| Site Map | About U4 | Feedback | Contact | U4 partner agencies   U4 Anti-Corruption Resource Centre
 
 

Themes    Other Resources    Training    Expert Answers

 
  Home > Expert answers > Frequently asked questions

FAQs:

Corruption and possible cures:

Public (Civil) Service Reform and Management

 

ON THIS PAGE:

What is the role of, and what can be done to reduce corruption in and strengthen the prevention and control capacity of:

 

Ethic standards for political leaders

Corruption among the political elite undermines the legitimacy of the state and its institutions, weakens trust in the rule of law and can have a detrimental effect on the economy. It is thus crucial that politicians act in an ethical manner.

Political leaders are expected to maintain a high moral standard in their professional and private lives. Politicians have the legitimate potential to take political decisions that determine the fortunes of the state. They are expected to have joined politics out of conviction and commitment to the public good rather than for personal power and private profit, yet surveys consistently show politicians to be the least trusted of all public officials.

Failure to achieve high ethical standards among political leaders has a detrimental effect on society. Where human and material resources are diverted away from their most profitable use and where institutions are run in a less than efficient way, costs are created that affect not only the state and its economy but also the welfare and morale of its citizens. A state whose institutions have lost their legitimacy and whose political elite is not deemed trustworthy by its population cannot be run efficiently. Experience suggests that where the behaviour of superiors is perceived to be incorrect, the respect of subordinates for common laws and practices wears off as well.

Ethical standards are a key instrument against arbitrary political power. Good behaviour cannot be enforced, but it can be encouraged through:
  • Preventative arrangements: the existence of a Code of Conduct for political office holders against which the performance of political leaders can be judged and that can help politicians to base their actions on a framework of agreed behavioural standards; furthermore, the creation of moral expectations as to the conduct of politicians among an empowered civil society which is aware of the actions - and shortcomings - of its political leaders.

  • Corrective arrangements: the existence and enforcement - through independent bodies - of laws and regulations relating to issues that are likely to arise in an ethical context. These include regulations on conflicts of interest and the waiving of immunities and privileges in cases of suspected misconduct.

Rules, laws and other provisions relating to ethics should not be exploited for political purposes as this undermines their credibility. Commitment to ethical behaviour must be - and must be seen to be - genuine.

Prerequisites for fostering good ethical conduct of political leaders include:
  • Leadership and demonstrated commitment by senior members of all major political parties.

  • A facilitating institutional environment of checks and balances where incentives for improper conduct are rendered less attractive by increasing the likelihood and severity of detection and sanctions.

  • Clear and visible codes of conduct against which the behaviour and performance of political leaders can be judged.

  • Complete and public disclosure of private interests.
Resources

<top>

Good governance and holistic reform

Corruption is a symptom of systemic breakdown. It can represent persistent failure of governance in a number of institutions and therefore cannot be treated in isolation.

Corruption should be dealt with in a holistic way that analyses the functioning and deficiencies of essential state institutions and address them in a comprehensive fashion. The concept of a National Integrity System, a term developed in the 1990s, proposes such an approach.

A National Integrity System is a constructive way in which to begin an examination of the workings of institutions and concepts such as values and public awareness, and to identify possible obstructions to overall good performance and governance. It provides a sound basis for all-encompassing reform. A country's National Integrity System comprises all those government and non-governmental institutions that have the ability to work together to achieve sustainable high standards of national integrity and low levels of corruption and maladministration by functioning individually but also by enabling a system of horizontal accountability whereby each actor acts as a watchdog over the actions of at least one other. The establishment of an effective, transparent and accountable National Integrity System thus fragments power and paves the way for a well-governed state.

A National Integrity System typically comprises the following institutional components:

The challenge lies in devising reform strategies that will lead to better governance and less corruption but more importantly, in devising reform strategies that can feasibly be implemented by the respective state. A state in need of all-encompassing reform may be too weak institutionally to implement a complex reform programme.

Prerequisites for the successful creation of a National Integrity System include:
  • Political will to support, launch and implement reform [link FAQ 1], including "champions of reform"

  • Realistic design of reform which is not overly ambitious but takes into account the capabilities of the state's institutions

  • Long term commitment to reform

  • Public Awareness and support for the goals of reform
    Resources

  • Pope, Jeremy (2000): TI Source Book 2000. Confronting Corruption: The Elements of a National Integrity System. Berlin, Transparency International

  • Transparency International

<top>

Public sector companies and privatisation

The anti-corruption potential of privatisation reforms depends largely on their design, the institutional context in which they take place and the structuring and regulation of the post-privatisation environment.

Privatisation of assets and services held and provided by the state is supposed to act as a corruption-deterrent in that it reduces the discretionary power of the state and subjects the newly privatised enterprises to the forces of the market. It is assumed that corrupt opportunities will be less plentiful in the free market as it subjects actors to the pressures of competition, increases the incentives to perform and makes economic actors less susceptible to interest group pressure. A state freed from its ideological obligation to intervene in the market place and to manage publicly owned enterprises will be free to concentrate on the delivery of its public services in addition to the money set free by the privatisation process.

But as well as an anti-corruption reform, privatisation can be a source of corrupt gains. Privatisation is associated with high political costs, as elites stand to loose out in the process. Support for reform may be difficult to find both within government circles and civil society more generally, as proposed benefits take time to manifest themselves. Furthermore, because of the complexity of the task, institutionally weak states may find themselves overwhelmed by the level of expertise needed for the task. The risk in these situations is the reproduction of old public sector elites in newly privatised firms, the capture of the privatisation process through these old elites. This is conducive to the loss of public support for the reform process and a disastrous post-privatisation climate without proper competition, where a state lacks the capacity to enforce the rules and regulations supposed to govern the market. Finally, even private sector agents can be corrupt!

Prerequisites for a successful and corruption-free privatisation programme include:
  • The type of privatisation matters as does the adequacy of the types chosen in one particular context. For example, it has been argued that, in cases of systemic corruption, fast privatisation methods are best as they tend to give less opportunities for public officials to behave in a corrupt fashion.

  • The institutional environment determines the success or failure of any privatisation programme. Privatisation can only make a positive difference, if functioning market institutions are in place prior to any privatisation process. This includes the deregulation of the economy, the existence of competition and a competitive and entrepreneurial spirit, a cutting back of the state and its power to interfere in the economy, and state institutions which are strong enough to enforce the rules and regulations which govern the marketplace.

  • Transparency of the privatisation process at all times

  • Informed management able to accurately audit an enterprise's assets and to assess its likely market value
Resources

<top>

Public service values, ethics and standards

The integrity of public sector employees can come under pressure in a variety of ways, not least because of their exposed position at the interface between the state and the civil society. It is thus crucial that each member of the public service has at their disposal a comprehensive system of values and standards to rely on.

Ethics is about making the right decision at any time by basing it on existing values and standards of conduct and finding the appropriate balance between conflicting moral and professional principles. For a public servant, this implies acting in a way that is lawful, reasonable and fair, and that is consistent with the public interest.

Administrative traditions vary depending on the respective historic and cultural context. There are, however, similar expectations as to the way civil servants should fulfil their duties, namely with equity, probity and efficiency. Problems arise where and when these values conflict with other, more traditional, behavioural expectations like for example the provision of friends and family with jobs and other favours not envisaged by the system. Problems may be caused as well by complex situations where the "right", ethical decision is not easily identifiable. It is thus crucial that civil servants have standards on the basis of which they can make an ethical decision and seek confidential advice in cases of difficulty. These, together with the tools and conditions that provide incentives for ethical conduct, are commonly referred to as an "ethics infrastructure".

Prerequisites for the establishment and maintenance of an ethical public service include:
  • The definition of clear rules and guidelines that are based on commonly understood and shared values and principles. Values - or the emphasis placed upon them - can change, but it is crucial that they be politically neutral and applicable even beyond changes of government

  • Efficient accountability mechanisms

  • Wide dissemination of codes of conduct and other documents relating to ethics and expected standards among government agencies and external stakeholders

  • Provision of training for public sector employees in ethical decision-making

  • Provision of positives incentives for compliance

  • The provision of "Ethics Counsellors" to provide guidance and to enforce ethical conduct

  • Political Leadership
Resources

<top>

Public service recruitment, promotion and dismissals

The professionalism and the performance of any public sector depend not only on the institutions, but also on the people who staff them. Other than a good formal framework, a good public service needs qualified and motivated personnel. The institutional arrangements for selecting, promoting and dismissing civil servants are thus crucial to the functioning of the public sector in the intended way.

A meritocratic civil service is less likely to be prone to corruption and maladministration than one based predominantly on political appointments. The fundamental difference between the meritocratic and the clientelist recruitment regimes is the type of merit they favour. The orthodox model of bureaucracy sees civil servants being recruited and promoted on the basis of the best and most qualified person for any given job. The other extreme is a model characterised by a choice of staff whose sole merit lies in their loyalty towards the ruling government, or other powerful interests.

A merit-based public service presents numerous advantages:
  • The suitability of candidates can be judged against verifiable criteria that can be checked if breaches are suspected.

  • Office holders have an incentive to perform well. Politicising the civil service is likely to lead to mediocre performance: where politicians have a direct impact upon recruitment, promotion and dismissal or transfer of civil servants for reasons other than merit-based ones, professional discipline may be hard to enforce and performance incentives difficult to give due to the short-termed nature of the appointment.

  • A politically appointed civil servant will be more inclined to break the rules in order to maximise his personal gains in the short time he can expect to be in office.

  • A civil servant owing his position to his own capability as well as clear and verifiable criteria, will feel accountable towards the state that employs him rather than towards the government of the day.

  • It avoids the relatively short-termed nature of political appointments and the consequent loss of expertise with each change of government.

However, a purely merit-based civil service is often impossible for political reasons, e.g. in multi-national states where an affirmative action programme is in place. Furthermore, it is no guarantee against corruption. The challenge lies in attracting the right people to the right posts: the civil service has to be attractive to qualified citizens (See question on pay reform, job security, etc) to avoid offering wrong incentives and to provide a worthwhile alternative to the private sector. It is also essential that ethical standards and enforcement and oversight mechanisms be in place. Since the centrality of the public sector for the way the state is run makes it susceptible to political interference, reforms aiming at the establishment of a meritocracy may be difficult to implement.

Prerequisites for a corruption-free public sector recruitment regime include:
  • A predominantly merit-based recruitment and promotion scheme with objective and contestable criteria and with a clear career path

  • A minimisation of political interference in both the action and the staffing of the public sector

  • A strict limitation of political appointments to certain high-level posts

  • Suitable pay and other benefits to provide the 'right' incentives

  • The protection of public servants through internal rule of law mechanisms

Resources

<top>

Public service pay reform

Reforming the wage structure for public servants can be an important tool for the prevention of corruption, as it changes the incentive structure for public servants, makes remuneration more transparent, eliminates underpay and wins more skilled personnel for the public sector:

  • The incentives for public servants to reject corruption and work efficiently are much higher, if the system of remuneration is based on the principle of meritocracy. When wages and promotion depend in a transparent manner on the respect of public servants for rules of conduct and on good performance, both are more likely to be implemented.

  • Pay reform can increase the transparency of the system of remuneration for public servants and thus eliminate possibilities for corruption. In many countries non-monetary allowances such as housing, transportation as well as retirement benefits add up to 100% to the base salary received by public officials. As the allocation of those allowances is often discretionary and difficult for the public to understand and evaluate, allowances create opportunities for corruption.

  • Real wages for public servants have been declining in many countries over the last few decades. If public servants are not paid a "living wage", the incentives to accept bribes are huge. Pay reforms that create "living wages" for public servants can therefore potentially curb petty corruption. (Examples: Argentina and Peru increased salaries in sensitive areas such as customs and tax administration).

  • Wage reforms can also aim at making public sector wages competitive with private sector wages in order to attract more highly skilled employees. Better human capital increases the efficiency of the public sector and can induce better compliance with codes of conduct. Both Singapore and Hong Kong are examples for this policy.
Prerequisites for the success of public sector pay reform in reducing corruption and increasing efficiency include:
  • Meritocracy as the principle for the determination of wages and promotion

  • A regulation of non-wage allowances and benefits

  • Wage increases without adequate controls and increased likelihood of detection do not curb corruption. Personal ethics of officials and other work conditions (such as merit-based recruitment, career satisfaction and prospects) also influence the incidence of corruption.

  • Financial viability of reforms: pay reforms that include wage increases are often financed through a general down-sizing of public institutions, the elimination of "ghost workers" and the like. This strategy has for example worked successfully in Uganda, but not in Malawi.

  • Wage differentials, i.e. the difference between wages of low- and high level public sector employees, can have an important influence on the motivation and morale of public officials.
Resources

<top>

Public service training and capacity building

Capacity building programmes for public employees can have an important impact on the prevalence of corruption in four ways:
  • thics training seeks to strengthen the ethical commitments of public servants directly.

  • Anti-corruption training aims to increase the awareness of public officials about the harmful effects of corruption and sometimes involves them in the design and implementation of anti-corruption strategies.

  • Training programmes for the public sector can also curb corruption by improving the monitoring and evaluation capacities of organisations. Good monitoring and evaluation skills and methods are key to detecting mismanagement, fraud and corruption and thus deter corrupt behaviour.

  • Finally, capacity-building programmes can aim at improving the job-related skills and capabilities of public employees in order to produce better and more transparent public management. Particularly relevant in this realm are training in accounting and expenditure management methods and e-government applications.
Prerequisites for success and caveats for training and capacity-building projects include:
  • Whenever possible, local institutions (universities, research centres, specialised agencies or NGOs) should offer the training programmes. This is more likely to lead to success, as organisers as well as participants can develop a sense of ownership and as the contents of the training can be adapted to the specific needs and experiences of the area/country. The role of international institutions and donors should be confined to "train the trainers" projects and the provision of funding.

  • Training programmes are more successful, when participation is awarded for good performance and is closely connected to professional career development.

  • Technical training is used to fill employees' skill gaps. Good recruitment policies can limit these gaps from the start.

  • There is a risk that newly qualified employees quit the public sector after participating in intensive capacity-building programmes. Participation should therefore be combined with a commitment to return to the organisation after completion of the training. Job satisfaction, recognition for good performance and a strong professional identity combined with a sense of mission can also improve the rate of retention.

  • Capacity-building does not exist in isolation. Capacity, defined as the ability of an institution to perform appropriate tasks efficiently, effectively and sustainably, also depends on the task structure faced by the organisation, the institutional context and the political, social and economic environment.

  • Training programmes, if ill-designed or co-ordinated, can lead to distraction from actual work, patronage (if the selection of participants is not transparent) and organisational resentment.

Resources

<top>

Rotation schemes

The frequent rotation of tasks among officials is an anti-corruption measure often employed in high-risk areas such as tax administration and customs. Job rotation works to curb corruption in the following ways:

  • If officials or politicians are frequently assigned new tasks or locations, it is very difficult to establish networks of corrupt relationships. Therefore, customs officials are often assigned to their postings on extremely short notice and tax officials change their area of responsibility periodically. Many countries also have rules that limit the duration and number of offices for politicians and periodically assign judges to new posts to prevent the establishment of corrupt networks.

  • Job rotation schemes can also lead to increased internal transparency. Through job rotation, public officials get to know the tasks and operating procedures of their colleagues. This knowledge enables officials to understand better what their colleagues are doing and thus increase the possibilities for mutual oversight.

  • Finally, job rotation implies that officials take over jobs from each other. This automatically provides detailed insights into the work of officials. This means that mismanagement, fraud and corruption are much more likely to be uncovered. A higher risk of discovery can have a deterrent effect.
Caveats concerning job rotation schemes include:
  • Frequent job rotation can be associated with high costs. Thus, frequent rotation requires officials to learn the skills necessary for each job assigned. This implies much higher training costs, losses of efficiency and time at each beginning of a job and potentially lower levels of skill and expertise for any specific job. This is not the case when only the location and not the job content changes (such as in customs).

  • Rotation implies the frequent change of personnel. It is therefore by definition difficult and costly to apply to projects that require a medium- to long-term perspective.

  • Job rotation seems a suitable measure to prevent large-scale corruption (especially through the limitation of terms of office for politicians) and the establishment criminal and corrupt networks (e.g. smuggling rings relying on corrupt customs officials). By contrast, job rotation is less effective against petty corruption, in which officials demand the payment of bribes for the delivery of certain services, as this type of corruption does not rely only firmly established networks among corrupt individuals.

  • When alternative measures to reduce the contact between officials and citizens (such as computerised processes) are in place, the need for job rotation schemes can be reduced.

  • If corruption is entrenched in the system, job rotation will mean the replacement of one corrupt official by another.

Resources
Job rotation is recommended as a preventive measure by:

<top>

Budgetary reform

The budget is a government's primary economic policy document. It lays out policy objectives and priorities and therefore serves as a central instrument for holding government as a whole and its subordinate entities accountable to parliament and the public. For transparency, accountability and the curbing of corruption, the scope of a budget needs to be comprehensive, its formulation transparent and its execution accurate.

Because the budget is such a central instrument of policy formulation and accountability, various international guidelines for budget transparency have been formulated, among those the OECD Best Practices for Budget Transparency and the IMF Code of Good Practices on Fiscal Transparency. These codes provide useful frameworks for assessing the transparency of the public finances of any particular state, identifying priorities for reform and monitoring the progress of reforms.

Some of the most central elements of budgetary reform include:
  • Comprehensiveness. Often, substantial public resources and liabilities are not included in the budget. Off-budget accounts by their very nature lack transparency, encourage discretionary spending and thus give rise to opportunities for corruption. Budgets should therefore aim at covering all public resources and assets as well as expenditures and contingent liabilities.

  • Transparency. To allow for parliamentary oversight as well as public scrutiny and debate, budgets should fulfil the following criteria for transparency: Timely access to information should be granted. As far as possible, this should also apply to budgetary items for defence and internal security. In addition, the budget should encourage insight and control by presenting information in a clear and understandable fashion, by using simple and well-documented procedures and by linking policy goals to expenditure items and by formulating performance targets. All assumptions concerning macroeconomic developments influencing revenue and expenditure projections should be explicitly disclosed.

  • Incentives. Institutions that do not respect their budgetary constraint should be penalised. In addition, positive incentives should encourage economical spending, i.e. institutions should not be penalised for spending less than their allocated resources.

  • Progress reports. The implementation of the budget should be monitored through periodical (monthly or quarterly) reports. These reports should include performance assessments from individual government entities and be presented to parliament in a timely fashion. When substantial divergences occur, the reasons for these should be explained.

  • Participation. The process of budget formulation should allow for the participation of parliament and civil society. A prerequisite for participation is the early submission of the draft budget to parliament.

  • Integration. To make financial planning and monitoring more reliable, the budgeting process should be integrated with other functions of financial management. In particular, the budgeting and accounting systems should employ the same methodology and links to fiscal forecasting and investment planning institutions should be in place.

  • Time horizon. Annual budgets should be linked to medium-term frameworks indicating the likely development of revenues and expenditures over at least a 3-5 year horizon.
Resources

<top>

Expenditure management, accounting

Without sound accounting and good expenditure management government accountability is unthinkable. The quality of financial management crucially influences the prevalence of malpractice and corruption by imposing discipline, uncovering fraud and deterring abuse. In addition, it has a direct impact on the financial situation of a country. International institutions (such as the World Bank and the IMF), financial markets and credit rating agencies all have to rely on the data provided by government institutions. When the information is reliable and transparent, risk and uncertainty are reduced and e.g. interest rates are lower.

Financial management in public sector entities includes the following tasks:
  • Conducting the day-to-day financial operations of the organisation.
    " Accounting for all revenues and expenditures in an accurate and timely manner.

  • Analysing the financial impact of policy alternatives.

  • Devising safeguards and controls for public resources and assets.

  • Evaluating the results of programmes with regards to their economy, efficiency and effectiveness, i.e. evaluate, whether they provide "value for money".

Given the centrality of financial management to good governance, international institutions and governments have devised extensive reform and improvement programmes.

Among the commonly encountered problems and proposed remedies are:
  • Staff qualifications. Especially, but by no means only, in developing countries, a shortage of fully trained accountants and financial managers exists. The problem is exacerbated by the fact that public sector wages are often not competitive with private sector wages. Remedies include efforts to raise staff competence and prestige through training and better working conditions.

  • Accounting standards. Many countries either lack detailed accounting standards for the public sector or employ methods that are not appropriate by international standards. To remedy this situation and make public sector accounting more reliable, consistent and transparent, the International Federation of Accountants has published International Public Sector Accounting Standards, which serve as a guidance for reform. Reforms often include the introduction of computerised integrated financial management systems.

  • Internal and external controls. Control elements include: internal and external audit and control mechanisms, the definition of performance goals and risk management. Computerised systems usually facilitate controls significantly, as they can automatically recognise irregularities and allow for immediate, multi-level inspection.

  • Improved data quality, medium-term time horizons for financial planning, the inclusion of contingencies and off-budget measures and the timely publication of financial reports are other focal points for reforms.
Resources

<top>

Financial sector regulation

Regulation in the financial sector is a double-edged sword. On the one hand, regulation can prevent abuse and corruption in the financial world. On the other hand, regulation itself, especially if it includes discretionary powers for the regulator, creates new opportunities for corruption.

While many advocate deregulation of the economy, the case for regulation of the financial sector remains strong. Regulation is needed to protect depositors and guarantee the stability as well as the efficiency of the system. Typically, regulatory systems provide deposit insurance and promote adequate capital standards, effective risk management and transparency. Regulations often cover licensing requirements, capital and liquidity requirements, criteria regarding loans, investments and portfolio management and internal controls and ethical standards.

Opportunities for corruption in a regulated financial sector exist among others:
  • In the relations between a bank and its customers, bribes can be paid e.g. to receive loans for unsound projects or to receive preferential treatment in terms of interest rates or other conditions.

  • In operations with the stock-market, corrupt practices can involve access to crucial "insider information". Many developed countries have only recently implemented legislation against insider trades.

  • In the relations between regulatory, supervisory and enforcement institutions and the financial sector, corrupt practices are used to circumvent regulations and escape enforcement. "Facilitation payments" during the licensing process also occur.

  • In most financial systems, the central bank plays a special role. Existing corrupt practices can involve the dealings between the central bank and the government as well as the relationship between the central bank and commercial banks.
Prerequisites for successful regulatory approaches therefore include:
  • Division of responsibilities. In many systems, one institution (typically the central bank) is responsible for designing regulations, supervising their implementation and has enforcement authority. In addition, many banks themselves are owned by governments. If these responsibilities are shared among various institutions and banks are privatised, internal controls are strengthened and opportunities for corruption reduced.

  • Adequate regulatory framework. Which regulatory system can best achieve the conflicting goals of protection against corruption, stability and efficiency of the financial system depends on the institutional environment of a country. Arguably, countries with stable financial systems, sound legal frameworks and low levels of corruption can afford a more efficient regulatory approach that grants regulators more discretion. Where, on the other hand, the skill level of regulators is lower and corruption more entrenched, more rigid and direct systems of regulation may be called for.

  • Transparency. As in most cases, transparency is an essential ingredient against corruption. Transparency requires that the system for designing regulations be open, that the regulations be simple and clear and that financial institutions as well as supervisory and enforcement institutions have strong disclosure requirements.

  • Quality of the regulator. To be able to design effective regulations against abuse and corruption, regulators must be highly skilled, independent and have sufficient access to information. The possibility of sanctions and effective enforcement must exist. Regulators themselves must have transparent objectives and operational procedures and be held accountable.

  • International cooperation. As financial operations have become global, international cooperation among regulators and enforcement agencies is crucial to counter fraud and corruption.
Resources

<top>

Taxation and customs

Customs and tax administrations are notorious for corruption. In these areas of public service the incentives to engage in corrupt behaviour are high for both officials, who can enrich themselves, and bribe payers, who evade customs or taxes. At the same time, the customs and taxation regulations are often so complex, that opportunities for corruption abound.

The consequences of rampant corruption in customs and tax are very serious:
  • It reduces state revenues and thus diminishes the capacities of the state to fulfil its obligations. The losses in revenues are often completely out of proportion to the amounts paid as bribes.

  • Smuggling can threaten domestic industries, introduce dangerous and illegal goods or enable trade in protected species.

  • The smuggling of arms and drugs and the trafficking in human beings create links between customs and organised crime. The proceeds of large smuggling operations can be used to finance civil wars.

  • Corruption in customs distorts international trade flows and limits foreign direct investment, both crucial to economic development.
Anti-corruption programmes therefore often focus on customs and tax administrations and can include the following measures:
  • Simplification of the tax and customs systems. Tax and customs regulations are often highly complex and include exemptions for many, often poorly defined, cases. This makes the system difficult to understand and gives officials discretionary powers. To prevent corruption, tax and customs systems should have simple and clear rules, few exceptions and clear definitions. If customs barriers are low and the tax system is perceived to be fair, the incentives for corruption are diminished.

  • Standardisation of procedures. Procedural manuals and electronic forms make the services more transparent, reduce discretion of officials and strengthen accountability and possibilities for controls. Standardised procedures should limit one-on-one contacts between officials and customers and reduce the number of forms/approvals needed (for example through the introduction of "one-stop procedures").

  • Professionalism of service. A number of factors can increase the professional standards of custom and tax administrations, starting with the appointment of a professional management, instead of politically appointed heads of administration. Staff needs to be recruited and promoted on merit, compensation needs to be sufficient and regular training, adapted to the needs of the staff members, should be provided. In addition, responsibilities should be functionally separated and mechanisms to process complaints need to be in place.

  • Controls. Both services should be subject to regular internal and external controls. In order to make controls effective, performance standards (relating to revenue targets and service standards) as well as codes of conduct should be in place. These codes need to be backed up by effective sanctions, which should include internal disciplinary measures for minor offence and the involvement of law enforcement agencies for more serious cases of fraud and corruption. The establishment of special vigilance units can support internal controls.
  • Customer surveys are useful tools to diagnose problems and monitor the ongoing effects of reforms.
Resources

<top>

Decentralisation

Decentralisation - the transfer of political, economic and fiscal decision-making powers from a central to a local government level - is not an anti-corruption measure per se. Devolving power from central government agencies for the benefit of independent sub-national units that gain their own legitimacy through elections is expected to result in better allocative and productive efficiency of the national and sub-national public services.

Decentralisation reforms are supposed to act against maladministration and inefficiency by:
  • Bringing the decision-making power closer to the people concerned. Local elected officials are likely to be linked to the local context and feel not only the moral obligation to serve their community well, but will also have a vested interest in doing so.

  • Deconcentration of state power. The decision-making powers are no longer concentrated in one central body, which reduces room for discretion and secrecy. Furthermore, citizens at the local level should be better able to monitor their local government's actions, which will result in higher accountability.

However, a poorly designed and implemented decentralisation programme is likely to lead to more corruption and waste of resources, not less. Among the risks encountered are the decentralisation of corruption by increasing the number of corrupt opportunities, political capture of the new local agencies through local elites, a decrease in public service delivery caused by maladministration and insufficient local capabilities, and macro-economic instability caused by red tape and insecurity.

Prerequisites for a successful and corruption-free decentralisation programme include:
  • An enabling institutional environment in place before decentralisation takes place to prevent resources being shifted to insufficiently prepared sub-national entities.

  • Political will especially on the central state level to make the reform programme work.

  • Political and administrative capacity of both local governors and civil servants.

  • Controls and enforcement / oversight that is both local and national, thus not limited to local interests.

  • An empowered civil society that is aware of their rights and duties and those of their local and national government, and that possesses the will and ability to enforce those rights. Education may be used as a tool for empowerment.

  • Transparency of and access to information about the decentralisation process at all times for accountability purposes.

  • The inclusion of anti-corruption measures in the reform programme.
Resources

<top>

Political party financing

Political parties fulfil a variety of essential functions in a democracy: they represent the interests of a section of society on the political level, recruit and train politicians and contribute to the political education of society. They are the vital link between politicians and civil society.

The funding of political parties is a necessity. Democratic politics cannot proceed without substantial financial resources that allow parties and party officials to fulfil their legitimate role in a satisfactory way. Parties obtain their funds from two main sources:

  • The state through either direct (public subsidies) or indirect (subsidies-in-kind) payments.

  • Private individuals or corporations, ideally supporting a party for ideological reasons but often anticipating direct or indirect returns.

A third source of funding, which is imporant particularly - but not exclusively - in the context of emerging democracies, stems from foreign public and private sources. Financial assistance from abroad is often welcome and necessary, but it bears a number of potential risks for the sustainability and integrity of democracies that must be weighed against its benefits. It has been argued that foreign donations lead to the perversion of a party system by draining political parties less likely to defend the interests of the respective donors of resources and hence of political power. Furthermore, since few new democracies require and enforce the disclosure of private contributions, the potential threat to the integrity of parties and party officials is high.

Funding enables political competition, which is not only vital for a democratic system but also an important safeguard against the excessive creation of corrupt networks by any one party in power.

However, party financing is also a potential source of corrupt influences. Political success often depends on access to financial resources. The temptation to accept political contributions in return for improper advantages may be too big to resist, in particular during election campaigns.

Corrupt political parties generate a number of problems:
  • The capture of politics by particular interests. The need to finance political campaigns introduces incentives to favour special interests in return for special treatment and to the detriment of the general [public] interest.

  • Discrimination against financially less powerful groups within society.

  • Loss of credibility of party politicians and resulting voter apathy as illegal contributions and the bribery of politicians undermine the legitimacy of the political system.

  • Bad handling of reforms like, for example, privatisation exercises:

Explicit rules to prevent corruption in party funding must be in place in every democracy. Mechanisms most commonly used to control the flow of money into the political process are the introduction of limits on campaign expenditures or contributions from individuals to avoid capture of political parties, of disclosure regulations where it is mandatory for parties to lay open the names of donors and the amount received, and of bans on certain types of contribution like, for example, donations from foreign corporations. Another option is an increase in direct state funding to minimise corrupt opportunities.

These measures are designed to minimise improper practices by introducing deterrents such as increased transparency and accountability requirements as well as specific regulations on the scope of private contributions, but they are notoriously difficult to enforce.

Prerequisites for a less corruption-prone party-financing regime include:
  • A system of clear rules and regulations specifying the requirements for legal funding and identifying the institutions and/or oversight bodies in charge of their enforcement.

  • The establishment of voluntary behavioural standards, such as codes of conduct, as a means to raise awareness as to which behaviour is expected.

  • Emphasis on the transparency of party finance and disclosure requirements.

  • Cross-party consensus and backing for the regulations as well as clearly displayed political will to adhere to them.

  • An alert media willing to expose illicit practices. This has, in some instances, already caused the private sector to rethink its financing of political parties.
Resources

<top>

 
Frequently Asked Questions
Causes and consequences
Some critical questions
Corruption and possible cures
Anti-Corruption glossary

Home | Top
U4 Anti-Corruption Resource Centre http://www.u4.no