D I R E C T I O N S D I R E C T I O N S II N N D E V E L O P M E N TT D E V E L O P M E N THE WORLD BANK Challenging Corruption in Asia Case Studies and a Framework for Action VINAY BHARGAVA AND EMIL BOLONGAITA Challenging Corruption in Asia Case Studies and a Framework for Action D I R E C T I O N S I N D E V E L O P M E N T Challenging Corruption in Asia Case Studies and a Framework for Action Vinay Bhargava and Emil Bolongaita THE WORLD BANK Washington, D.C. © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved. 1 2 3 4 06 05 04 03 The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. ISBN 0-8213-5683-6 Library of Congress Cataloging-in-Publication Data has been applied for. Manning, Nick, 1951­ International public administration reform : implications for the Russian Federation / Nick Manning, Neil Parison. p. cm. -- (Directions in development) Includes bibliographical references and index. ISBN 0-8213-5572-4 1. Public administration--Cross-cultural studies. 2. Civil service reform-- Cross-cultural studies. 3. Civil service reform--Russia (Federation) I. Parison, Neil, 1957­ II. Title. III. Series. JF1351.M356 2003 352.3'67'0947--dc21 2003053833 Contents Foreword xi Preface and Acknowledgments xv 1. Introduction: Challenging Corruption in Asia 1 Corruption Increasingly Damages Economic Development 3 Globalization of the Fight against Corruption 4 Recent Initiatives in Combating Corruption in Asia 5 Challenge of Combating Corruption in Asia 7 Outline of the Book 11 Notes 12 References 14 2. An Analytical Framework for Improving the Effectiveness of Anticorruption Policies and Programs 17 Analyzing a Country's Governance and Operating Environment 21 Reviewing the Global Menu of Anticorruption Instruments 26 Crafting Anticorruption Measures Based on a Country's Governance Environment 27 Building Broad Anticorruption Coalitions 39 Establishing Accountable Anticorruption Leadership and Management 43 Monitoring and Evaluating Policy and Program Feedback 46 Summary 51 Appendix 2.1: Selected Sources of Governance Indicators 54 Appendix 2.2: A Selective Global Review of Anticorruption Instruments 56 Notes 73 References 74 v vi CONTENTS 3. Anticorruption Initiatives in the Philippines: Breakthroughs, Limits, and Challenges 77 Country Governance 78 Contours of Corruption 87 Anticorruption Policies and Programs 95 Improving Organizational Coherence and Filling in the Gaps 109 Designing a Coherent Anticorruption Strategy: Focus on Prevention 113 Appendix 3.1: Evaluation of Anticorruption Policies and Programs in the Philippines 122 Appendix 3.2: Philippine Government Anticorruption Bodies, as of 2001 126 Appendix 3.3: Presidential Antigraft and Investigation Agencies Established since 1950 127 Notes 128 References 130 4. State Capture under Good Governance: The Challenge of the Republic of Korea's Experience 135 The Burden of History 136 2001: A Year of Corruption Scandals 140 Corruption Conditions in Korea 142 Explaining Corruption in Korea 145 Anticorruption Policies and Programs 148 Coalition-Building against Corruption 151 Recent Anticorruption Initiatives from Civil Society 155 Leadership and Management of Anticorruption Efforts 156 Corruption Monitoring and Reporting Mechanisms 157 Conclusion 159 Appendix: Anticorruption Instruments: Analysis of Likely Effectiveness 162 Notes 166 References 167 5. Controlling Corruption in Thailand: Transforming the Problems and Paradoxes 171 Country Governance 171 Contemporary Patterns of Corruption 172 The Changing Constitutional Environment 180 New Actors, New Rules in the Battle against Corruption 184 The Challenge for Civil Society: Building a Coalition against Corruption 187 CONTENTS vii Assessing the Impact of Anticorruption Institutions 192 Evaluating Institutional Performance 194 Strengthening the Freedom of the Press 195 Conclusion 198 Appendix: Overview Assessment of the Effectiveness of Anticorruption Policies and Programs in Thailand 199 Notes 204 References 204 6. The State of Corruption: Indonesia 209 The Present Impasse 209 Governance 213 Corruption Conditions 217 Anticorruption Policies and Institutions 219 Anticorruption Coalitions 223 Leadership and Management 225 Monitoring and Reporting Mechanisms 227 Conclusion 228 Notes 228 References 233 Web Resources 234 7. Conclusion: Lessons and Issues from Challenging Corruption in Asia 237 Challenging Corruption: Addressing a Priority Public Policy Agenda in Asia 237 The Need for Improvement in Anticorruption Policies and Programs in Asia 239 An Analytical Framework for Improving Anticorruption Effectiveness 241 Country Governance Environments: Shaping Successes and Failures of Anticorruption Efforts 243 Anticorruption Coalitions: Serious Challenges to Corruption in Asia 250 Varied Anticorruption Leadership and Management Structures Produce Varied Outcomes 253 Anticorruption Monitoring and Reporting Systems: Good Ones Emerging in Asia 255 How Asia Can Improve the Effectiveness of National Anticorruption Programs 256 Note 259 References 260 viii CONTENTS Index 261 Figures 2.1. Stylized Typology of Corruption Conditions 26 3.1. Fair Governance Marks for the Philippines 80 3.2. Fair Marks for the Philippines in New World Bank Indicators 81 3.3. More Corruption Comes with More Regulation 82 3.4. Are Asian Judicial Systems Endogenous? 83 3.5. An Autonomous Executive and Veto Points Complement Each Other 84 3.6. Autocracy and Political Freedom Are Polar Opposites 85 3.7. Corruption Perceptions Index, Philippine Scores, Selected Years, 1980­2002 93 3.8. Net Satisfaction with the National Administration in Eradicating Graft and Corruption, by Income Class 94 3.9. Perceived Extent of Public Sector Corruption 94 4.1. Trend of Freedom in Korea, Selected Years, 1973­97 139 4.2. Trend in Corruption Convictions in Korea, 1997­2000 144 4.3. Transparency International Corruption Perceptions Index, Korea Scores, Selected Years, 1980­2002 144 4.4. Summary Ratings of Economic Freedom, Korea Scores, Selected Years, 1970­99 147 5.1. Transparency International Corruption Perceptions Index, Thailand Scores, Selected Years, 1980­98 178 5.2. Freedom House Annual Survey of Press Freedom, Thailand Scores, 1994­2002 180 6.1. Transparency International Corruption Perceptions Index, Indonesia Scores, Selected Years, 1980­2001 217 Tables 1.1. Corruption Perceptions Index Scores, Selected Economies in Asia, 2000­03 8 1.2. Governance Indicators, Selected Years, 1996­2002 9 2.1. Quality of Governance Ranking of Countries 25 2.2. Recommended Measures in the ADB-OECD Anti-Corruption Action Plan for Asia and the Pacific 28 2.3. Assessment of Selected Anticorruption Instruments 34 2.4. Crafting Anticorruption Strategies According to Governance Quality and Corruption Patterns 37 2.5. Examples of Anticorruption Institutions in the Asia-Pacific Region 44 2.6. Examples of Anticorruption Survey Instruments 48 4.1. Transparency International Bribe Payers Index, 2002 145 CONTENTS ix 4.2. Estimates of Governance (Control of Corruption), FY 2000/01 146 4.3. The Second Phase of Anticorruption Measures in the Republic of Korea 150 7.1. Control of Corruption in Selected Asian Countries, Selected Years, 1996­2002 238 7.2. Corruption Perceptions in Selected Asian Countries, Selected Years, 1996­2003 240 7.3. Country Governance Environment, Selected Countries 244 7.4. Governance Indicators, Selected Years, 1996­2002 245 Boxes 4.1. The Korean Independent Commission Against Corruption 153 4.2. The Role of the Korean Institute of Certified Public Accountants 158 5.1. A Social Movement against Corruption in the Public Health Ministry 188 5.2. The Cases of Freedom of the Press 196 Foreword In East Asia, the challenge of controlling corruption in both public and private sectors remains formidable, and governments in the region fre- quently call upon the World Bank for advice on designing, implementing, and strengthening anticorruption programs in their countries. The Bank is happy to respond to such requests, as we know that corruption is one of the single biggest obstacles to growth and poverty reduction. Corruption hurts the poor and raises the cost of doing business in a myr- iad of different ways. Interference in public procurement and deliberate distortions to laws and policies in order to favor personal or private inter- ests weaken competitiveness and can undermine the functioning of the whole economy. Many countries in this region suffer from weak and cor- rupt judicial systems, sabotaging the enforcement of contracts and prop- erty rights, not to mention access to justice for the whole society. The costs of corruption stretch further, raising public expenditure and lowering the tax take, with consequent damage in terms of fiscal deficits and macro- economic instability. Corruption in building standards and inspections results in unsafe buildings and loss of life. And corruption hurts the poor most of all. While the rich bribe for speed, the poor have to bribe for access, even to basic services. The poor pay a higher proportion of their income in bribes than any other income group, they find it harder to get jobs or start businesses, their property rights are more insecure, and they suffer from poor services or no services at all--such as lack of access to clean water. They pay with low life expectancy as well as with money. We also know that fighting corruption takes time and can be risky. Powerful groups whose interests are threatened can be dangerous. But leaving corruption to fester can be even more dangerous. We have seen how prolonged systemic corruption undermines institutions, alienates investors, and ultimately erodes the legitimacy of the state. The region cannot afford that. Earlier this year we published Fighting Corruption in East Asia: Solutions from the Private Sector. This volume focuses on the public sector agenda. Both these offerings are based upon the Bank's own research and cross- country experience as a global development finance institution and are published for the benefit and use of development practitioners and xi xii CHALLENGING CORRUPTION IN ASIA researchers around the world. In this regard, I am delighted by the pub- lication of this book, which responds to the needs and demands of poli- cymakers for a practical framework to assess and improve anticorruption policies and programs. Across the board in Asia, the champions of corruption control are seek- ing to improve the effectiveness of tools, instruments, and approaches to this complex and dangerous problem. Many have adopted policies and programs that worked in other countries only to find them wanting at home. In some instances, what worked well elsewhere actually worsened the problem when transplanted to a different country. This book uses case studies of four Asian countries, written by local specialists, to tackle that critical dilemma: how to design and deliver policies and programs so that they are appropriate, relevant, and effective in specific country gover- nance environments. The case studies and the analytical framework proposed by the authors were subjected to a reality check during discussions, facilitated by the Bank's Global Development Learning Network, with a wide vari- ety of individuals from the countries concerned. They confirmed that measures that do not fit the country context are unlikely to work, or may even aggravate the problem. Corruption does not come in standard sizes and types. It is essential to assess the strength or weakness of the coun- try's institutions, and understand the particular patterns, mechanisms and incidence of corruption, in order to design effective strategies. It is therefore critical, the book contends, to assess a country's gover- nance conditions accurately and to choose those anticorruption measures that are appropriate to a country's governance environment. The authors emphasize that building a broad coalition with ethical leadership can be the deciding factor in shifting the balance of forces in favor of anticor- ruption. They also argue that execution is only as good as its evaluation, and they therefore emphasize monitoring and feedback mechanisms to help fine-tune the program and give citizens the information they need to hold the state to account. In sum, this book aims to provide policymakers with a functional framework to help them design and implement anticorruption agendas that are relevant to the national context. It seeks to encourage policy- makers to learn and draw from a global menu of anticorruption instru- ments. The method is appealing for its simplicity and straightforward- ness: its six-step approach to anticorruption should help guide the delib- erations and decisions of policymakers and stakeholders. It does not pur- port to provide clear-cut answers, but it does offer an informed way to ask better questions and identify ways and means to improve the effec- tiveness of anticorruption programs. FOREWORD xiii I commend the editors and contributors for this important volume, and I recommend the book to anyone seeking to sharpen their thinking and tools to combat corruption. It is in all our interests to help good gov- ernance prevail. Jemal-ud-din Kassum Vice President, East Asia and Pacific Region The World Bank Preface and Acknowledgments Our interest and involvement in anticorruption converged from different paths. Vinay Bhargava's work at the World Bank, advising policymakers and implementing development projects, exposed him to many countries with different qualities of governance, and to their interplay with devel- opment. The final spark for writing this book came in 1998 when the pres- ident of the Philippines asked Bhargava to organize World Bank advice on improving the effectiveness of anticorruption programs in the Philippines. That led to a two-year effort covering not only the Philippines but also neighboring countries facing similar challenges. Emil Bolongaita learned about the complexity of governance environ- ments and corrupt practices in Asia while teaching and consulting in dif- ferent countries in the region. Our paths crossed a few times and our dis- cussions would often turn to the region's problems of corruption and governance. We realized that there cannot be a one-size-fits-all solution to the problems in the face of such country diversity. The solutions to a country's problems must surface from and be suited to its conditions. After a series of discussions we were fortunate to be able to convert our conversations into a collaboration in the World Bank's Global Development Learning Program (GDLN) series in Making National Anti- Corruption Policies and Programs More Effective. In that venture we sought to develop an analytical framework that would address a com- mon need among progressive policymakers in the region--a tool to help them make anticorruption measures more appropriate to and effective in their particular country governance and operating environments. We were not alone or ahead in thinking about this issue--some of our World Bank and academic colleagues were in one way or another already involved in research and action. We are grateful to colleagues at the Bank whose work in this regard has been seminal and influential, particularly Anwar Shah and Daniel Kaufmann and his colleagues at the World Bank Institute. To illustrate the heuristic and practical value of the analytical frame- work we selected four countries for case studies. We chose countries that reflect varying degrees of corruption and different levels of governance quality. We were fortunate to find and work with outstanding local schol- ars who contributed ably in this regard, namely Jhungsoo Park xv xvi CHALLENGING CORRUPTION IN ASIA (University of Seoul) for the Republic of Korea, Nualnoi Treerat (Chulalongkorn University) for Thailand, Eduardo Gonzalez and Magdalena Mendoza (Development Academy of the Philippines) for the Philippines, and Hamid Awaluddin (Partnership for Governance Reform) for Indonesia. The country case studies drafted by these scholars and practitioners served as discussion papers in the various GDLN ses- sions around the region. Vedi R. Hadiz later joined the project to con- tribute the case study of Indonesia included in this volume. We thank each of them for their contributions in their write-ups and in the video- conference sessions. The GDLN seminars in different cities in the region were designed to discuss the analytical framework and country case studies with policy- makers and stakeholders onsite. Through the aid of World Bank video- conference facilities, the reach of each seminar extended to other coun- tries. We are grateful to the government officials, private sector leaders, heads of nongovernmental organizations, and other concerned people who participated in the seminars in Bangkok, Jakarta, Manila, and Singapore, and who provided highly valuable reality checks on the prac- tical applicability for the framework and approach we have proposed. On a couple of occasions we had videoconference participation from Dili, East Timor. Bolongaita thanks his former students in the Public Policy Program at the National University of Singapore who avidly shared their views about their respective countries. We thank May Olalia and the World Bank staff in Manila for their effective coordination of the various GDLN sessions. In the course of the GDLN videoconference seminar series we realized that we could only cover a particular segment of the anticorruption pop- ulation of policymakers and stakeholders. To further meet the growing demand for anticorruption tools we decided to propose bringing togeth- er the analytical papers and case studies into an edited volume. We grate- fully acknowledge the support for the GDLN program extended by the World Bank's East Asia and Pacific Region as well as the production and publication of this book. In that regard we are grateful for the support of Homi Kharas and Barbara Nunberg. We are also grateful for support from other colleagues at the World Bank. The perceptive comments from Daniel Kaufmann and Ed Campos helped us revisit and revise the text. We also received helpful feedback from Sarwar Lateef, Helen Sutch, and Joel Hellman. Ana M. Cardona-Geis provided us with efficient secretari- al support. At present, Bhargava is director of international affairs at the World Bank and continues to work on governance and anticorruption matters. Bolongaita currently heads the Public Sector Governance Group of the Economic Governance Technical Assistance Program of the U.S. Agency PREFACE AND ACKNOWLEDGMENTS xvii for International Development in the Philippines. Our responsibilities continue to give us learning opportunities to improve the framework proposed in this volume. We are pleased and privileged to be able to work with capable colleagues and staff. Together, fighting corruption is less the lonely and dangerous activity that it can be. Finally, we would like to thank our spouses, Nimmi and Kerrie-Anne, for the unstinting support that gave us the time and energy to complete this volume. 1 Introduction: Challenging Corruption in Asia We are all deeply concerned about the spread of corruption, which is a virus capable of crippling governments, discrediting public institutions and private corporations and having a devastating impact on the human rights of populations, and thus undermining society and its development, affecting in particular the poor. --Final Declaration, Global Forum II Corruption in Asia: who cares? The citizens in every country where cor- ruption is prevalent care. Corruption is now recognized as perhaps the most challenging governance problem afflicting many countries. The growing condemnation of corrupt activities is a seismic shift in national mood. Many practices once part of business- and politics-as-usual are now regarded as corrupt. Two events in the last decade--the East Asian financial crisis and the corruption scandals involving the highest govern- ment officials--helped catalyze the change in perception of corrupt prac- tices. As a result, public awareness about the corrosive effects of corrup- tion is at an all-time high and corruption is invariably among the top problems cited in citizen surveys. At the economic level, corruption is seen as a contributing factor to the East Asian financial crisis. The crisis focused people's attention on the staggering impact of corruption, particularly in Indonesia, the Republic of Korea, and Thailand. The interlocking relationship of business and government were previously viewed as part of the way of doing business and practicing politics--a useful partnership crucial to strategic policy- making. As one scholar noted, "Not too many years ago, the economic successes of the countries of East Asia were attributed by some observers to a presumably positive impact of corruption in facilitating decision- making" (Tanzi 1999, p. 2). Many actors justified questionable practices by explaining them to be necessary conditions for rapid economic devel- opment. Today those specific practices constitute the problematic areas of corruption. At the political level, corruption has risen in recent years in national agendas because of its role in political developments. At one point the 1 2 CHALLENGING CORRUPTION IN ASIA heads of government themselves of Indonesia, the Philippines, and Thailand were in the dock on corruption-related charges. Peaceful pop- ulist protest forced the Philippine president, Joseph Estrada, to step down in January 2001. In July 2001 Indonesia's parliament removed President Abdurrahman Wahid from office partly because of corruption allega- tions. Thaksin Shinawatra, prime minister of Thailand, was indicted by the National Counter-Corruption Commission but was eventually acquitted in a controversial decision by the country's Constitutional Court. In 2002 the convictions of two sons of President Kim Dae-Jung of the Republic of Korea on corruption charges tarnished the president's achievements. Other high-level political leaders have also been convicted recently on corruption-related charges in China, Indonesia, the Philippines, and Thailand. Although many countries now face corruption as a major national issue, its causes, patterns, and consequences are highly country specific. Differences--in terms of political and legal institutions, level of econom- ic development, and social values--mean variable effects in dealing with corruption. For instance, all things being equal, a country that has an independent judiciary is more likely to be able to succeed in combating corruption than a country weak in the rule of law. (For an empirical analysis, see Ades and di Tella 1997.) Thus the heterogeneity of Asia's political and electoral processes (Hsieh and Newman 2001; Taylor 1996), economic patterns (Rodan, Hewison, and Robison 1997), and social and cultural conditions (for example, see Steinberg 1987) mean different country capabilities for controlling corruption. In this introductory chapter we give an overview of the costs and con- sequences of corruption. We then present a survey of recent efforts to address the problem at the international and national levels, and we highlight the role of government, the private sector, and civil society in dealing with the problem. We continue by presenting some recent data on dimensions of the corruption problem in Asia and the progress in chal- lenging it. The data will show that Asia is lagging behind some of the other regions in this fight and has a huge challenge ahead. In chapter 2 we discuss a strategic framework for combating corrup- tion, emphasizing that an effective anticorruption program must be craft- ed on the basis of an extensive review of a country's governance and operating environment and the nature of its corruption problems. The anticorruption strategy must be grounded on actual governance condi- tions, not grafted simply from a one-size-fits-all approach. We then pro- vide an overview of a global menu of anticorruption instruments and explain the importance of selecting and prioritizing from that menu, based on a country's particular circumstances. We explain the importance of building a broad anticorruption coalition and the need for ethical lead- INTRODUCTION 3 ership and management. Critically, we underscore the need for a moni- toring and evaluation process that ensures feedback to benchmark and improve implementation. Chapters 3 through 6 are case studies of the Philippines, Korea, Thailand, and Indonesia, respectively. Each case study discusses the problems of cor- ruption in the country in the context of the country's governance and oper- ating environment. It likewise assesses the relevance of recent approaches to combating corruption in those countries and suggests how such anticor- ruption measures may be improved. It is not our intention to make a com- prehensive presentation of the full range of each country's anticorruption programs. Rather, we focus on a subset of anticorruption measures in each country, distill some lessons, and show how application of the framework can improve the effectiveness of anticorruption programs. Corruption Increasingly Damages Economic Development Corruption is plainly deleterious to enterprises even if it is more calcula- ble than variable.1 To be sure, many firms see bribery as a cost of doing business. Others believe bribery to be acceptable because it increases busi- ness and sales. For these firms, playing by the rules in a game in which rules are being bent would be disastrous. Recent research, however, has shown that firms that practice bribery end up paying more for their money--they actually become inefficient as well. In reality these firms spend significant amounts of effort negotiating with bureaucrats and they are burdened with higher cost of capital (Kaufmann and Ji-Wei 1999). Corruption is corrosive to economies. Because many Asian countries were rapidly growing for years, the tradeoff between economic growth and good governance was tolerated, if not extolled. But the events in June 1997 and onward made it clear that the tradeoff was a false bargain. Corruption was hollowing out Asia's economies. Indonesia, Korea, and Thailand came close to economic collapse (Arndt and Hill 1999). In Indonesia's case, the economic drop was accompanied by a political upheaval that brought down the Suharto government. In Thailand, the government of Prime Minister Chuan Leekpai subsequently faced defeat at the polls. The magnitude of the Asian crisis was huge because the problems were glossed and rolled over for a long time--a situation made possible by the lack of transparency in those countries, particularly in their banking systems, which were not adequately prepared for the effects of financial liberalization (Mehrez and Kaufmann 1999; McLeod and Garnaut 1988). The financial crisis was an expensive lesson about the costs and effects of corruption. There is growing international realization that corruption cripples devel- opment in many ways (Gray and Kaufmann 1988; Hutchcroft 1997). It wors- 4 CHALLENGING CORRUPTION IN ASIA ens income inequality and poverty (Gupta, Davoodi, and Alonso-Terme 1998), reduces investment rates (Mauro 1997), lowers economic growth (Tanzi and Davoodi 1998), diminishes democratization, and weakens repre- sentation (Ocampo 2001). It enervates economy and society in insidious ways. It is, as World Bank president James Wolfensohn put it, a "cancer." Given corruption's negative multiple effects, it stands to reason that controlling it can yield multiple benefits. Indeed, in countries where cor- ruption is contained, critical socioeconomic indicators are performing well: there are greater foreign investments, higher per capita income growth, lower infant mortality, higher literacy, stronger property rights, increased business growth, and so on (see Kaufmann, Kraay, and Zoido- Lobatón 2000). Controlling corruption is, therefore, nothing less than pro- moting economic development, increasing country competitiveness, improving social conditions, and reducing poverty. Globalization of the Fight against Corruption International efforts to combat corruption have played a pivotal role in setting the agenda of many governments. Two global gatherings of anti- corruption practitioners from country governments, international organi- zations, donor countries, international nongovernmental organizations, and national political leaders have gained in stature and reach. These are the International Anti-Corruption Conference (IACC) series (www.11iacc.org) and the Global Forum series (www.globalforum3.org). The IACC series has included a wide range of anticorruption stakehold- ers (governments, civil society organizations, international institutions, media, and so forth) whereas the Global Forum series has been primari- ly a gathering of government ministers with participation from invited experts, multilateral institutions, and leading civil society organizations. The IACC series started in 1983 whereas the Global Forum is of more recent origin and had its first meeting in 1999. The 11th IACC and Global Forum III were scheduled back to back in May 2003 in Seoul, Korea. This conjunction underscored efforts at inter- national coalition-building to foster advocacy and implementation of the anticorruption agenda. The participants included ministers, senior offi- cials, and representatives of various state bodies representing 123 coun- tries and various intergovernmental and nongovernmental organiza- tions. The final declaration at the end of the forum sought to ensure that corruption will continue to be a high priority on international and nation- al agendas. In the 11th IACC and Global Forum III, an anticipated event discussed among the participants was the proposed U.N. convention against cor- ruption. As of this writing, negotiations are ongoing with a view to com- INTRODUCTION 5 pleting the document for signing by the end of 2003. This initiative builds on other important international initiatives, among them the following: · Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (www.oecd.org) · Financial Action Task Force--established to fight money laundering (www.oecd.org/fatf/) · Transparency International--the pioneering global civil society­dri- ven coalition against corruption (www.transparency.org) · Multilateral Development Banks' Working Group on Anticorruption, Governance and Capacity Building (www.worldbank.org/publicsector) · United Nations Development Programme--a thematic program for pro- moting accountability, transparency, and anticorruption (www.undp.org/ governance/account.htm). Recent Initiatives in Combating Corruption in Asia In Asia, the Asian Development Bank (ADB) and the Organisation for Economic Co-operation and Development (OECD) have pledged to sup- port the Anti-Corruption Action Plan for Asia and the Pacific that has now been endorsed by 20 ADB member states since November 2001.2 The ADB-OECD action plan aims to support regional activities related to the plan's "three pillars": (1) developing effective and transparent sys- tems of public service, (2) strengthening antibribery actions and pro- moting integrity in business operations, and (3) supporting active pub- lic involvement.3 Both organizations have taken the lead in mobilizing resources for countries that seek support under the action plan. By pledging support to help countries secure resources for their anticorrup- tion initiatives, the ADB and OECD aim to provide action incentives to governments. Nevertheless, it is a testimony to the difficult problem of corruption that originally only 18 of the 33 member governments in attendance in Tokyo in November 2001 signed the action plan.4 Designed to be as broadly appealing as possible, the plan is actually non- binding in nature. A similar situation applies in the efforts of the World Trade Organization (WTO) to promote its Agreement on Government Procurement in which signatories adopt nondiscriminatory and trans- parent procurement processes. To date, in Asia only Hong Kong (China), Japan, Korea, and Singapore have signed. For various reasons and with the exception of Taiwan (China), the rest of the economies in the region have not even started to negotiate accession or adopted observer status.5 The closest that economies in the region have come to moving toward WTO standards is Asia Pacific Economic Cooperation's (APEC's) creation 6 CHALLENGING CORRUPTION IN ASIA of a Government Procurement Experts Group that in 1999 adopted "Non- Binding Principles on Government Procurement."6 Several international organizations have also sought to shape the anti- corruption agenda more directly. The World Bank, for example, has estab- lished a number of country initiatives in governance and anticorruption. Among its supported projects in the region are the Economic and Public Sector Capacity Building Project in Cambodia (2002), the Transitional Support Program for East Timor (2002), and the Partnership for Governance Reform (2002) in Indonesia. Some international organizations have been particularly energetic in certain anticorruption issues, notably those involving money laundering. Recently, the Financial Action Task Force (FATF) placed Indonesia and the Philippines on its "blacklist" of noncooperative countries. After peri- ods of postponement by the Philippine congress on a money-laundering bill, the FATF blacklisting finally prodded the passage of the measure by the congress. (However, the FATF decided to keep the Philippines on the list because, in its view, the law "contains a number of important defi- ciencies."7) Indonesia, added to the FATF blacklist in June 2001, has yet to pass a similar anti-money-laundering law. An offshoot of the FATF's work is the Asia/Pacific Group on Money Laundering (www.apgml.org) that was formed in 1997 to facilitate the adoption, implementation, and enforcement of the FATF's 40 recommendations. There are continuing efforts by other international organizations to weigh in on the corruption agenda of governments through the estab- lishment of various covenants. Among the efforts are the Basel Capital Accord of the Bank for International Settlements,8 the OECD's various initiatives,9 and international private sector associations like the Pacific Basin Economic Council (PBEC). PBEC is an association of senior busi- ness leaders in the Asia-Pacific region and it has adopted a charter on standards for transactions between business and government and it pro- motes the involvement of business in curbing corruption in the region.10 Finally, a few donor countries themselves have been involved directly in corruption agenda setting in the region, notably the Australian Agency for International Development (AusAID), the Canadian International Development Agency (CIDA) and the U.S. Agency for International Development (USAID). Those agencies have been active in pursuing pro- grams in democracy and governance in several countries in the region that have anticorruption dimensions.11 In summary, partly because of rising public pressure in Asia fueled somewhat by the East Asian financial crisis, the sundry corruption scan- dals, and the advocacy work of multilateral institutions, government reformers, and civil society, challenging corruption has become a high priority for many governments. Because of their economic resources and INTRODUCTION 7 diplomatic reach, external actors have continued to influence those evolving agendas. At times their leverage is relatively unilateral; at other times it is combinatorial, as when international organizations join forces with domestic groups to multiply and magnify pressure points. In many ways the universalization of anticorruption efforts testifies to the power- ful nexus that can develop among international and domestic processes and players. This nexus augurs well in tilting the balance of forces between those who benefit from the status quo, and therefore naturally have interests to protect and are often equipped to do so, and the more disparate and less-organized forces for reform. Challenge of Combating Corruption in Asia Growing numbers of citizens in several Asian countries, like other countries increasingly influenced by external forces of globalization and internal pressures for democratization, are becoming increasingly aware of the effects of corruption. With newfound voices they are demanding better behavior from their leaders even as they wish for bet- ter lives themselves. The clamor of citizens resonates with the concerns of an international community that is itself increasingly aware of the costs and consequences of corruption. Because of their networks and resources, international actors have uncommon leverage in demanding better governance in exchange for the support they provide. In seeking change and reform in governance, there is a burgeoning demand among national and international anticorruption players and stakeholders for more knowledge, greater information, and increased insight about cor- ruption. To meet that demand, a number of institutions have worked to over- come the inherent difficulties of generating and analyzing information on the naturally secretive world of corruption. To be sure, data concerning the extent of corruption across countries are hard to collect. Despite these methodological constraints, a number of institutions are regularly assess- ing corruption comparatively. Transparency International's (TI's) Corruption Perceptions Index (CPI), for instance, is among the more prominently used measures of cor- ruption. Drawing on various international and country surveys, TI's CPI scores provide a useful partial measure of the challenge of combating cor- ruption in Asia. CPI scores relate to perceptions of the degree of corrup- tion based on surveys of businesspeople, academics, and risk analysts, and range between 10 (highly clean) and 0 (highly corrupt). Using this measure we see, as listed in table 1.1, that most of the developing coun- tries in Asia have CPI scores at or below 4 and thus have a long way to go to reach a corruption-controlled state. 8 CHALLENGING CORRUPTION IN ASIA Table 1.1. Corruption Perceptions Index Scores, Selected Economies in Asia, 2000­03 Economy 2000 2001 2002 2003 Singapore 9.1 9.2 9.3 9.4 Australia 8.3 8.5 8.6 8.8 Hong Kong, China 7.7 7.9 8.2 8.0 Japan 6.4 7.1 7.1 7.0 Taiwan, China 5.5 5.9 5.6 5.7 Malaysia 4.8 5.0 4.9 5.2 Republic of Korea 4.0 4.2 4.5 4.3 China 3.1 3.5 3.5 3.4 Thailand 3.2 3.2 3.2 3.3 India 2.8 2.7 2.7 2.8 Philippines 2.8 2.9 2.6 2.5 Pakistan n.a. 2.3 2.6 2.5 Vietnam 2.5 2.6 2.4 2.4 Indonesia 1.7 1.9 1.9 1.9 Bangladesh n.a. 0.4 1.2 1.3 Regional average 4.4 4.3 4.6 4.5 n.a. Not available. Source: Transparency International, at www.transparency.org. The World Bank is contributing to efforts to measure corruption as part of a broader attempt to understand and improve governance. Corruption is viewed as one of six indicators of governance, namely (1) voice and accountability, (2) political stability, (3) government effectiveness, (4) reg- ulatory quality, (5) rule of law, and (6) control of corruption. In develop- ing its corruption-control indicators the World Bank uses original survey sources, such as DRI/McGraw-Hill, the Economist Intelligence Unit, the Political Risk Services Group, and the World Bank's business surveys. (It does not use the TI index directly because the CPI actually is also a sur- vey of surveys.) In our view it is important to situate the problem of corruption as part of the comprehensive challenge of good governance. In the analyt- ical framework we discuss in the following chapter, we will emphasize the importance of understanding a country's full governance environ- ment as a critical foundation to crafting appropriate anticorruption policies and programs. In this regard the World Bank's work in devel- oping six aggregate indicators of governance helps us better under- stand the magnitude and dimensions of the problem of corruption among countries. At the same time, it also helps us to understand the strengths and weaknesses in the governance of a country and its shifts INTRODUCTION 9 over time, which can affect the way we assess and develop anticorrup- tion strategies. Table 1.2 presents the World Bank's governance indicators for the peri- od 1996­2002 for the four countries covered by the case studies in this vol- ume, Indonesia, Korea, the Philippines, and Thailand. The table gives each country's percentile rank for each indicator in recent years. The number Table 1.2. Governance Indicators, Selected Years, 1996­2002 (percentile ranking of selected countries) Republic Governance indicator Year Indonesia of Korea Philippines Thailand Voice and accountability 2002 34.8 67.7 54.0 57.1 2000 32.5 68.6 60.2 58.1 1998 12.0 68.6 63.4 55.5 1996 16.2 68.1 58.6 52.9 Political stability 2002 12.4 60.5 29.7 62.7 2000 3.0 64.8 40.0 57.0 1998 9.1 56.4 49.7 59.4 1996 30.5 54.3 43.3 55.5 Government effectiveness 2002 34.0 79.4 55.7 64.9 2000 33.2 72.8 60.3 64.1 1998 26.8 75.4 66.7 62.8 1996 66.5 78.2 67.6 73.7 Regulatory quality 2002 26.3 76.3 57.7 65.5 2000 28.1 67.6 62.2 77.3 1998 47.3 58.7 72.8 56.5 1996 65.7 78.5 68.5 70.2 Rule of law 2002 23.2 77.8 38.1 62.4 2000 15.1 74.6 41.6 69.7 1998 14.1 77.3 60.0 69.2 1996 39.8 81.9 54.8 71.1 Control of corruption 2002 6.7 66.5 37.6 53.6 2000 8.7 72.8 37.5 46.2 1998 6.6 69.9 45.9 61.2 1996 35.3 76.7 38.0 42.7 Note: The database for these governance indicators is comprehensive, based on 275 gover- nance variables from 20 sources and 18 organizations, including among others Freedom House, Gallup International, Economist Intelligence Unit, DRI/McGraw-Hill, the World Bank, the Heritage Foundation, and the European Bank for Reconstruction and Development. The methodology of aggregation is sensitive to measurement errors; the authors placed greater weight on survey results with smaller measurement errors and less- er weight on those with higher margins of error. By drawing on multiple sources, the gov- ernance indicators reduce their margins of error, which would not have been possible if they relied on one or a few sources. For a fuller explanation, see chapter 2 in Radelet (2003). Source: Kaufmann, Kraay, and Mastruzzi 2003. 10 CHALLENGING CORRUPTION IN ASIA for each indicator refers to the percentage of countries worldwide that rate below the selected country (subject to a margin of error). This multidi- mensional snapshot of governance for each country thus highlights the individual governance contexts in which corruption in each country oper- ates. It suggests that the challenge of combating corruption needs to be clearly differentiated by understanding certain governance strengths and by accounting for particular governance weaknesses. In part because of the growing information about the costs and effects of corruption, and with corruption prominent in the agendas of interna- tional organizations and domestic groups, many governments have been prodded if not pressured to launch or reinvigorate anticorruption policies and programs. In this regard, the number of proposals or ideas on ways and means to combat corruption has grown. An increasing stock of knowledge provides ample information on such efforts. There is hardly any country in which no anticorruption agency exists and few anticor- ruption instruments are in place. However, the evidence from manifold sources more than suggests that these institutions and instruments are not getting the job done for most countries. In fact, either the counter-cor- ruption policies are not working or the anticorruption institutions them- selves are among the most corrupt. Thus, although vertical and horizontal demands for policies and pro- grams to challenge corruption in Asia are growing, the progress thus far has been less than satisfactory. Metaphorically, in the view of many lead- ing officials and key stakeholders, the goal of anticorruption is clear but the road ahead is uncertain because there are no useful road maps. At the outset some type of road map is precisely what we seek to pro- vide: the development of an analytical framework to evaluate and increase the effectiveness of existing and proposed anticorruption poli- cies and programs. With varying, if not at times contradictory, recom- mendations and prescriptions coming from different sources, public offi- cials and anticorruption advocates need a framework to assess and pri- oritize recommended policies and programs. At the same time they have called for such a framework that would be sensitive to the political, eco- nomic, and social realities of their respective environments. These con- cerns were clearly articulated in the general principles of the Final Declaration of Global Forum III: "anti-corruption measures tailored to the specific circumstances of a particular society should be devised in order to effectively deliver practical solutions." To clarify that this declared need was not a cultural cover to exonerate corruption, the Final Declaration in Global Forum III stated at the outset that there was a "uni- versally held value of integrity" and that the participants' "...call for cul- tural and historical particularity should not be used as a pretext for justi- fying corruption...."12 INTRODUCTION 11 The sense of urgency among governments, the private sector, and civil society to control corruption stems in part from the economic dam- ages--and its numerous negative externalities--that continue to be wrought by insidious mutations of transnational and domestic corrup- tion. At the same time there is a growing realization among those sectors that there are enormous benefits to be gained by building a coalition that can control corruption effectively. The World Bank's research, as alluded to earlier, has found that controlling corruption has numerous positive externalities in the political, economic, and social spheres. A less-corrupt Asia would mean its countries are likely to have more growth, improved foreign investments, higher per capita income, lower infant mortality, increased literacy, stronger property rights, increased business growth, and many additional benefits (see, for example, Kaufman, Kraay, and Zoido-Lobatón 2000). The challenge, of course, is how to get from here to there. Drawing on the growing and compelling body of research about gov- ernance and corruption, we discuss and propose an analytical frame- work--elaborated in the next chapter--that can be used to assess, priori- tize, and improve existing and recommended anticorruption policies and programs. A fundamental premise of this framework is that different countries require differentiated policies. Because of the historical, politi- cal, economic, and social differences among countries, there is no one- size-fits-all anticorruption agenda. What the analytical framework offers is a practical approach to drawing lessons from the global experience of anticorruption tools and instruments and to crafting and implementing an appropriate reform agenda effectively. Outline of the Book In this book we present four case studies: one each from Indonesia, Korea, the Philippines, and Thailand. These cases illustrate the universal nature of the problem of corruption as it afflicts even countries considered to demonstrate relatively good governance (for example, Korea). Two cases--the Philippines and Thailand--highlight the problems of corrup- tion for countries with fair governance, and Indonesia demonstrates the challenges of dealing with corruption under poor governance conditions. Using these case studies we explain that the choice and design of counter-corruption policies need to be calibrated according to the respec- tive governance and corruption conditions in specific countries. That is no merely academic point. We contend that certain anticorruption poli- cies may not simply be ineffective or inefficient in certain contexts, but may actually worsen the situation. We discuss this tragic irony in our case studies where some anticorruption policies have exacerbated conditions. 12 CHALLENGING CORRUPTION IN ASIA In chapter 2 we propose a multidisciplinary analytical framework to help understand the patterns of governance and the nature of corruption in a country and then to use that knowledge to improve the effectiveness of national anticorruption policies and programs. The framework goes beyond improving the technical design of anticorruption programs. It explains the importance of three other elements needed to improve their effectiveness: (1) building coalitions of anticorruption champions, (2) cre- ating effective management and leadership structures, and (3) supporting regular monitoring and reporting on corruption. The Philippine case is discussed in chapter 3. Written by Eduardo Gonzalez and Magdalena Mendoza of the Development Academy of the Philippines, the case illustrates the challenge of tackling corruption in a fair governance environment characterized by persistent patterns of state capture and petty corruption. Chapter 4 focuses on the Republic of Korea. The country has joined the ranks of the OECD but continues to encounter serious problems of state capture. The article, written by University of Seoul professor Jhungsoo Park, discusses the challenge of confronting corruption in a relatively well-developed economy. In chapter 5, the case of Thailand is addressed by Chulalongkorn University professor Nualnoi Treerat. She discusses the dilemma of coun- tering corruption in another fair governance environment where the role of "money politics" continues to perpetuate a significant degree of state capture and administrative corruption. Chapter 6 deals with Indonesia, and the "untraceable" anticorruption initiatives that have dotted its history (untraceable because they have left no marks against corruption). Written by National University of Singapore professor Vedi R. Hadiz, the article describes the complexity of combating corruption in the poor governance conditions existing in the country--conditions compounded by difficulties in the transition from authoritarianism. Finally, chapter 7 seeks to draw key lessons from challenging corrup- tion in the four case studies and highlights issues that need to be addressed. We then try to illustrate how to use the analytical framework discussed in chapter 2 to improve the effectiveness of national anticor- ruption policies and programs. Notes 1. Some studies suggest that countries with more predictable corruption prac- tices will have higher investment rates than those with unpredictable patterns (see Campos, Lien, and Pradhan 1999). 2. For more information see www1.oecd.org/daf/ASIAcom/index.htm. INTRODUCTION 13 3. The ADB itself has developed a number of country programs across the region to improve governance and capacity building. For an overview of these various projects see www.adb.org/Projects/default.asp. 4. The plan was originally endorsed by Bangladesh, Cook Islands, Fiji, India, Indonesia, Japan, Korea, Kyrgyz Republic, Malaysia, Mongolia, Nepal, Pakistan, Papua New Guinea, the Philippines, Samoa, Singapore, and Vanuatu. Subsequently three other economies added their support: Cambodia, Hong Kong (China), and Kazakhstan. 5. See the World Trade Organization's "Overview of the Agreement on Government Procurement," available at www.wto.org/English/tratop_e/ gproc_e/over_e.htm. 6. See www.apecsec.org.sg. 7. See the FATF statement, "No FATF Counter-Measures to Apply against the Philippines for Now," available at www1.oecd.org/fatf/pdf/PR-20011218_ en.pdf. In its meeting in Hong Kong, China, in February 2002, the FATF reaf- firmed its December decision ("Philippines Stays" 2002). 8. In December 2001 the Basel Committee on Banking Supervision of the Bank for International Settlements (BIS) reviewed its progress toward a new Basel Capital Accord, which seeks to improve existing capital requirements, conduct supervisory review of an institution's capital adequacy and internal assessment process, and pursue greater market discipline through effective disclosure to encourage safe and sound banking practices. See BIS, "Progress towards Completion of the New Basel Capital Accord." December 13, 2001, available at www.bis.org/press/p011213.htm. 9. The OECD continues to push for implementation of various measures, notably its Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Revised Recommendation, the OECD Council Recommendation on Improving Ethical Conduct in the Public Service, and the OECD Principles on Corporate Governance. For details, see www.oecd.org. 10. See PBEC Web site at www.pbec.org. 11. USAID currently has such programs in Myanmar, Cambodia, Indonesia, and the Philippines. In the Philippines, it seeks to support accountability institutions such as the ombudsman and the other member agencies of the Inter-Agency Anti- Graft Coordinating Council. Working with the Philippine Department of Budget and Management, it is helping conduct Integrity Development Reviews and establish anticorruption plans in high-risk agencies. It is also working with the Philippine Department of Finance to establish an Integrity Protection Service. For a general description of USAID's work, see www.usaid.gov/democracy/ ane/ane.html. CIDA has ongoing or planned projects in Cambodia, Indonesia, Laos, Malaysia, the Philippines, Thailand, and Vietnam. See www.acdi-cida. gc.ca/CIDAWEB.webcountry.nsf.asia_e.html. AusAID undertook various activi- ties during 2001/02 with governance as the primary focus, at a cost of A$308.3 million. See www.ausaidegov.au/keyaid/gover.cfm. 14 CHALLENGING CORRUPTION IN ASIA 12. See the Final Declaration at www.worldbank.org/wbi/governance/ pdf/gf3_finaldec.pdf. References Ades, Alberto F., and Rafael di Tella. 1997. "The New Economics of Corruption: A Survey and Some New Results." In Paul Heywood, ed., Political Corruption. Malden, Mass.: Blackwell. Arndt, H. W., and Hal Hill, eds. 1999. Southeast Asia's Economic Crisis: Origins, Lessons, and the Way Forward. Singapore: Institute of Southeast Asian Studies. Campos, Jose Edgardo, D. Lien, and Sanjay Pradhan. 1999. "The Impact of Corruption on Investment: Predictability Matters." World Development 27 (6): 1059­67. Gray, Cheryl W., and Daniel Kaufmann. 1988. "Corruption and Development." Finance and Development 35 (1): 7­10 Gupta, Sanjeev, Hamid Davoodi, and Rosa Alonso-Terme. 1998. "Does Corruption Affect Income Inequality and Poverty?" Working Paper WP/98/76, International Monetary Fund, Washington, D.C. Hsieh, John Fuh-Sheng, and David Newman, eds. 2001. How Asia Votes. New York: Seven Bridges Press/Chatham House. Hutchcroft, Paul. 1997. "The Politics of Privilege: Assessing the Impact of Rents, Corruption, and Clientelism in Third World Development." Political Studies 45 (3): 639­58. Kaufmann, Daniel, and Shang Ji-Wei. 1999. "Does `Grease Money' Speed Up the Wheels of Commerce?" Working Paper 7093, National Bureau of Economic Research, Cambridge, Mass. Kaufmann, Daniel, Aart Kraay, and Pablo Zoido-Lobatón. 2000. "Governance Matters: From Measurement to Action." Finance and Development 37 (2). Available at www.imf.org/external/pubs/ft/ fandd/2000/06/kauf.htm. Kaufmann, Daniel, Aart Kraay, and Massimo Mastruzzi. 2003. "Governance Matters III: Governance Indicators for 1996­2002." World INTRODUCTION 15 Bank Policy Research Working Paper 3106. Washington, D.C. Paper and data available at http://www.worldbank.org/wbi/governance/gov data2002/index.html. Mauro, P. 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 D.C.: Institute for International Economics. McLeod, Ross H., and Ross Garnaut, eds. 1988. East Asia in Crisis: From Being a Miracle to Needing One? London: Routledge. Mehrez, Gil, and Daniel Kaufmann. 1999. "Transparency, Liberalization, and Financial Crises." Policy Research Working Paper 2286, World Bank Institute, Washington, D.C. Ocampo, Luis Moreno. 2001. "State Capture: Who Represents the Poor?" Development Outreach, World Bank Institute, Winter. Available at www1.worldbank.org/devoutreach/winter01/article.asp?id=100. Radelet, Steve. 2003. Challenging Foreign Aid: A Policymaker's Guide to the Millennium Challenge Account. Washington, D.C.: Center for Global Development. Rodan, Garr, Kevin Hewison, and Richard Robison, eds. 1997. The Political Economy of Southeast Asia: An Introduction. Melbourne: Oxford University Press Australia. Steinberg, David Joel, ed. 1987. In Search of Southeast Asia: A Modern History. Honolulu: University of Hawaii Press. Tanzi, Vito. 1999. "Governance, Corruption and Public Finance: An Overview." In Salvatore Schiavo-Campo, ed., Governance, Corruption and Public Management. Manila: Asian Development Bank. Tanzi, Vito, and Hamid Davoodi. 1998. "Roads to Nowhere: How Corruption in Public Investment Hurts Growth." Economic Issues Series. Washington, D.C.: International Monetary Fund. Taylor, R. H., ed. 1996. The Politics of Elections in Southeast Asia. Cambridge, U.K.: Woodrow Wilson Center Press and the Press Syndicate of the University of Cambridge. 2 An Analytical Framework for Improving the Effectiveness of Anticorruption Policies and Programs Anti-corruption measures tailored to the specific circumstances of a par- ticular society should be devised in order effectively to deliver practical solutions. --Final Declaration, Global Forum III In several countries around the world, opportunities have emerged for the launching or reinvigorating of national anticorruption programs and poli- cies. In many ways the corrupt forces in these countries now face anticor- ruption forces that are less discrete and more organized than before. Across countries, previously dispersed and silenced elements from with- in and outside government appear to be overcoming problems of collec- tive action as they create coalitions against corruption. In some countries progress has been remarkable. Groups have taken advantage of problems and openings to form broad-based coalitions, gathering momentum at such inexorable pace that vested interests have been overcome swiftly. These opportunities have developed for several reasons. First, from a growing body of research and analysis about the consequences of cor- ruption, citizens have learned that the problem is more costly than was previously imagined. Second, reform-oriented officials in the public sec- tor have also found that the risks of challenging corruption are not as high as before because of the increasing numbers of international donors who are demanding that their development assistance be used honest- ly--a fact reflected in the international treaties being forged that oblige countries to take measures to combat corruption. Third, public officials are seeing that corruption has become riskier than before as they see changes in the political landscape where corrupt behaviors have led to the ouster of politicians from the highest offices. For that same reason some public officials are now calculating, if not deciding, that anticor- ruption can reap political rewards. 17 18 CHALLENGING CORRUPTION IN ASIA In this context of rather favorable opportunities and somewhat less- ened risks for combating corruption there is a growing interest and a sense of urgency among public officials and key stakeholders for an ana- lytical framework to evaluate and improve anticorruption policies and programs. The opportunities to initiate or improve anticorruption poli- cies and programs will not be available for long. In fact, the forces of cor- ruption are simultaneously trying to counter them. So it is critical for anticorruption coalitions to develop and execute strategies that can take advantage of opportunities in the face of immediately resistant and resourceful forces. To address this need, in this chapter we outline an analytical frame- work that may be applied to make the design and implementation of anticorruption policies and programs more effective at national and sub- national levels. Building on the emergent research and findings of global corruption studies, this framework provides a "lens" for the thinking about and crafting of strategies to develop and advance anticorruption agendas. It is partly because the annals of global anticorruption action are recent and partly because there are more questions than answers on the matter that we propose this analytical framework. In this vein the frame- work can help reformers learn from the evolving global experience and thus ask better questions as they develop and execute strategies. We do not mean to suggest that following this framework ensures vic- tory in combating corruption. As in other fields of human endeavor, the struggle against corruption involves far too many factors and forces to be able to predict with absolute confidence the outcome of battle. We do, however, suggest that the framework can help improve reformers' odds. The analytical framework we propose comprises the following six action elements: 1. Analyze a country's governance and operating environment. The develop- ment and improvement of anticorruption policies and programs at national and subnational levels need to begin with a solid understand- ing of the country's governance and operating environment. In many countries the establishment of anticorruption agencies and measures omitted such analysis and study, and this explains in part the ineffec- tiveness of their anticorruption efforts. A thorough analysis of gover- nance and operating environment entails examining various aspects of a country's political, economic, social, and historical experience. The sociopolitical analysis is particularly important in this regard because it is a decisive determinant of anticorruption outcomes. This analysis should include looking at different existing comparative assessments of a country's governance and its patterns of corruption. There are various diagnostic tools, developed by the World Bank and others, that can pro- AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 19 vide an in-depth understanding of a country's governance and operat- ing environment. Such a thorough assessment is critical in choosing anticorruption measures that will have the best chances of working in a given national or subnational governance environment. 2. Review the global menu of anticorruption instruments. This global review is fundamental in crafting appropriate policies and programs that are likely to succeed in a particular governance environment. A review of the literature indicates that there is a wealth of information now avail- able on instruments being implemented to combat corruption. A glob- al menu of anticorruption instruments can be compiled. This menu can be comprehensive or limited to a subset, such as increasing trans- parency through disclosure of information. It is likely that a corruption problem that a country is trying to address (for example, ensuring whistleblower protection) is being addressed in other countries. Reviewing the experiences of other countries can help identify policy and program alternatives and answer the following questions: Where, when, and how did the instruments work? What have been their suc- cesses and shortcomings? What are the prerequisites for success, and what needs to be avoided? 3. Select anticorruption instruments according to a country's governance envi- ronment. Choose from the global menu of anticorruption options the policies and programs that are likely to work in the particular gover- nance environment prevailing in a country, state, or district. To be sure, these measures will need to be analyzed and adapted accordingly. It is crucial that selected measures be analyzed in terms of the likelihood of their being effective in a given set of governance conditions. This analysis can help shape the design and calibrate the implementation of the anticorruption measures. The scope of such measures may be quite comprehensive or more targeted based on available opportunities. For example, the public disgust with corrupt behavior by large corpora- tions has opened an opportunity to put in place measures to improve corporate governance. This analysis of the governance environment should include an assessment of the opportunities for reform, which in turn would shape the comprehensiveness of an anticorruption pro- gram. Among other things, analysis should include an assessment of the impact of the proposed measure on the drivers of corruption in the country. Such an appraisal can benefit from the information gathered under the first two action elements described above. Based on this analysis, a technically sound anticorruption program can be crafted that is most likely to succeed given a country's governance circum- stances.1 Although necessary, however, a sound technical design is not a sufficient condition for effectiveness, as the following three action elements underscore. 20 CHALLENGING CORRUPTION IN ASIA 4. Build broad coalitions to develop and implement anticorruption policies and programs. Fighting corruption can be characterized as shifting the bal- ance of forces in state and society toward anticorruption policies and programs. In poor-governance countries, the people and groups who benefit from corruption are likely to be small in size and number, but are more or less organized and, not surprisingly, have sizable resources at their disposal. Thus, the greater the corruption in a coun- try, the more critical it is to build a broad coalition. Only a broad coali- tion can effect a shift in the balance of forces. The broader the coalition, the better. With a critical mass of state and nonstate actors, anticorrup- tion policies and programs can be placed at the top of a government's agenda. Moreover, the probability that the policies and programs will be decided on and implemented is likely to be increased despite expected resistance and opposition from corrupt forces both inside and outside of government. 5. Establish accountable leadership and management of anticorruption policies and programs. Almost all national anticorruption programs feature varying leadership and management structures. These include one or more of the following offices: independent commission against cor- ruption, ombudsman, supreme audit institution, investigative and prosecutorial agency, parliamentary oversight body, multisector advi- sory group, internal affairs unit, and so forth. In countries with poor governance conditions, many if not most of those institutions them- selves are plagued with corruption. In establishing or improving anti- corruption institutions it is critical that they have sufficient authority and resources combined with broad accountability mechanisms. Whatever the form of the leadership and management structures, their effectiveness may be appraised according to the following criteria: political support, operational independence, subpoena powers and access to documentation, protection and promotion of whistleblowers, authority to introduce greater transparency and disclosure in public sector operations, reputational legacy, credibility and integrity of top leadership, and adequacy of resources. 6. Monitor and evaluate feedback about anticorruption policies and programs. In many poor-governance countries with anticorruption policies and programs there are hardly any regular and systematic processes to generate and assess accountable performance indicators. If anything, the facts and figures monitored and reported are often unrelated to measuring the anticorruption effectiveness of the organizations con- cerned. The lack of systematic assessments of measurable performance indicators retards and compromises anticorruption policies and pro- grams. Such feedback is critical to establishing benchmarks for improvement. Only what is observed and measured can be more effec- AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 21 tively achieved. The World Bank and other organizations have devel- oped various tools, such as diagnostic surveys and report cards, and the information they provide is critical to helping anticorruption actors anticipate, prepare for, and overcome the expected forces of resistance to reforms. We now discuss in greater depth the specific elements of the analytical framework. Analyzing a Country's Governance and Operating Environment This is the core premise of our proposed analytical framework: anticor- ruption policies and programs need to be crafted on the basis of a careful analysis of the nature of governance and the patterns of corruption in a country. This premise is straightforward enough but it is not a practice in many countries. Various governments have overlooked or hardly con- ducted thorough research in developing and implementing anticorrup- tion efforts. This is not to say that such thorough research will ensure suc- cess, but that it can enhance the prospects that chosen anticorruption instruments will have some impact on the problem. When conducting research, be aware not only of its possibilities for making future programs more effective, but also of its limitations. The nature of governance and the drivers of corruption are complex, present- ing interactions among each other that are not easily detectable, much less immediately manipulable by public policy. This is, in fact, a key les- son from the past and present failures of many existing anticorruption efforts. Thus, it is all the more important to be methodical in the matter. Institutional change--or the change of incentive structures that make cor- ruption more costly (and, conversely, make noncorruption less costly)-- is what anticorruption action seeks to achieve, and it is a dynamic and uncertain process (North 2003). To know what strategies and tools might work in a particular gover- nance environment it is important to understand that environment in the first place. The country governance setting is a key determinant of the likely effectiveness or ineffectiveness of any anticorruption measure. For example, although there is growing consensus that media have a role to play in any anticorruption program, the effectiveness of investigative journalism in China will differ from that in the Philippines. In this regard the nature of governance must be factored in assessing the weight and efforts devoted to particular anticorruption approaches. There are a number of diagnostic instruments for assessing gover- nance and operating environment at national or subnational levels. They 22 CHALLENGING CORRUPTION IN ASIA may be viewed as an inverted pyramid of categories, providing, as it were, first a broad view of the forest and eventually a close-up view of the trees. Beginning at the broadest point these categories are: 1. Comparative cross-country surveys of governance (see appendix 2.1) 2. Country-focused diagnostics (such as the World Bank's institutional governance reviews) 3. Within-country surveys (such as report cards and enterprise or busi- ness climate surveys) 4. Sector-focused surveys (such as the World Bank's public expenditure tracking surveys). Policymakers and key actors have found the diagnostics in the first category to be useful because of their comparative appeal and because they provide benchmarking information to assess performance. The sec- ond category lists forms of country case studies conducted to gain an in- depth understanding of the nature of governance in a country, with close attention paid to country-specific factors in politics, economics, social conditions, and the like. The third category offers in-country surveys that cover sectors or areas perceived to be most affected by corruption and poor governance. The fourth category describes studies that focus on governance and corruption conditions in particular sectors, such as health, education, or customs. In sum, this range of categories presents a systematic and sequential way of using diagnostic instruments. 2 In drawing insights from diagnostic studies, the analysis of country governance should focus on a country's drivers of corruption. Such a review needs to be comprehensive and to encompass political, legal, eco- nomic, and social dimensions. All of those dimensions are important, but a special mention must be made of politics and incentives. Incentives and constraints faced by politicians strongly influence the nature and extent of corruption, so developing a good understanding of this landscape is extremely important in designing an anticorruption program. Among other things, a comprehensive framework analysis would include the fol- lowing factors: · Political system governing how state power is exercised, decisions are made, and accountability is enforced · History and lessons of the country's anticorruption efforts · Constitutional and legal framework concerning corruption · Media freedom and civil liberties · Regulations governing disclosure of information · Activism of civil society and polling organizations · Size, behavior, and values of the private sector AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 23 · Public awareness and sociocultural attitudes toward corruption · Independence and integrity of the judiciary · Effectiveness of anticorruption agencies, prosecutorial agencies, supreme audit institutions, and the like · Quality and incentives of civil servants · Local anticorruption champions and advocates in government, civil society, and the private sector · Extent of political corruption. Understanding a country according to each of the dimensions listed above would be a formidable task if done from scratch, but starting from square one is not necessary. One way of telescoping the process is to look at a country's governance indicators using existing comparative studies and surveys. The number of indicators available for a wide range of countries is growing (see appendix 2.1). 3 These indicators provide data for developing a rating of a country's governance environment that may then be used to assess the potential impact of a particular anticorruption measure. Determining an overall rating of governance (or other aggregate measures of rating the key com- ponents of a country's governance environment) is necessary because the number of governance indicators can be large. For example, in the work of the World Bank the indicators used are based on several hundred indi- vidual variables measuring perceptions of governance that are drawn from 25 separate data sources and constructed by 18 different organiza- tions (see Kaufmann, Kray, and Mastruzzi 2003). Thus, an aggregate rat- ing becomes useful in providing a sense of the prospective effectiveness of anticorruption strategies and instruments in different governance set- tings, as we shall explain shortly. In this matter we draw heavily on the work of researchers who have tried to delineate the relationships between the effectiveness of various strategies and instruments and the governance environment. In the following section, we will discuss two pioneering studies to illustrate this analytical relationship. Typology of Country Governance Environments: Two Approaches There are two typologies that help explain the importance of selecting anticorruption instruments appropriate to a country's governance envi- ronment. The first typology deals with a country's "quality of gover- nance." Jeff Huther and Anwar Shah (1998) developed a governance quality index based on four subindexes: 1. A citizen participation index (an aggregated measure using indexes of political freedom and political stability) 24 CHALLENGING CORRUPTION IN ASIA 2. A government orientation index (an aggregated measure using index- es of judicial efficiency, bureaucratic efficiency, and lack of corruption) 3. A social development index (an aggregated measure using indexes of human development and egalitarian income distribution) 4. An economic management index (an aggregated measure using index- es of outward orientation, central bank independence, and inverted ratio of debt to gross domestic product). This governance quality index is three-tiered: "good," "fair," or "poor." Huther and Shah applied the index to 80 countries, as shown in table 2.1, so the index provides a snapshot of the nature of a country's governance relative to that of other countries. Certainly the index is not meant to be deterministic or static because a country's governance quali- ty can and does change over time, for better or for worse. Concerning the countries covered by the case studies in this volume, in table 2.1 we see that the Republic of Korea is rated as having "good governance," the Philippines and Thailand have "fair governance," and Indonesia has "poor governance." (Since Huther and Shah's study was published in 1998 the governance situation in each of those countries has more or less changed for the worse or for the better, as the case studies will show). Generally speaking, the case studies illustrate how the ratings of country governance can help in the design and improvement of anti- corruption programs and policies. The second typology tackles the different patterns of corruption among countries. In a study on corruption in transition economies in Europe, the World Bank (2000a) created a two-dimensional matrix of cor- ruption. The two dimensions are state capture and administrative corrup- tion,4 as shown in figure 2.1. State capture refers to "...shaping the formation of the basic rules of the game (that is, laws, rules, decrees, and regulations) through illicit and non-transparent private payments to public officials" (Hellman, Jones, and Kaufmann 2000, p. 2).5 In Asia this practice is also known as crony capitalism (Kang 2002). Administrative corruption, also known as petty corruption, refers to the "...private payments to public officials to distort the prescribed implementation of official rules and policies" (Hellman, Jones, and Kaufmann 2000, p. 2).6 Variance in these two types of corrup- tion presents different kinds of challenges and likewise poses different prospects for the effectiveness of anticorruption policies.7 In developing this typology, the authors explained that "...an anti-cor- ruption strategy should be designed not only in response to the level of either state capture or administrative corruption alone in a given country but to the interaction of these forms of corruption as well" (World Bank 2000a, p. 58). This is important because strategies and tools to combat AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 25 Table 2.1. Quality of Governance Ranking of Countries Country Quality index Country Quality index Good governance Switzerland 75 Czech Republic 60 Canada 71 France 60 Germany 71 Belgium 58 Netherlands 71 Malaysia 58 Austria 70 Israel 57 United States 70 Republic of Korea 57 Finland 68 Trinidad and Tobago 57 Australia 67 Greece 55 Denmark 67 Spain 55 Norway 67 Costa Rica 54 Sweden 67 Hungary 54 Ireland 66 Uruguay 54 United Kingdom 66 Chile 53 Singapore 65 Italy 53 New Zealand 64 Argentina 52 Japan 63 Jamaica 52 Fair governance Panama 50 Tunisia 47 Romania 50 Brazil 46 South Africa 50 Russia 46 Venezuela, R.B. de 50 Turkey 46 Poland 49 Paraguay 45 Ecuador 48 Sri Lanka 45 Jordan 48 Philippines 44 Mexico 48 Zimbabwe 44 Oman 48 India 43 Peru 48 Thailand 43 Saudi Arabia 48 Côte d'Ivoire 42 Colombia 47 Papua New Guinea 41 Poor governance Egypt 40 Togo 29 Morocco 40 Zambia 29 China 39 Senegal 28 Kenya 39 Uganda 28 Cameroon 38 Yemen 28 Honduras 38 Iran 26 Indonesia 38 Malawi 26 Nicaragua 37 Sierra Leone 26 Nepal 36 Zaire 25 Pakistan 34 Rwanda 22 Nigeria 33 Liberia 20 Ghana 32 Sudan 20 Country names in boldface: subject of case studies in this volume. Source: Huther and Shah 1998. 26 CHALLENGING CORRUPTION IN ASIA Figure 2.1. Stylized Typology of Corruption Conditions High/Medium High/High (High state capture/medium (High state capture/high State administrative corruption) administrative corruption capture Medium/Medium Medium/High (Medium state capture/medium (Medium state capture/high administrative corruption administrative corruption) Administrative corruption Source: World Bank 2000a. administrative corruption may be compromised by state capture and vice versa. Of course, like the ratings on quality of governance, the snapshots of state capture and administrative corruption are meant to reflect condi- tions at the time of their taking. Thus they should be assessed in relation to current realities. In fact, as the authors said, "...it might be more use- ful to know in which direction a country is moving within the typology rather than its position at any given time" (World Bank 2000a, p. 58). Reviewing the Global Menu of Anticorruption Instruments Given the history of anticorruption efforts worldwide, the list of mea- sures that have been tried is likewise long and varied. Since their found- ing, nation-states have wrestled with issues of balancing accountability and power. For example, in the United States the very structure of gov- ernment was, to some of its founders, a measure to ensure accountability among powerful institutions through mutual checks and balances. 8 Thus, anticorruption measures broadly include instituting checks and balances in the political system (for example, strengthening the judiciary and promoting government decentralization), expanding civil society (for example, fostering a freer press and freedom of information and association), increasing accountability among political officials (for exam- ple, establishing asset disclosure regimes and campaign finance rules), injecting greater competition into the economy (for example, breaking up monopolies and enhancing regulatory institutions), and improving pub- lic administration and public finance (for example, developing a merito- cratic civil service and fiscal discipline) (Kaufmann 2000). Other mea- sures include raising public awareness, promoting public participation, establishing "watchdog" agencies, involving the private sector, and join- AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 27 ing international initiatives (Stapenhurst and Kpundeh 1999; Langseth, Stapenhurst, and Pope 1997). For its part the World Bank uses an anticorruption strategy framework with five components: (1) increasing political accountability, (2) strength- ening civil society participation, (3) creating a competitive private sector, (4) establishing institutional restraints on power, and (5) improving public sector management. Each of these components contains various tools and 9 instruments. Of particular relevance to Asia is the comprehensive menu of anticorruption measures outlined in the Asian Development Bank (ADB) and Organisation for Economic Co-operation and Development (OECD) Anti-Corruption Action Plan for Asia and the Pacific (see table 2.2). The importance in compiling anticorruption measures used globally is in being able to come up with an "anticorruption menu." In this regard, we made a preliminary compilation to create such a menu of measures (see appendix 2.2). We researched information from various secondary sources, including Web sites that have data on measures in use around the world.10 The list is varied but it does not say much about the efficacy of the measures included. We recommend as a next step that a fact sheet be developed for each measure, which includes (a) information on the problem that the measure was designed to address, (b) how the measure would work to reduce corruption, and (c) what prerequisites or enabling conditions are necessary for the measure to be effective. This recommen- dation requires further research, which is beyond the scope of this pro- ject. At present it is sufficient to say that a global menu of anticorruption measures can be developed and used as a basis from which country-rel- evant measures may be drawn. Crafting Anticorruption Measures Based on a Country's Governance Environment Equipped with understanding about a country's governance environ- ment and its patterns of corruption, policymakers can choose from the global menu of anticorruption measures the instruments that are likely to be appropriate and effective in their country. An anticorruption strategy does not have to be a comprehensive one in all cases. In some countries there may be enough resources, political commitment, and civil society support to launch an attack on all fronts. More often, however, this may not be the case, so a more focused approach may be very advisable. The analysis of a country governance environment is crucial for making that choice because the effect of anticorruption measures depends in part on (Text continues on page 33.) at dis- its clean eport-r educa- anticor- public ough: integrity and for of example, and an thr campaigns eness omote for, uption eating support cr encourage uption pr by to corr at awar that of for 3 active es corr documenting of uption citizen uption implementation aimed e. 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ent ambiguous, scr on ocessing political public 2.2. availability campaigns onment of Adapted bleaT Developing transpar Enhancement public Adoption tion mation tion-pr ing toral Simplification envir lapping, egulationsr ce: · · · Sour 32 AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 33 the governance environment in which they are applied. Without suffi- cient knowledge of conditions policymakers are more likely to make mis- takes in committing to ill-informed and poorly advised projects. Table 2.3 presents the effect of specific anticorruption measures assessed relative to the quality of a country's governance environment, and suggests that the choice of measures must be calibrated according to that environment.11 A particular policy that is effective in one setting may be ineffective if not counterproductive in another. Huther and Shah (2000) explained that some well-known anticorruption policies or pro- grams are unlikely to have much impact in "weak" to "fair" governance environments. Those policies and programs would include approaches such as conducting seminars to raise public awareness, creating anticor- ruption agencies and ethics offices, and increasing public sector wages. By themselves those measures are likely to have little effect because they are not suitable to the governance conditions. Policies and programs such as instituting economic reforms, improving media and judicial indepen- dence, reducing the size of the public sector, and strengthening the rule of law would have greater effects against corruption in "weak" to "fair" governance environments. In such circumstances a targeted approach focused on promising areas (that is, where leadership, resources, and means for collective action are available) may be more effective. However, it is not sufficient simply to base the choice of anticorruption instruments on broad assessments of the quality of governance. It is also critical to look at the nature of corruption in the country. The degree and combination of state capture and administrative corruption affect the ability of officials to implement certain anticorruption measures effec- tively. That is because the depth of corruption problems is a good indica- tor of the likely strength and capacity of the opposition to reformers. The more serious state capture and administrative corruption are, the more formidable vested interests are in countering reforms. Here again a tar- geted approach in promising areas would be more effective. For example, a country governance environment with intermediate levels of state capture and administrative corruption presents less daunt- ing conditions. In such a context the World Bank recommends strength- ening political accountability and transparency through deepening insti- tutional reforms in civil service, public finance, procurement, and the judiciary; introducing greater transparency into political financing; and building strong partnerships with civil society. Those are the kinds of broad measures that have reasonable prospects of being implemented because the state retains some autonomy and can leverage the relative strengths of its institutions in pursuing change. In contrast, where the governance environment is characterized by high levels of state capture and administrative corruption the challenge 34 CHALLENGING CORRUPTION IN ASIA Table 2.3. Assessment of Selected Anticorruption Instruments Anticorruption Quality of governance instrument Weak Fair Good Comments Raising public aware- n.r. Low Med. In countries with weak gover- ness of corruption nance, corrupt practices and through seminars agents are generally well-known. Raising public officials' n.r. Low Med. Public officials may be aware of officials' awareness of corruption but unwilling or corruption through unable to take action because seminars of incentive problems in coun- tries with weak governance. Establishing anti- n.r. Low Med. With endemic corruption, anti- corruption agencies/ corruption agencies or ombuds- ombudsman position man may actually extort rents. Positive influence if precondi- tions for good governance exist. Establishing ethics n.r. Low Med. Positive influence may be limit- office ed to societies with good gover- nance. Raising public sector ... Low Med. May have positive impact on wages on petty corruption but little impact on grand corruption. Negative impact if part of the problem is excessive public employment. Reducing wage ... ... ... More relevant as an incentive compression mechanism for career develop- ment. May increase corruption if the public sector is viewed as a lucrative career option by greedy elements of society. Establishing merit- Low Med. High May be derailed by bureaucratic based civil service processes in highly corrupt societies. Conducting public Low Med. Med. Public opinion surveys have opinion surveys served as a useful tool in articu- lating citizens' concerns (e.g., Bangalore scorecard). Demanding financial Low Low Med. Appropriate when democratic accountability accountability and a substantial accounting/bookkeeping infra- structure with some integrity are in place. Establishing parliamen- Low Med. Med. Parliamentary oversight can be tary oversight helpful but parliamentary micro- management is not an effective form of governance. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 35 Anticorruption Quality of governance instrument Weak Fair Good Comments Reducing public Med. Low Low May reduce opportunities for employment corruption. Decentralization Med. Low Low May improve accountability and may increase sense of social pur- pose for public officials. Promoting client-client- Med. Med. Low Success depends on service based civil service/ delivery orientation of public bureaucratic culture service, reinforced by account- ability for results. Pursuing economic High Med. Low Reduces potential corruption by policy reform shifting decisionmaking to the private sector. Promoting media and High Med. Low Allows for detection, followed and judicial indepen- by accountability. dence, citizen partici- pation Reducing size of the High Med. Low By reducing the number of gov- public sector ernment activities, officials can focus on the primary objectives of the state. Strengthening the rule High Med. Low Is essential for any progress. of law n.r. Not relevant ... Negligible Med. Medium Source: Huther and Shah 2000. is tougher because the forces of corruption are stronger relative to the state. In such cases the World Bank recommends reforms that focus on deconcentrating economic interests through restructuring, competition, and enhanced entry; building accountability and oversight mechanisms; and promoting collective action among countervailing interests. Those types of measures are intended to weaken vested interests by reducing the scope for corruption and increasing the risks of detection, investiga- tion, and prosecution. In our analytical framework we consider both the broader ratings of governance and the particular assessments of patterns of corruption in choosing and crafting anticorruption strategies (see table 2.4). We use the governance quality ratings with state capture and administrative corrup- tion assessments as guiding indicators to select and prioritize anticor- ruption instruments. In this regard we differentiate countries beyond a 36 CHALLENGING CORRUPTION IN ASIA broad three-tiered categorization of governance. The approach allows us to capture some of the complexity among countries within the same cat- egory of governance quality. For example, state capture afflicts countries with different qualities of governance. Each of the four countries studied in this book have been stricken with relatively high levels of state capture. Even so-called good- governance countries, such as Korea, have not been immune. And Korea's case is not unique. The experiences of Italy and, to some extent, France likewise suggest that state capture is an insidious problem that can strike seemingly good governance environments (see Heidenheimer, Johnston, and LeVine 1989). With regard to administrative corruption, however, it appears to strike mainly poor- to fair-governance countries. There are serious implications for policymaking when one considers both governance quality and particular patterns of corruption. For exam- ple, dealing with state capture in a poor governance environment demands a different strategy than does tackling state capture in a good governance context. The former situation will certainly be a more formi- dable task than the latter because the capacity of governmental institu- tions, civil society, and the private sector to combat corruption is likely to be less robust in a poor governance context than in a good governance environment. The forces of resistance in settings with state capture and poor governance are likely to be strong because of the resources they have accumulated from corruption. In such situations emphasis may be on reducing opportunities for corruption. For example, a country that demonstrates poor governance, with unsur- prisingly high levels of state capture and administrative corruption, calls for a judicious approach to combating corruption. Its conditions would not nec- essarily be mitigated by establishing anticorruption agencies or the office of an ombudsman. Because those agencies have been shown to be relatively effective in good-governance countries, they are often recommended as nec- essary institutions for poor-governance countries. In fact, setting up such agencies in poor-governance countries with high state capture and petty corruption may serve only to broaden corruption and increase the price of illicit transactions. In short, such putative solutions could worsen the prob- lem because the anticorruption agency may easily get entangled in embed- ded corruption. Thus, effective anticorruption instruments must be crafted to reflect the quality of a country's governance environment and the degree of its state capture and administrative corruption. We suggest in table 2.4 policy priorities that are likely to be effective in different country governance environments with particular corruption patterns. Our approach is more amenable to a targeted program than to a comprehensive program. In the table we show that countries with high levels of state capture and administrative corruption are likely to suffer - e - - the not the ar cor to - gover inter strate- is and on strate- get of involve- for petty should risks upt the "medi- anticor tar opportunities a, incidence, focus uption a, needed high risks insulating Patterns ease because police,, corr to thus focus). is of and e; corr on should the strategy and incr and quality economic quality prioritizing pattern, and the to fective society needs es opportunities forts scope es captur focus weak state coalition because ef inef ong. to secondary e the (civil be equirr incentives Corruption Rationale be still str pattern measur e lessen essur should penalties to conditions, ar governance administrative governance to pr eaucracy; uption and ducinger on be would on oad-based pattern br these uption; likely elativelyr administrative a bur corr strategy on institutions e susceptibility this "medium/medium" (because cut external penalized. corr judiciary) ar e, a and should to uption. intensifying ith Quality Under focus for initially nance the ests Depending "high/medium" state's gy ment sever Depending um/high" gy uption;r exert corr W uptionr state lowering and being e key and and involve- and foster omote es. uption; eater business to pr state exposur gr and d, to corr uption- Governance institutional and measur to competition governmental systems political boar and eaucracy; corr strategies inject levels economic egulationsr petty eaucratic oad engthen enhance on to focus br the governmental bur bur str state politics down mechanisms. on oss the and system, economic eaucratic educer to major Recommended formser economic acr minimize bur to and sectors; limit make on educer According involvement. emphasis and cement to anticorruption governmental and mainser to party es to eformsr cutting activities, ong enfor oss eamline ocedur one Primary economic political acr economic eformsr ment interventions. Focus eformsr str competitive a market-driven Str pr emphasis formser economic Pursue institutions continue pr and Strategies good- to- - countries and- countries - countries -governance also) fair poor poor fair poor fair quality Anticorruption Governance Likely governance Mainly governance (some governance also) Mainly governance (some countries Generally good-governance countries assessments. Crafting Petty High Medium High Medium corruption 2.4. e Authors' ce: ableT State captur High High Medium Medium Sour 37 38 CHALLENGING CORRUPTION IN ASIA from poor governance quality. But, as noted earlier, high state capture by itself does not necessarily mean poor governance. Korea, a good-gover- nance country that has joined the ranks of the OECD, has eliminated petty corruption but has not been spared instances of state capture. Administrative corruption would seem to be easier to tackle than state capture, arguably because the people who partake in and benefit from petty corruption are the broad transacting public, which is generally dis- persed, not organized, and lacking in resources. The opposite is true for state capture whose beneficiaries are elite groups and powerful individ- uals who are generally concentrated in the capital and urban areas, are organized, and certainly endowed with political and economic resources. That distinction has implications for the choice and crafting of strate- gies to fight corruption. Looking at countries with high degrees of admin- istrative corruption and state capture, the reforms that are likely to be effective are those that reduce the scope of and rewards for corruption. That suggests, for example, the need for calibrated liberalization and deregulation of an economy because those actions reduce prospects for corruption by removing the state from direct economic activities. The fewer the prospects, the lesser the chances for corruption. As the cases in this book show, those reforms can be implemented with relative success in a poor to fair governance context. Measures to enhance enforcement and punishment, although critical, are of somewhat lesser priority in poor governance environments. Enforcement-oriented measures that can increase risks for corruption are unlikely to be effective in poor gover- nance countries because the enforcement institutions themselves (that is, police and the judiciary) are weak and often part of the problem. In cases of medium administrative corruption and high state capture, the focus of anticorruption measures should be less on the bureaucracy itself than on the major economic interests that have penetrated the state and purchased preferential treatment. The strategy should be to lessen state economic involvement and reduce the number and scale of projects that can be magnets for corruption. Because administrative corruption is not severe, bureaucratic reforms would be a secondary focus. With fair to good governance conditions, civil society may be tapped to combine forces with reformist bureaucratic actors. They can band together to pass mea- sures that will introduce greater political and economic competition in the country. Such steps would reduce the size and gains of corruption oppor- tunities even as they enhance the risks of prosecution and conviction. In poor- to fair-governance countries with high petty corruption and medium state capture, the key challenges are streamlining and strength- ening the capacity of bureaucracy to deliver public services in a trans- parent and accountable manner. Doing so narrows the scope for and prospects of administrative corruption. With only moderate state cap- AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 39 ture, some state support for bureaucratic anticorruption measures may be found. But clearly the ability of top officials to execute the state's policies and programs will depend in great part on their finding fulcrums for leverage within a corrupt bureaucracy. Countries that are moderate in terms of state capture and administrative corruption are likely to be fair- to good-governance countries. In such cases the prospects for fighting corruption are more propitious because the state and bureaucracy, on balance, have some capacity to counter corrupt forces. Anticorruption thus needs to focus on insulating further both the state and the bureaucracy by reducing opportunities for corruption and increasing the penalties and the risks of being penalized. Under those conditions there is reason to emphasize enforcement and accountability mechanisms. * * * In summary, the discussion of the first three elements of the analytical framework has focused on designing or improving anticorruption strate- gies based on international experience and on adapting them to the spe- cific conditions of the governance environment in which the measure will be applied. We believe that approach can help practitioners arrive at a better technical design for anticorruption programs that have the poten- tial to be more effective. We have argued that a choice needs to be made regarding a comprehensive program versus a targeted one and that choice should be based on an analysis of the country's governance envi- ronment. In the next three sections we explain how a sound technical design needs to be followed by three other elements that are essential for effectiveness and results. Those elements are a broad coalition of sup- porters, effective leadership and management structures, and regular monitoring and reporting by independent and credible sources. Building Broad Anticorruption Coalitions Developing an anticorruption agenda, no matter how technically sound, needs a broad coalition to ensure it goes beyond the drawing board. The importance of such a coalition is a function of the quality of governance of the country and its patterns of corruption. The poorer the governance and the worse the corruption, the more critical coalition-building becomes because the resources, organization, and concentration of cor- rupt interests in the more corrupt countries far outweigh those of the broader transacting public. As one analyst-practitioner put it, "those who suffer the consequences of corruption and thus who stand to benefit from reducing it (usually the general public) are spread out across many civil society groups or are 40 CHALLENGING CORRUPTION IN ASIA even unorganized."12 The challenge, thus, is to surmount the problem of collective action: bringing together the dispersed, pooling their resources, and building a movement that can outsmart, if not outweigh, the formi- dable forces of corruption. Scanning the situation in many poor- to fair-governance countries, we see that there are varying levels of development and capacity of civil soci- ety and the private sector. Some groups appear to have spread them- selves thinly as they try to combat corruption on various fronts, whereas others are geared toward particular problem areas, such as tax collection or customs administration. In both cases, anticorruption groups find themselves unable to advance their cause because they are "outgunned" by the purveyors and beneficiaries of corruption. This is why a more strategic focus on coalition-building is needed (Gonzalez de Asis 2000). Only when the various anticorruption groups are able to coalesce as a cohesive force can they have realistic prospects of neutralizing or coun- tering the organizational and financial advantages of corrupt elements. If coalition-building becomes more critical depending on the gover- nance and patterns of corruption in a country, it becomes all the more so depending on the nature of the anticorruption reforms being pushed. The more significant and sweeping the reforms, the more serious the resis- tance will be and thus the more crucial coalition-building is to the endeavor. Therefore, a coalition-building strategy needs to be calibrated with the anticorruption strategy. In mobilizing a coalition against corruption, it is crucial to find and draw the support of reformist officials. Even in environments with poor governance and high levels of state capture and administrative corrup- tion, there are pockets of reform. Sometimes the search is not too difficult, as when there are visible officials who have displayed reformist goals. As one observer wrote, "Many public institutions may be afflicted by corrup- tion, yet within them are caring and honest officials--including some in high positions--who, with the right encouragement and support, are pre- pared to address the corruption in their midst" (Kaufmann 1998, p. 143). In other instances the quest for political allies will be tough because there are no visible proponents of reform. In many poor-governance countries it is not surprising that there are fewer public officials who expressly take on anticorruption issues. Because the beneficiaries of cor- ruption are formidable politically and economically, public officials face a situation where the costs of reform are immediately daunting. In fact, in those environments where there is a low risk of being punished for cor- ruption, there is conversely a high risk in pushing reforms. The challenge for the anticorruption coalition is not just to increase the risk of being penalized for corruption, but also to lower the risk of backlash for anti- corruption advocates. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 41 In finding and nurturing political leaders who are supportive of anti- corruption efforts, remember that the higher the official involved, the bet- ter. That is because there is a cascading effect when high office is involved. Those officials will have greater resources and more networks that can be converted to support reform. A cascading impact can lead to a so-called bandwagon effect where those people who previously sat on the fence will jump into the anticorruption coalition. For example, as is discussed in the Thailand case study in this volume, in 1997 the involve- ment of former Thai prime minister, Anand Panyarachun, and other notables in a social movement for good governance helped create a broad coalition that produced what is perhaps the world's most expressly anti- corruption constitution. In seeking the support of reformist officials for an anticorruption coali- tion, it is important to understand their concerns and criteria. If they are elected incumbents, they likely will worry about votes and reelection. In a poor governance environment where political corruption is part of the problem, politicians will naturally weigh the tradeoffs between the potential electoral benefits of an anticorruption platform and a strategy of playing politics-as-usual. In this regard the mood of the public is critical to shifting the calculus of politicians. If the public has demonstrably turned against corruption, politicians will appreciate that an anticorrup- tion campaign can be appealing to the electorate. If the public has not embraced the fight, the anticorruption coalition needs to help raise pub- lic awareness and support. Whatever the situation, it is crucial that officials and other stakehold- ers have access to information to make the case for anticorruption efforts. That can be done by making materials available on the Internet. Technical assistance may be provided to the officials. For example, research papers and memoranda about the problem of corruption can be used as the basis for speeches and seminars by executive officials that could help shape the public's mood and propel anticorruption alternatives. In the legislative branch policy research can become the basis for bill sponsorship and pub- lic hearings. The process of getting an anticorruption bill sponsored and read on the floor of the assembly is a significant move by itself. Public hearings on the bill can educate both legislators and the public about the costs and consequences of corrupt practices and the attendant benefits of more transparent and accountable systems. Naturally, if the anticorrup- tion platform of reformist politicians is vindicated in the polls, it is likely that this platform will help shape their governing agendas. Working with nongovernmental actors is a crucial component to broadening an anticorruption coalition. In countries with poor- to fair- quality governance where there is an increasingly strong civil society and a developing free press, an anticorruption agenda cannot do without the 42 CHALLENGING CORRUPTION IN ASIA support of nongovernmental organizations (NGOs) and the mass media (see Stapenhurst 2000). Civil society groups, such as NGOs, academic institutions, and research organizations, have proven themselves in vari- ous cases to be powerful partners in counter-corruption coalitions. The more an institution is perceived as politically nonpartisan and impartial, the more significant its contribution to the coalition can be. The work and findings on anticorruption by researchers, analysts, and other scholars may become the bases for investigation by government agencies, hear- ings by the legislative assembly, social mobilization by NGOs, and may draw the spotlight of media coverage. For example, in the Philippines the Philippine Center for Investigative Journalism helped start the ball rolling on the formation of a broad coalition that eventually toppled the corrupt government of President Joseph Estrada. Its series of exposés on the sudden and unexplained wealth of the president and his associates led to a public outcry, an impeachment trial, and eventually Estrada's removal from office.13 To be sure, in poor-governance countries academic institutions and research entities are generally weak, with scant resources and few incen- tives to take on state actors from which many derive their budgets. The media in those countries are likewise not quite independent and there- fore cannot be counted on to be a singular catalyst for reform. In this context, international organizations and external support can play a cru- cial role. Their skills and resources can be pivotal in helping build demand for change and mobilizing a broad reform coalition. At the request of the Philippine government, for instance, the World Bank (2000b) conducted a wide-ranging study of corruption there and recom- mended a nine-point agenda for reforms (see also World Bank 2001). It is important to emphasize, however, that international involvement must be nonpartisan and actually must be seen as such because accusa- tions of partisanship can divide the anticorruption coalition and quickly undermine reform efforts. In short, the challenge in seeking partners for a broad coalition for reforms is to assemble sufficient players and stakeholders in government and civil society whose reach and weight can shift the balance of forces that heavily favors corrupt interests. Shifting this balance means the coalition can gain maneuvering room to work at changing people's and policymakers' values about corruption. An encompassing and nonparti- san coalition will have greater credibility in reframing the problem of cor- ruption and proposing policy options. Having shifted the balance, it is no less important that the anticorruption coalition can then be more effective in ensuring that policy reforms are prioritized in the government's agen- da, that they are decided on and allocated resources, and that the policies and programs implemented are appropriate and effective. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 43 Establishing Accountable Anticorruption Leadership and Management The leadership and management structures of anticorruption programs are varied. Many of them actually are modeled on the institutions and practices of Western countries. The ombudsman, for example, originated in Scandinavia; the Independent Commission against Corruption was started in British-ruled Hong Kong. Therefore, various existing anticor- ruption leadership and management structures worldwide originally were based on the experience of good-governance countries. There are other kinds of structures and arrangements that more or less emanated from good-governance countries. Some are constitutionally independent of the executive branch and others are set up by the execu- tive branch to serve either in an advisory role or with the authority to investigate and help prosecute public officials of all ranks. Apart from the ombudsman and independent commissions, there are the presidential commissions, multisectoral advisory groups, institutions to administer ethical codes of conduct, regulations for financial disclosures by public officials, appointment of special authorities or commissions to handle or investigate specific corruption allegations, and parliamentary commit- tees to oversee codes of conduct and campaign finance issues. The variety of leadership and management structures for combating corruption is reflected in the different countries in Asia (see table 2.5). The wide variety of leadership and management structures indicates the diverse approaches to combating corruption in different countries. It also suggests that some countries have modeled their structures on the successful experience of other countries. It is unfortunate in many cases that only the structures have been copied, not the accomplishments. Generally the performance record of these different organizations has left much to be desired, marked more often by failure than success. For exam- ple, the Philippine Office of the Ombudsman, which combines the pow- ers of its Scandinavian namesake and the investigative authority of inde- pendent commissions against corruption, only achieved a conviction rate of 6 percent in 2001. This pales in comparison with the 79 percent con- viction rate of the Independent Commission Against Corruption in Hong Kong, China, in the same year. 14 This divergence in performance illustrates the difficulties of trying to transplant leadership and management structures from good-governance countries to fair and poor governance environments. In poor-governance countries, the network of political, economic, and social institutions in general is weak, which hinders the ability of anticorruption agencies to be effective. At the very least, an anticorruption agency must have the fol- lowing attributes: 44 CHALLENGING CORRUPTION IN ASIA Table 2.5. Examples of Anticorruption Institutions in the Asia-Pacific Region Economy Anticorruption agency Australia (New Independent Commission Against Corruption South Wales) China Supreme People's Procuratorate, Central Disciplinary Inspection Committee Hong Kong, Independent Commission Against Corruption China, Special Administrative Region India Central Bureau of Investigation, Central Vigilance Commission, Election Commission Indonesia KOPKAMTIB (Operational Command for the Restoration of Security and Order), Financial Auditing Body, Financial and Development Auditing Body, National Commission to Investigate State Officials' Wealth, and National Ombudsman Commission Republic of Korean Independent Commission Against Corruption, Board Korea of Audit and Inspection, Public Prosecutors Office, and the Ombudsman Macao Independent Commission Against Corruption Malaysia Anticorruption Agency Pakistan National Accountability Board Philippines Office of the Ombudsman, Civil Service Commission, Presidential Antigraft Commission, and Commission on Audit Singapore Corrupt Practices Investigation Bureau Taiwan, China National Counter-Corruption Commission Thailand National Counter-Corruption Commission, State Audit Commission, Ombudsman, and Electoral Commission. Source: Quah 2000. · Political support from the head of state and broader political leader- ship · Political and operational independence to investigate the highest lev- els of government · Access to documentation and power to question witnesses · Leadership with great integrity (Pope and Vogl 2000). Even with those attributes the ability of anticorruption agencies to raise the risks and reduce opportunities for corruption is contingent on the AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 45 quality of governance in a country. An anticorruption agency in a good governance environment will likely be more potent than an agency in a poor governance environment. In a good-governance country the agency can collaborate with other institutions that are more or less effective in their jobs, such as the police, the prosecutors, and the courts. In a poor- governance country those institutions are more likely to be poorly staffed, ill equipped, and weakly motivated. Worse, those institutions are often corrupt themselves. So an anticorruption agency in a poor gover- nance environment can face enormous resistance and opposition. If poor- ly monitored and not held accountable, the agency can become infected with precisely the problem it was created to solve. Determining the leadership and management structures for anticor- ruption programs is not an easy task, especially in poor governance envi- ronments. It is not sufficient to model the structures on the institutions and programs of other countries. In our view that has been a recipe for failure. Transplanted structures find themselves in very different grounds, and thus yield different results. It is crucial in the crafting of leadership and management structures, therefore, to consider the cir- cumstances of a country's governance and operating environment. What makes the task more difficult in poor to fair governance envi- ronments is the quality of officials who assume leadership and manage- ment positions. The recruitment process is often fraught with political corruption, which compromises the kinds of officials who are elected or hired from the highest office of the land to the lowest position. Even good-governance countries are not immune to falling short in the officials who lead anticorruption drives. In Korea former president Kim Dae- Jung's efforts to leave a legacy of effective anticorruption were tarnished by the corruption prosecution and conviction of his two sons. The problem surely is most acute in poor to fair governance contexts. In the Philippines former president Estrada's initiative to tackle corrup- tion was an example of how the messenger can mix up the message. Because of allegations of corruption swirling around Estrada himself, many in the media, civil society, business, and other sectors greeted the initiative with skepticism, if not scorn. The president's actions backfired in the face of evidence of presidential corruption and ironically helped propel the building of a successful anticorruption effort against his gov- ernment. In summary, the task of selecting leadership and management struc- tures for a battle against corruption requires paying attention not just to the design of the institutions but also to the quality of recruited officials. Merely transplanting structures that worked well elsewhere can produce a familiar façade but not necessarily the needed internal workings of the structure. Those institutions must be designed to withstand the likely 46 CHALLENGING CORRUPTION IN ASIA attacks of vested interests that will naturally try to destroy or sabotage the structures. Such design requires creating the institutions with a suffi- ciently strong combination of incentives and disincentives for its officials to behave and perform as mandated. Creating those institutions often requires resources that poor-governance countries lack. It is here that international and bilateral sources can be of help. Given the firepower of corrupt interests in countries with high levels of state capture and admin- istrative corruption, international and bilateral support can help make the structures as "bullet-proof" as possible. Monitoring and Evaluating Policy and Program Feedback Many anticorruption reforms have fallen short after they have become policy because officials and stakeholders failed to effectively monitor and assess feedback about the implementation.15 The anticorruption policy may be technically sound and have a broad coalition behind it, including appropriate leadership and management structures, but still it may falter. The failure to foster and listen to feedback from implementation results in the fatal error of not knowing the nature, location, and strength of cor- rupt elements that are naturally opposed to reforms. With monitoring and evaluation mechanisms, anticorruption reformers are able to assess information from implementation and accordingly to adjust policy reforms. Opposition in implementation can occur in several ways. Key actors may defy the policy directly. In the Philippines, for example, the effort of the gov- ernment of President Gloria Macapagal-Arroyo to corporatize the Bureau of Internal Revenue saw its employees use the courts and the streets to prevent the passage of legislation. The defiance may be less confrontational or overt, but no less effective. For instance, in Indonesia, as described in the case study later in this book, the attempt by an anticorruption team to investigate alleged corruption in the Supreme Court was cut short when the regulation that created the team was declared unconstitutional. In other cases non- compliance with the policy may delay the implementation in different ways that circumvent, if not cripple, the policy. Monitoring and evaluating implementation can help overcome oppo- sition to policy by providing critical information to officials about where, when, and how they might be able to adapt, calibrate, or sequence the policy. Broadly speaking, this step requires collecting and disseminating empirical information on the state of corruption, using various indica- tors. It entails qualitative analysis to assess levels of resistance and to fos- ter cooperation and compliance among key actors and stakeholders. In monitoring it is critical to anticipate the location, organization, and strength of potential opposition and potential support for reforms. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 47 Anticorruption coalitions need to be supported with an ongoing supply of empirical information and analysis to counter the opposition mounted against them. It helps to have this empirical information on the nature and magnitude of corruption (collected by credible institutions using sound methodologies) prominently and widely disseminated through media out- lets because the resistance can sometimes be strong enough to cause the slow or sudden death of reforms unless public opinion and outrage against corruption are formed and sustained over many years. As noted earlier in the chapter, there is a growing set of governance indicators being compiled at the country level by various groups and organizations. Although these cross-country compilations are extremely useful and influential in the international arena, many developing coun- tries appropriately are collecting indigenous sources of information on corruption. Some of these information sources go to subnational levels. Such indigenous as well as international monitoring and reporting sys- tems on indicators of corruption and governance are an essential compo- nent of the analytical framework for improving the effectiveness of anti- corruption policies and programs. Various diagnostic instruments are being pioneered around the world to collect micro-level information on corruption and on public service deliveries in developing countries. A sample of those instruments is pre- sented in table 2.6. Although these empirical monitoring tools are indispensable to mak- ing anticorruption policies and programs more effective, they must be supplemented by qualitative sociopolitical analysis of the vested interests that will passively or actively oppose the anticorruption policies and pro- grams. Strategic considerations have to contend with resistance within gov- ernment or in the public at large (Grindle and Thomas 1991). To be sure, combined resistance is more formidable than is resistance from either the public or bureaucrats alone. The nature of the resistance generally corre- sponds to the nature of the reform being pursued--that is, the one who will be hurt by the reform is the one who will likely resist. Conversely, whoever benefits is likely to be a supporter. Of course, the world of costs and benefits can be more or less immediate, depending on the immedia- cy and impact of a reform. For example, the pain of abolishing an agency will be immediately felt by bureaucrats, whereas the expected rewards of a corporatized agency are likely to be felt by the public only in the future. Therefore bureaucratic resistance will be more immediate, and public support less forthcoming. Opposition to reform will likely emerge in the bureaucracy if the poli- cy means more costs than benefits to the officials and employs weak coer- cive or remunerative instruments to ensure and enforce compliance. The 48 CHALLENGING CORRUPTION IN ASIA Table 2.6. Examples of Anticorruption Survey Instruments Diagnostic survey instrument Developer Public Officials Survey--The purpose of this survey World Bank Institute is to identify different practices inside the public (www.worldbank.org/ sector related to the management of personnel, wbi/governance) the budget, and the delivery of public services. In particular the survey investigates corrupt and improper practices in (a) personnel management, (b) budgeting, (c) project planning, (d) information management, and (e) performance of the public sector. It also investigates (a) public officials' opinions about state reforms, (b) the perfor- mance of the public sector, and (c) the capacity of official institutions to undertake the battle against corruption. Enterprise Survey--The purpose of this survey is World Bank Institute to gain a better understanding of the obstructions (www.worldbank.org/ and limitations to business development. In wbi/governance) particular the survey examines (a) the perceived obstacles to business development, (b) analysis of the corruption problem, (c) the different faces of corruption, (d) transparency in public services in the judicial system, (e) bureaucratic costs, and (f) tax evasion and the informal sector. Household Survey--The purpose of this survey is World Bank Institute to find out how households perceive the services (www.worldbank.org/ they receive in their homes and the ways to wbi/governance) improve them. Among other things the survey focuses on (a) perceived dishonesty in various pub- lic institutions (for example, the judicial system, educational system, health system) as well as in public service providers (for example, customs office, tax payment offices, water works, police, transit authorities, licensing, public registry, schools, telecommunication providers, post office, power companies, public hospitals, social security, trash collection) and (b) the efficiency of anticorruption agencies. Citizen Report Cards--According to the developers Public Affairs Center, of this instrument, report cards are an aggregate Bangalore, India of public ratings on different aspects of service (www.pacindia.org) quality, built on specific random surveys of users of different public services (that is, utilities in a city). The report cards include information on corruption encountered. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 49 Diagnostic survey instrument Developer Public Expenditure Tracking Surveys (PETS)-- Uganda, with assistance These surveys focus on collecting micro-level from the World Bank data on the characteristics of the service facility, (www.worldbank.org/ the nature of financial flaws from facility records, poverty/empowerment/ output, and accountability arrangements. In this toolsprac) process PETS also help uncover where and to what extent corruption and abuses are leading to break- downs in future delivery systems. Transparent Accountable Governance Surveys-- Social Weather Stations Pioneered in the Philippines, these surveys cover (www.sws.org.ph and businesses to deepen understanding of public and www.tag.org.ph) private sector perceptions of the roots and realities of corruption. Social Accountability Mechanisms--These are featured World Bank in a number of recent loans financed by the World (www.worldbank.org/ Bank. They include the accountability of govern- poverty/empowerment/ ments to their citizens through collection and dis- toolsprac) closure of information on expenditures and performance. costs to bureaucratic entities can come in different forms--such as if the policy is seen as eradicating the bureaucracy, impinging on its turf, reduc- ing its personnel, adding more administrative work, or placing an addi- tional drain on its budget. Resistance will come from the public sphere if the programs mean more costs than benefits to the public, with no significant incentives or disincentives for cooperation. The high costs and low benefits can be var- ied. The policy, for instance, may result in some inefficiency in govern- mental procedures, as the government adds measures to increase trans- parency and accountability. This is in many ways a concern among those who contend that anticorruption projects can sacrifice efficiency and effectiveness in the name of control (see Anechiarico and Jacobs 1996). Or the policy may be seen as making use of resources at the expense of other programs perceived to warrant a higher priority. A situation in which combined and coordinated resistance emerges from inside and outside government can constitute the most serious chal- lenge to the implementation of reforms. At the extreme this resistance can be expected in poor-governance countries under high state capture con- ditions because the anticorruption agencies of the state often have been 50 CHALLENGING CORRUPTION IN ASIA influenced by corrupt elements and are unable to respond effectively (Hellman and others 2000). In that context, the close monitoring and eval- uation of anticorruption policies is critical. In monitoring and evaluating, it is important to be on the lookout for ways and means to calibrate or modify policies to make them more effec- tive. Reformers have to watch for the impact of the policy on the existing power structures and networks within and outside the state. They should be prepared to balance incentives and disincentives in the reforms to ensure that there are sufficient rewards for cooperation and adequate instruments for compliance. As noted earlier, the failure of many reforms has been their inability to prepare for opposition from beneficiaries of corruption who are often more organized and more resourceful than the officials and groups promoting reform. Monitoring and evaluation include paying attention to arrangements that can mobilize additional resources to counter resistance that will like- ly be powerful in poor- to fair-governance countries with medium to high levels of state capture. The more organized and economically endowed the expected opposition might be, the more the anticorruption agenda should be accorded substantial political and economic resources. And it is important to consider tinkering with the policy itself, recalibrating its parts, resequencing its approach, and so forth to modulate the action and mollify the opposition. Monitoring and evaluation should also pay attention to how anticor- ruption policy is understood by stakeholders and the public. Vague pro- visions can result in diverging interpretations, which would make non- compliance inevitable. Unless reforms are on solid constitutional and legal grounds, the implementation can be obstructed by court challenges or weakened by policy inconsistencies. Finally, monitoring and evaluation must take into account the resources required and available to them. The resources required depend on the nature of the reform and the implementation approach taken. These resources can be technical, administrative, and managerial mea- sures. They can be bureaucratic and organizational means. They can also be more properly legal moves and political forces. They may also include international actors and foreign aid. 16These courses of action are most critical when we are dealing with poor governance and high levels of state capture and administrative corruption. In those environments resources are expectedly in short supply and often may not be accessible right away. Whatever limited resources there are, they must be deployed effectively. There is, therefore, less margin for error in such contexts than in good governance contexts where the state has sizable resources to spare to overcome resistance and ensure implementation. AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 51 Summary Because the quality of governance and the patterns of corruption among countries differ, a country's anticorruption strategy must be appropriate to its conditions. A strategy that is not reflective of the governance and corruption realities of the country environment is unlikely to work and may even help worsen the problem. The analytical framework we pro- pose is akin to six building blocks that can strengthen the foundation of anticorruption. We are not saying that this approach will guarantee suc- cess--no one can guarantee that--but that it can increase the chances that the strategy will be effective. The first element of the framework is an analysis of a country's quali- ty of governance and patterns of corruption. A governance quality review should include studying a country's various dimensions of governance, such as rule of law, regulatory capacity, government effectiveness, voice and accountability, and control of corruption. One dimension--incen- tives or constraints faced by politicians--deserves special mention because it is a key determinant of the nature and extent of corruption. Such an analysis of governance environment can draw on growing com- parative governance research and can help provide a well-founded assessment of a country's quality of governance and its patterns of cor- ruption. The second element involves compiling a menu of anticorruption poli- cies and programs being practiced internationally. We suggest develop- ing fact sheets about specific anticorruption measures in terms of their effects on officials' cost-benefit calculations--that is, the impact of mea- sures on reducing corruption opportunities, narrowing corruption gains, raising penalties, and increasing risks. Such fact sheets could also identi- fy the prerequisite conditions that must be in place for the anticorruption measure to be effective. The third analytical effort is to select from the global menu of anticor- ruption measures those policies and programs that would constitute an appropriate corruption-fighting agenda in relation to a country's quality of governance and patterns of corruption, particularly its conditions of state capture and administrative corruption. The agenda may be compre- hensive or targeted at a few areas, depending on resources, political will, civil society support, and implementation capacity. The fact sheets on particular anticorruption measures are useful in this analytical applica- tion, helping reformers not only to identify relevant anticorruption mea- sures but also to prioritize their implementation. The fourth element of the framework is building a broad anticorrup- tion coalition that spans reformist elements from different sectors of soci- 52 CHALLENGING CORRUPTION IN ASIA ety, of sufficient size and credible leadership to shift the balance of forces in favor of change. An anticorruption agenda, no matter how technically sound, will likely crumble without a solid coalition behind it. This is par- ticularly the case in poor-governance countries, where high levels of state capture and administrative corruption produce powerful opponents to change. Mobilizing an anticorruption coalition in such a context is com- plicated but utterly necessary. The fifth aspect of our analytical framework is establishing leadership and management structures and systems that are appropriate to a coun- try's governance and operating environment, equipped with the neces- sary authority, powers, and resources to implement the reform program. Transplanting institutions and organizations that have worked elsewhere without taking context into consideration can be problematic. In poor- governance countries the need for authoritative and accountable leader- ship and management is acute. This is, all too often, the Achilles heel of anticorruption efforts. Monitoring and evaluating feedback from the implementation of anti- corruption policies and programs is the sixth aspect of the framework. It enables reformers to anticipate the opposition's location, strength, and resources and accordingly to mobilize resources in response. Nowhere is this effort more important than in a poor governance environment where the struggle against corruption carries with it significant risks in the form of powerful beneficiaries of corruption. There are various methods for monitoring and evaluating that enable officials and stakeholders to assess where, when, and how they can adjust and calibrate their efforts to ensure compliance and implementation. To conclude, this analytical framework builds on the growing contri- butions of research in governance and corruption. Although much work remains to be and is being done, some progress has been made in identi- fying measures that would be effective in certain governance environ- ments and particular corruption conditions. In that regard, this six-part framework is presented as one strategic approach to developing a multi- dimensional reform strategy appropriate to a country's governance envi- ronment and patterns of corruption. The need to be focused and targeted in anticorruption efforts cannot be overemphasized because of the complex and resistant nature of the problem. Combine that with the relatively weak position that govern- ments and other reform advocates find themselves in, particularly in poor to fair governance contexts, and it becomes all the more impera- tive to ensure that scarce political and economic resources are deployed effectively to fight the problem. Opponents of anticorruption policies and programs, more often than not, are operating from a posi- AN ANALYTICAL FRAMEWORK FOR IMPROVING EFFECTIVENESS 53 tion of strength that is enhanced by poor policy design and coordina- tion, lack of public support, and inadequate resource mobilization, among other things. 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Sour 55 ori- by For a in for If lead (A). e and - ar only e ced safe- identi- and ds ar e may magnitude ease ar (D) e gover delivery einforr legal strategies especially countries. the ds penalties. incr safeguar (which good such, in cultur integrity -governance transactions may law service opriate governance, fair penalties legal with on service, esults,r law ease standar opriate upt accountability some of and for appr of incr As appr good eaucratic corr with with strategy paying uler Remarks -governance public uler an (D). when with the e bur in accounting/bookkeeping of the countries depends of fair to e with weak- this to and ar uctur in ds lead so oving decline opriate For matched penalties a Success ntatione obability esent accountability weak- combined guar may of fied, countries impr to Appr substantial infrastr place. countries pr when upholding pr D D B, Good Medium, A, Medium, A, D, D, Instruments Governance of Fair Low Low D, Quality eak W Low Low Anticorruption of Most countries Most countries countries Non-OECD of ea Review eece OECD Republic eland Kor Republic eland Belgium Czech France Germany Hungary Ir Italy Japan Rep. Mexico Poland Sweden Switzerland Belgium Czech France Germany Gr Hungary Ir Italy Global law of of by duties, and ulesr ds values lesur gifts, public assets ests; est, e holdings, political Selective imposed general public standar for inter inter and A of and fice for declar of of fice; es eceivingr to 2.2. ements of behavior; ement ements ent instruments financial financial Anticorruption ocedur ocur conflict ficials Requir Statements obligations, public public pr pr Requir of and on including concurr and activity Appendix A. A.1 A.2 56 .) and of e ar ent sys- page this (B) such ease May transac- gains incr essed, following upt qualified, satisfactorily transactions paying transpar internal countries, corr and, magnitude for crimes. the upt of econditions addr es, on ce corr ease pr governance be such expected ency ease trained, for grievances. uption of incr ocedur for obability good decr ease pr work corr pr ovided and of should information, continues decr transpar pr of essing Hence, may of (D). number ease (C), adequately (D) Lack edrr (A), ease incr ements Appendix( for nance). strategy tions because penalty Needs ofessionalrp esent. eedomfr investigating decr (A), penalty penalty pr equirr as administrative tem D C,, Medium, A D C, Medium, A, D C, High, A, Pakistan of ea Kor Japan Rep. Mexico Poland Spain Sweden Switzerland 1959; ficers forth) political Of der for so Or esentative with and (Public Repr deal of to [Punishment uption fice Laws corr Disqualification Holders Of Misconduct], a A.3 57 uption econ- d also pr penalty actually if econdi- or may pr towar governance, anticorr may paying upt of good ument influence agencies corr uption, minimal instr of contribute with ith corr Remarks W uption ombudsman Positive may obability uption pr number or endemic ents.r exist. countries anticorr the easing For anticorr ith W agencies extort ditions tions, ombudsman incr (C). this educer transactions. C Good Medium, A, C, Governance of Fair Low Quality eak W Not elevantr Most countries countries Non-OECD - OECD land Republic Belgium Switzer Czech the exists intel- la la e and into de Central de e has Serious Office contr financial serious sector Detecting It (continued) economique ganisee in in corruption commissariat Office ession the lutte ore crime), inquir publice investigates implicating for and Criminality ficials police. 2.2. the the eprr de Nationale can public of instruments la upt Service uption the Anticorruption deliquance financier ganized Minister Specialized services/agencies Under police, pour corruption, Central la et (specializing or Brigade (specializing crime) corr activities. Le Confideration misconduct public The Corr Economic with Appendix B. B.1 B.2 B.3 58 .) page following the on continues Appendix( eece France Germany Gr . la law even- des vie func- pr la elle Admin- entities des comptes, ches, des des et trans- inde- la la uption. inves- de public des mar dee investigate the have to corr and pour Public administration, international centrale les independent centrale politiques, can jurisdictions. Inspectors- Central Cour of under Corruption, interministr campagne of the and la sur Commission la de . bodies oversees financier have fices of their of branches suspected ollers de authorities, Service ches, ches, Body Mission Commission ence ligence functions. Le tion Commission mar la d'enquete Commission mar comptes financements la par politique authority Audit within Some pendent tigate The Contr istration tioning local established B.4 B.5 B.6 59 Remarks Good Governance of Fair Quality eak W countries Non-OECD of ea eland OECD Kor Hungary Ir Italy Rep. d and and of ol that Boar Anti- for public Inspec- for Contr waste, Service ecommendsr investigate uption. Accounting Administra- financial agencies, Ministry), etary investigation 's Meeting and (continued) ols and action. fices can ministers corr Inspection; Of Finance State Public Inspectorate, Secr Inspection; dinator the concerning and judicial easuryr the and 2.2. contr (T Minister instruments Government Public involve Anticorruption General General uption Co-coor uption; fice ficials esidential Audit The Of management investigates government The Commission matters of may Special the torate the Service, Department administrative institutions. Pr Corr of Prime tion Corr Appendix B.7 B.8 B.9 B.10 60 .) page following the on continues Appendix( Philip- New Guinea pines Papua the Mexico Poland and an ol- uption; Anti- as of esident. all Justice on members civic, pr public of that internal 15-member serves the Comptr ganized or in government of Anti-Corr the sector to involving established (consisting ofessors, oups) investigate on Ministry investigate conduct pr gr body uption Review Commission etariat ficials. Government can private of the also corr individual uption Secr the egularities investigating Ministers the agencies investigation; Special Corr lawyers, of eligiousr advisory The lership irr public Departments within for crime sector context. National Contracts Committee 1 a B.1 B.12 B.13 61 the c imple- these law and in mid- and 2000. inves- weak exis- posi- not to of In in on it in another is case Success. the with uler situations stopped A uption of contribute e.g., uption law on work. when ICAC of support. in be stepped will of corr not focusing wife but a mechanism of may fective. established unconstitutional. this uler a ef Anti-Corr countries depends China, may work and Court strategy popular the but agencies be for econditions, its Remarks to fenders, pr Kenya High KACA Kong, incidence (KACA) of because itself, oader br uption operations minister mobilize starts the started a the, the elevantr other a high governance its is ed of Hong to it engthening str implementation For strategy ment and Anticorr with poor cases, once point Authority KACA dle-ranking tigated minister declar Highly governance to of tence D Good Low C, Governance D of Fair Medium C, Quality eak W High D Philip- Kong (China) Hong the pines Kenya Most countries countries Non-OECD eece eland OECD France Germany Gr Hungary Ir uption ols anticorr ces (continued) contr action including esourr 2.2. and instruments Anticorruption to Independent commissions/bodies Human management Disciplinary up dismissal a Appendix B.14 C. C.1 62 .) also a in e and - e page penal- have selec- upt exist. and ar only ds ar May . corr ease (D) gover and paying useful of following incr (which of governance, usually safeguar be the bookkeeping integrity -governance good hiring eaucracy econditions may on not penalties law on number pr fair legal with bur weak accountability some of may elements and the obability ease with some with with paying uler continues of pr upt power if when strategy e e decr accounting/ of weak- the countries the ument this corr uctur in May For matched Appendix( cultur ease countries instr opriate decision (C). obability esent tive incr ty For this because full tion. transactions Appr substantial infrastr place. countries pr when upholding pr D B, Medium A Medium, A, , Medium A Low D , Low Low D Most countries Most countries of ea of ea eece Kor eland Kor Republic eland Italy Japan Rep. Mexico Poland Spain Sweden France Germany Gr Hungary Ir Japan Rep. Poland Belgium Czech France Germany Hungary Ir Italy Japan or est inter uitment ficials of of ecrr eventing of pr declarations employment for conflicts the and dized est selection ocesses inter Standar and Pr detecting (including of estrictions)r C.2 C.3 63 . - fi- with of this this (B) of and, ease transac- uler impact gover upt number decen--, gains incr upt e, significant a corr the upt corr matched law e. governance of eatest countries corr and, if esponsibilityr weak of be e cultur econditions Gr . the have pr down with uler accountability cultur such expected ency ease mor uption ency on not number for should with Remarks decr ease corr eaucratic May given minimal the bringing decr transpar bur countries financial eaucratic