enrichment, and increasing...

      • Ireland (pp. 172-176)
        Elaine Byrne

        Council of Europe Civil Law Convention on Corruption (signed November 1999; not yet ratified)

        Council of Europe Criminal Law Convention on Corruption (ratified October 2003; Additional Protocol ratified July 2005)

        OECD Anti-Bribery Convention (ratified September 2003)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        The Proceeds of Crime Act was ratified in January 2005 to amend the 2001 Prevention of Corruption (Amendment) Act and increases the powers of investigation of the Criminal Assets Bureau (see below).

        The Commissions of Investigation Act, passed in July 2004, provides...

      • Israel (pp. 176-180)
        Doron Navot

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        A Supreme Court ruling in November 2004 set a precedent for the interpretation of the offence of breach of trust .¹ In a special appeal, Shimon Sheves, a former director general in the Prime Minister’s Office, was found guilty in two cases of using his position to promote the financial interests of friends. The case established norms for the behaviour of civil servants by prohibiting senior officials from involvement in serious conflicts of interest. It also placed breach of trust at...

      • Japan (pp. 181-184)
        Transparency International Japan

        OECD Anti-Bribery Convention (ratified October 1998)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        Amendments to the unfair competition prevention law, the legislation that enforces the OECD Anti-Bribery Convention, came into effect in January 2005 and introduce a jurisdiction based on nationality to the offence of bribing foreign public officials. Two months later, the OECD published a review of the implementation of domestic legislation that found Japan has not demonstrated sufficient efforts to enforce the offence of bribing...

      • Kazakhstan (pp. 184-188)
        Sergey Zlotnikov

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        ADB-OECD Action Plan for Asia-Pacific (endorsed May 2002) In April 2005, the president signed a decree on measures to step up the fight against corruption and to strengthen discipline in the activities of state bodies and officials. Disciplinary councils in all provinces will be restructured, and their work will be more accessible to the public. The finance police are due to present a national anti-corruption strategy for 2006–10 by the end of the third quarter of 2005. The decree also...

      • Kenya (pp. 188-191)
        Wachira Maina and Noelina Nabwire

        AU Convention on Preventing and Combating Corruption (signed December 2003; not yet ratified)

        UN Convention against Corruption (ratified December 2003)

        UN Convention against Transnational Organized Crime (acceded June 2004)

        John Githongo, President Mwai Kibaki’s special adviser on governance and ethics, resigned in February 2005. The Minister for Justice and Constitutional Affairs subsequently announced in April that the office would be scaled down because some of its functions were already being performed by the Kenya Anti-Corruption Commission (KACC), which became operational in February 2005.¹ Githongo’s resignation and the diminution of his office could weaken the fight against corruption and may signal...

      • Kuwait (pp. 191-195)
        Kuwait Economic Society

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        In October 2004, the Council of Ministers merged its economic and legal standing sub-committees to address the issue of corruption within the public sector. These subcommittees had not previously been delegated with the task of dealing with corruption. However, since corruption had become an important government issue, it was deemed prudent to merge the two committees in order to draw from a wider pool of expertise on corruption-related issues.

        In January 2005, the Council of Ministers set up...

      • Kyrgyzstan (pp. 195-199)
        Aigul Akmatjanova

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified October 2003)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        Following the overthrow of President Askar Akayev in March 2005, the new government was quick to commit itself to a renewed fight against corruption, having witnessed the role it had played in fuelling the revolution that unseated the former president. In May, the government announced the creation of an anti-corruption centre in the mayoralty of Bishkek. Provisionally, it provides for the creation of a monitoring agency, composed of civil society organisations, with oversight...

      • Malaysia (pp. 199-203)
        Mehrun Siraj and Sunita Chima

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2004)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        The Central Bank introduced two public complaints and redress forums in 2005. The Financial Mediation Bureau (FMB), launched in January, is an integrated dispute resolution centre for financial institutions. The FMB’s predecessors, the Banking Mediation Bureau and the Insurance Mediation Bureau, handled a total of 1,515 cases in 2004. The FMB provides an avenue of redress for a wider spectrum of the public since it covers the consumer areas of Islamic insurance, development...

      • Morocco (pp. 203-206)
        Azeddine Akesbi, Siham Benchekroun, Kamal El Mesbahi, Rachid Filali Meknassi and Michèle Zirari

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2002)

        In April 2005, the government announced a new six-point plan to fight corruption. One measure will require all senior office holders to make a formal disclosure of their assets and net worth before and after holding public office. Other measures include a proposed new law on money laundering; the creation of an office responsible for keeping track of known corruption cases; and the consolidation of transparency in the process of awarding government contracts to private businesses.

        A law passed in September...

      • Nepal (pp. 206-210)
        Rama Krishna Regmee

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2002; not yet ratified)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        King Gyanendra issued a decree in February 2005 that created a Royal Commission for Corruption Control (RCCC). Although the commission was initially formed through a clause in the constitution on the issuing of a state of emergency, the king extended its mandate after the state of emergency was lifted. Though the measure addresses popular grievances about corruption in the country, it has been widely criticised by politicians and civil society....

      • New Zealand (pp. 210-213)
        Shane Cave

        OECD Anti-Bribery Convention (ratified June 2001)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified July 2002)

        In December 2004, four existing laws aimed at promoting integrity in the public sector were amended. As a result, the State Services Commission, the agency responsible for overseeing all core government departments, now has explicit responsibility over a far broader range of state agencies than before (see below). Under the new legislation, the commission’s annual reports on the agencies’ progress in promoting ethical standards must be made available to the public. In early 2005, the...

      • Nicaragua (pp. 213-216)
        Roberto Courtney

        OAS Inter-American Convention against Corruption (ratified May 1999)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2002)

        Article 68 of the Constitution, which exempts the media from paying import duty on supplies, was revoked in March 2005. The measure is expected to have an adverse effect on the media’s ability to report on corruption.

        A flawed Judicial Career Law , which the National Assembly ratified in September 2004, was due to enter into effect in September 2005. The law establishes competitive examinations for judges, but leaves open the possibility that...

      • Panama (pp. 216-220)
        Angélica Maytín Justiniani

        OAS Inter-American Convention against Corruption (ratified October 1998)

        UN Convention against Corruption (ratified May 2005)

        UN Convention against Transnational Organized Crime (ratified August 2004)

        Executive Decree No. 335, issued on 1 September 2004, the day President Martín Torrijos Espino took office, derogates Executive Decree No. 124 of May 2002 which regulated the transparency law. The 2002 decree was issued under former president Mireya Moscoso and was an obstacle to accessing information since it restricted official information to any interested person with a ‘direct relationship to the information requested’. The Supreme Court had rejected many habeas data writs by appealing to...

      • Papua New Guinea (pp. 220-223)
        Transparency International Papua New Guinea

        UN Convention against Corruption (signed December 2004; not yet ratified)

        UN Convention against Transnational Organized Crime (not yet signed)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        A private members’ bill to protect whistleblowers has been drafted, but by mid-2005 had yet to be submitted to parliament for debate by its sponsor, the MP Kimson Kare. There is limited support in government for the bill.

        Parliament passed the Proceeds of Crime Bill in July 2005. The legislation provides measures against money laundering, including the confiscation of illegally gotten gains.

        Attempts to establish an independent commission against corruption (for which the...

      • Peru (pp. 223-226)
        Samuel Rotta Castilla and Leonardo Narvarte Olivares

        OAS Inter-American Convention against Corruption (ratified June 1997)

        UN Convention against Corruption (ratified November 2004)

        UN Convention against Transnational Organized Crime (ratified January 2002)

        Reforms to the penal code and code of criminal procedures were approved in July 2004 and will enter into force in February 2006. They make it easier for prosecuting judges to prepare their final reports and broaden the instances in which preventative detention can be used to include complicated cases where more than 10 people are implicated (thus reducing the number of suspects implicated in the drawn-out corruption cases benefiting from house arrest or release under...

      • Poland (pp. 227-230)
        Julia Pitera

        Council of Europe Civil Law Convention on Corruption (ratified September 2002)

        Council of Europe Criminal Law Convention on Corruption (ratified December 2002)

        OECD Anti-Bribery Convention (ratified September 2000)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified November 2001)

        Parliament adopted an amendment to the law governing MPs and senators in January 2005 that came into force in mid-May. Under new provisions, parliamentarians who have been arrested or imprisoned will automatically be deprived of their rights and obligations as representatives, including remuneration. There is a right of appeal. The amendment was introduced...

      • Romania (pp. 230-234)
        Adrian Savin

        Council of Europe Civil Law Convention on Corruption (ratified April 2002)

        Council of Europe Criminal Law Convention on Corruption (ratified July 2002; Additional Protocol ratified November 2004)

        UN Convention against Corruption (ratified November 2004)

        UN Convention against Transnational Organized Crime (ratified December 2002)

        An ‘urgency ordinance’ in February 2005 waived the immunity protections of members of the former government in line with the recommendations of the Council of Europe’s Group of States against Corruption (GRECO), paving the way for prosecution of past corruption crimes (see below). But there are categories of people who still benefit from immunity. Under a modification...

      • Serbia (pp. 235-238)
        Nemanja Nenadic

        Council of Europe Civil Law Convention on Corruption (signed April 2005; not yet ratified)

        Council of Europe Criminal Law Convention on Corruption (ratified December 2002)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified September 2001)

        After considerable delay, parliament adopted the law on access to information in November 2004.¹ The law introduces the public right to any information held by the government, local authorities, public enterprises and all other agencies or organisations financed by the state, unless it can be legally shown there is an overriding interest in not disclosing the...

      • Slovakia (pp. 239-242)
        Emilia Sicáková-Beblavá

        Council of Europe Civil Law Convention on Corruption (ratified May 2003)

        Council of Europe Criminal Law Convention on Corruption (ratified June 2000; Additional Protocol ratified April 2005)

        OECD Anti-Bribery Convention (ratified September 1999)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified December 2003)

        In February 2005, parliament approved an act regulating the financing of political parties and electoral campaigns. From the viewpoint of corruption, it contains several principles that improve regulation and increase transparency of party financing, but weaknesses remain, most notably the monitoring of the law’s implementation (see below).

        An...

      • South Africa (pp. 242-246)
        Ayesha Kajee

        AU Convention on Preventing and Combating Corruption (signed March 2004; not yet ratified)

        SADC Protocol against Corruption (ratified May 2003)

        UN Convention against Corruption (ratified November 2004)

        UN Convention against Transnational Organized Crime (ratified February 2004)

        The Division of Revenue Act came into effect in April 2005. Its objective is to promote transparency and equity in the allocation of resources to municipalities and provinces, and to promote accountability by ensuring that all allocations are reflected in their budgets. Corruption is rife at local government level, with serious backlogs of service delivery in many poorer areas. The act is an attempt...

      • South Korea (pp. 246-250)
        Geo-Sung Kim

        OECD Anti-Bribery Convention (ratified January 1999)

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (not yet signed)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        The Amendment on Anti-Corruption Act, proposed by the Korean Independent Commission Against Corruption (KICAC) in November 2004, is currently under review by the Legislation and Judiciary Committee. The act only applies to corrupt practices in the public sector. The broad thrust of the amendment is to expand its coverage to the private sector so as to root out bribe payers, as well as bribe recipients. Among the proposed changes is...

      • Spain (pp. 250-253)
        Manuel Villoria

        Council of Europe Civil Law Convention on Corruption (signed May 2005; not yet ratified)

        Council of Europe Criminal Law Convention on Corruption (signed May 2005; not yet ratified)

        OECD Anti-Bribery Convention (ratified January 2000)

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (ratified March 2002)

        A number of corruption-related initiatives have been adopted under the framework of the Plan of Economic Reactivation presented by the Economy and Finance Ministry in March 2005. The Council of Ministers has approved the plan, which includes steps to tighten laws regulating the public sector, improve public access to information,...

      • Sri Lanka (pp. 253-257)
        Anushika Amarasinghe

        UN Convention against Corruption (ratified March 2004)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        After a three-month delay in appointing a new chairperson and two new commissioners, the Commission to Investigate Allegations of Bribery and Corruption became operational once again in March 2005. Its agenda includes awareness-raising programmes and training on corruption issues for 30,000 graduates recently admitted into the public services. It is also developing a curriculum to train investigative officers in financial auditing, investigations related to control systems, areas of corruption, and analysis of evidence and technique. Certain key reforms are still needed...

      • Switzerland (pp. 257-261)
        Jeffrey Nilsen, Anne Schwöbel and Stefanie Teickner

        Council of Europe Civil Law Convention on Corruption (not yet signed)

        Council of Europe Criminal Law Convention on Corruption (signed February 2001; not yet ratified; Additional Protocol signed June 2004)

        OECD Anti-Bribery Convention (ratified May 2000)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        A new law on freedom of information entered into force in April 2005. Until then, the principle of non-disclosure was paramount, every document was considered confidential and people had to give reasons for seeking access to records. The list of exemptions to...

      • Uganda (pp. 261-265)
        Charles Mubbale and Paul Onapa

        AU Convention on Preventing and Combating Corruption (ratified August 2004)

        UN Convention against Corruption (ratified September 2004)

        UN Convention against Transnational Organized Crime (ratified March 2005)

        The government issued a White Paper in October 2004 recommending that the Inspector General of Government (IGG) be given more latitude to arrest and prosecute persons involved in corruption or abuse of public office. This would amend sections of the Leadership Code Act of 2002 to bring it in line with the 1995 Constitution, which grants the IGG prosecutorial powers. A previous constitutional ruling in May 2004 trimmed the IGG’s powers. To strengthen the...

      • Ukraine (pp. 265-267)
        Transparency International

        AU Convention on Preventing and Combating Corruption (ratified August 2004)

        UN Convention against Corruption (ratified September 2004)

        UN Convention against Transnational Organized Crime (ratified March 2005)

        The government issued a White Paper in October 2004 recommending that the Inspector General of Government (IGG) be given more latitude to arrest and prosecute persons involved in corruption or abuse of public office. This would amend sections of the Leadership Code Act of 2002 to bring it in line with the 1995 Constitution, which grants the IGG prosecutorial powers. A previous constitutional ruling in May 2004 trimmed the IGG’s powers. To strengthen the...

      • United Kingdom (pp. 267-272)
        Transparency International (UK)

        Conventions: Council of Europe Civil Law Convention on Corruption (signed June 2000; not yet ratified) Council of Europe Criminal Law Convention on Corruption (ratified December 2003; Additional Protocol ratified December 2003)

        OECD Anti-Bribery Convention (ratified December 1998)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        In July 2004, the Cabinet Office announced the appointment of Sir Patrick Brown, a former permanent secretary, to undertake a review of the arrangements for senior civil servants moving to jobs in industry, including the requirement for a cooling-off period before...

      • United States of America (pp. 272-277)
        Nancy Izzo Jackson

        OAS Inter-American Convention against Corruption (ratified September 2000)

        OECD Anti-Bribery Convention (ratified December 1998)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (signed December 2000; not yet ratified)

        In February 2005, Senators Trent Lott, John McCain and Russell Feingold, and Representatives Christopher Shays and Martin Meehan, introduced the 527 Reform Act in Congress. The proposed legislation would amend the Federal Election Campaign Act of 1971 and its 1974 amendments, to require ‘527s’, organisations created for explicit political purposes but with no formal ties to parties or particular politicians, to comply with campaign...

      • Vanuatu (pp. 277-280)
        Anita Jowitt

        UN Convention against Corruption (not yet signed)

        UN Convention against Transnational Organized Crime (not yet signed)

        ADB-OECD Action Plan for Asia-Pacific (endorsed November 2001)

        In November 2004, the government passed the Constitution (Fourth Amendment) Act 2004 which rules that MPs who cross the floor will lose their seats. In addition, there can be no vote of no confidence ‘within 12 months of a general election … within 12 months of the formation of any government … or within 12 months before the end of the life of a parliament’. The amendment could halt the instability that has dogged the government’s...

      • Venezuela (pp. 280-284)
        Transparencia Venezuela

        OAS Inter-American Convention against Corruption (ratified June 1997)

        UN Convention against Corruption (signed December 2003; not yet ratified)

        UN Convention against Transnational Organized Crime (ratified May 2002)

        In July 2004, the legislature approved secondary legislation that expands the powers of the post of ombudsman created in 1999. The new law specifies that scrutiny of abuse of power and flaws in the provision of services will henceforth be among the ombudsman’s responsibilities. The law to partially reform the penal code entered into force in March 2005. It fails to eliminate a provision that criminalises ‘offensive expressions’ directed at public officials which...

  9. Part three: Research on corruption
    • 9 Introduction (pp. 287-291)
      Robin Hodess

      This year’sGlobal Corruption Reportonce again presents a selection of important studies on transparency and corruption covering a range of themes, from corruption’s relation to socio-economic phenomena, to the links between policy implementation and change. Given the ever-growing number of studies and the breadth of approaches used, there is little doubt that the empirical analysis of corruption has now gained a foothold in a number of research disciplines. The challenge for policy-makers is to gain access to this information, and then to interpret and incorporate these results in their subsequent anti-corruption efforts. The research overview presented here provides a...

    • 10 Ten years of the CPI: determining trends (pp. 292-297)
      Johann Graf Lambsdorff

      Transparency International (TI) has published its Corruption Perceptions Index (CPI) annually since 1995. It is a composite index, using surveys of business people and assessments by country analysts to provide an annual snapshot of corruption perceptions in particular countries. Year-on-year changes in a country’s CPI score are the result not only of changes in perceptions of a country’s performance, but of changes in survey samples and methodology and alterations in the list of sources that constitute the index. Changes in sources have made it difficult to derive valid time-series information from CPI results and therefore TI has only been able...

    • 11 Corruption Perceptions Index 2005 (pp. 298-303)
      Johann Graf Lambsdorff

      The Corruption Perceptions Index, now in its eleventh year, aims to provide data on extensive perceptions of corruption within countries. These perceptions enhance our understanding of real levels of corruption from one country to another. The CPI is a composite index, making use of surveys of business people and assessments by country analysts.

      Overall, 16 sources were included in the 2005 CPI, originating from 10 independent institutions and using data compiled between 2003 and 2005. The sources used were: (1) Columbia University; (2) the Economist Intelligence Unit; (3) Freedom House; (4) Information International from Beirut (Lebanon); (5) the International Institute...

    • 12 Governance matters IV: new data, new challenges (pp. 304-307)
      Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi

      In this new study, we present a set of governance indicators covering 209 countries over the period 1996–2004. For 2004, these indicators are based on 352 different underlying variables measuring perceptions of a wide range of governance issues.² The variables are drawn from 32 separate data sources constructed by 30 different organisations worldwide. The indicators that capture the six key dimensions of institutional quality or governance are as follows: voice and accountability, political stability and lack of violence, government effectiveness, regulatory quality, rule of law and control of corruption.

      The precision of the aggregate governance indicators in this updated...

    • 13 Corruption in the United States of America (pp. 308-311)
      Edward Glaeser and Raven Saks

      Corruption is not just something that happens to poor countries. Between 1990 and 2002, federal prosecutors in the United States convicted more than 10,000 government officials of acts of corruption including fraud, campaign-finance violations, and obstruction of justice. While corruption in the United States is bad news for the country, it is a mixed blessing for researchers, whose analysis of corruption has been hampered by lack of data. Most studies of corruption have relied on international opinion surveys that ask private individuals about the level of corruption in a nation. While these opinion surveys contain valuable information, they do not...

    • 14 Transparency and its impact on financial fragility (pp. 312-314)
      Saadia Zahidi

      In recent decades, many countries have experienced some form of banking crisis, either small borderline crises or systemic ones, typically involving widespread bank insolvencies, liquidity squeezes and depositor withdrawals. The crises have been expensive, not only through their effects on government budgets and taxes, but also due to forgone economic output. The economic literature investigating the causes of banking crises has focused mainly on macroeconomic factors, such as growth rates and inflation, financial factors, such as liquidity and credit growth, and only more recently on the role of institutions. This work is an attempt to probe further into the role...

    • 15 Budget transparency survey (pp. 315-318)
      Pamela Gomez

      As part of the global movement towards more open government, citizens around the world have become increasingly concerned with obtaining access to accurate, comprehensive, and timely information on the financial activities of their governments. This is not surprising. Comprehensive financial information, which should be disclosed in a country’s budget documents, allows the public to evaluate a government’s policy intentions, its policy priorities, and their implementation. Public access to such documents is essential to ensure both that government is financially accountable and that civil society can participate effectively in budget debates.

      The International Budget Project (IBP) was established at the Washington,...

    • 16 Beyond the rhetoric: measuring revenue transparency in the oil and gas industry (pp. 319-322)
      Elizabeth Lort-Phillips and Vanessa Herringshaw

      There has been growing recognition that transparent disclosure of revenues from extractive industries is vital for responsible use of oil and gas and the avoidance of the ‘resource curse’. This insight has been strongly endorsed by those committing to schemes such as the Extractive Industries Transparency Initiative (EITI).² But beyond the rhetoric, what concrete action has been taken to improve transparency in the oil and gas sectors?

      Save the Children UK (SC UK) has been very proactive in tackling this question. In 2005, it created a framework for measuring revenue transparency and developed a set of indices to set transparency...

    • 17 Benchmarking corporate reputation: an incentive for good anti-corruption practice (pp. 323-324)
      Transparencia Mexicana

      The reputation of private companies is highly sensitive to news or suspicion of corrupt behaviour. The financial collapses of powerful corporations such as Enron and Parmalat are examples of the dire consequences companies face when their reputation is damaged by actions that are corrupt or that unfairly damage the interests of competitors or shareholders. Conversely, corporations that demonstrate positive good business practices and values in their relationships with their community and stakeholders can boast of a commitment to a less corrupt society. With this in mind, Transparencia Mexicana, the Mexican chapter of Transparency International, in collaboration with market research company...

    • 18 Officials’ asset declaration laws: do they prevent corruption? (pp. 325-328)
      Ranjana Mukherjee and Omer Gokcekus

      Requiring public officials to declare their wealth and assets is widely considered an effective measure to prevent corruption. It has been included as an article of agreement in the United Nations, the African Union, and the Inter-American conventions against corruption. But how effectively can officials’ asset declaration laws reduce corruption? Are there any features in the laws’ design and implementation that act as stronger antidotes to corruption than others?

      To address these questions, we examined various countries’ asset declaration laws to find common aspects within such laws. Using a method similar to that of Transparency International’s National Integrity Systems Survey,...

    • 19 Tax evasion, fines and corruption in Mozambique (pp. 329-332)
      Ralf Lanwehr

      A survey on the investment climate in the Mozambican province of Inhambane was conducted in March 2004. 2 Its aim was to describe and explain cooperation problems between the public and private sectors, and it unveiled a systemic network of major tax evasion, compensatory fining and fine-related bribery.

      Although Inhambane has great economic potential, investors are currently hesitant regarding further investment and are dissatisfied with the status quo, because of serious disruptions in cooperation between the private and public sector. These disruptions hamper the climate for new investment and thereby threaten the province’s economic development.

      To describe, explain and quantify...

    • 20 The V4 index: corruption propensity in four Visegrád capitals (pp. 333-335)
      Michal Štička

      The V4 Index is a Transparency International Czech Republic research project that was completed in the first half of 2004. The goals of the project were to design a survey methodology that would establish the existence and evaluate the functionality of anti-corruption institutions (‘corruption propensity’) in the public administration at local/regional levels. That is, in the public administrations of the four Visegrád (V4) capitals: Bratislava, Budapest, Prague and Warsaw. A major outcome of the project was to rank the capitals’ administrations according to the quality of their anti-corruption institutions. By doing this, the index raised public awareness with respect to...

    • 21 Efficiency of federal transfers to municipalities in Brazil (pp. 336-338)
      Marcos Jose Mendes

      This study aims to analyse irregularities uncovered by the Office of the Inspector General (Controladoria Geral da União, CGU) in the administration of the Fund for Development and Maintenance of Elementary Teaching and for Professional Improvement of Teachers (FUNDEF). In order to inspect FUNDEF and other federal transfers, the CGU has maintained, since 2003, a systematic programme for conducting random audits in municipalities across the country. For the purposes of this work, only federal transfers are analysed, since CGU does not audit the use of state and municipal funds.

      Federal funds are an important part of municipal budgets representing 62...

    • 22 Integrity Index for Public Institutions: evaluating Colombia’s health sector (pp. 339-342)
      Transparencia por Colombia

      Since 2002, Transparencia por Colombia, the Colombian chapter of Transparency International, has produced an annual Integrity Index for Public Institutions, comparing levels of corruption risks in the country’s public institutions. The aim of the index is to provide a tool for civil society to monitor transparency, integrity and efficiency of public institutions. Since institutions are individually evaluated, it is possible to use the index to assess vulnerabilities to corruption of a particular sector. Here we provide an overview of the index and examples of how it can be used to assess corruption risks in the health sector.

      The index ranks...

    • 23 Corruption in the public health service in Bangladesh (pp. 343-345)
      Iftekhar Zaman and Alim Abdul

      Health is a priority sector in the allocation of public funds in Bangladesh. In line with the ‘Health for All’ policy, first adopted in 2000, the government allocated 9 per cent of its development budget for the 2004–05 fiscal year to health, which was the fifth largest category of its public expenditure. The government formed a Health Watch Committee in 1998 under the ministry of health, which was aimed at making doctors and other health officials more accountable for public funds and to their patients. The new government disbanded the programme when it came to power in 2001, however....

    • 24 Governance in Bulgaria’s pharmaceutical selection and procurement systems (pp. 346-349)
      Patrick Meagher

      The selection and procurement of pharmaceuticals in health care systems presents a host of governance challenges. Technically sound decisions about the cost-effectiveness of drugs, and objective evaluations of bids, must be made in a political environment fraught with contending pressures from domestic and foreign companies, patients’ and physicians’ lobbies, and policy-makers with strong views. In this field, both politics and profits create strong pressures towards rent-seeking and corrupt behaviour.

      This research has two components, the first concerning the central processes of drug selection for the health system, and the second focusing on procurement of pharmaceuticals by hospitals throughout Bulgaria. The...

    • 25 Survey research sheds light on Latin Americans’ experience with corruption (pp. 350-353)
      Eric Kite and Margaret Sarles

      The United States Agency for International Development (USAID) is increasingly using citizen surveys to improve its democracy and governance programmes and measure their impact. In Latin America, USAID completed 11 surveys in 2004, comprising Bolivia, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama.² The surveys probe perceptions of corruption behaviour, and corruption victimisation, all of which can be disaggregated by personal attributes (gender, region, age, ethnicity, income, and so on) and cross-tabulated with political behaviour.

      The survey results enable analysis of the depth and effects of corruption, determining the corruption problems most important...

    • 26 Corruption in Palestinian society (pp. 354-356)
      TI Palestine/the Coalition for Accountability and Integrity (AMAN)

      In late 2004, TI Palestine/the Coalition for Accountability and Integrity (AMAN) commissioned the Palestinian Centre for Political Studies and Surveys to conduct an opinion poll focusing on levels and forms of corruption in the Palestinian Territories of the West Bank and the Gaza Strip. Questions assessed the extent ofwasta, the practice of people making inappropriate interventions on behalf of individuals, who do not possess the requisite qualifications or demonstrated work ethics, often resulting in appointments being made on the basis of family connections or party affiliation.Wasta, usually translated as ‘nepotism’, is viewed as a significant source of corruption...

  10. Index (pp. 357-362)