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Anti-Corruption Measures in Fragile States. Adressing Change through a United Nations Anti-Corruption Package of Measures

Thesis (M.A.) 2009 119 Pages

Politics - International Politics - Topic: Miscellaneous

Excerpt

Content

List of Acronyms and Abbreviations ... 2

1. Introduction ... 6

2. The Role of the International Community ... 10

3. Corruption ... 14
3.1. Corruption: General Background ... 14
3.1.1. Definition of Corruption ... 15
3.1.2. Causes of Corruption ... 15
3.1.3. Forms of Corruption ... 18
3.1.4. Consequences of Corruption ... 19
3.2. Corruption in Fragile States ... 20
3.2.1. The Situation on the Ground ... 20
3.2.2. Addressing Corruption in Fragile States ... 23
3.3. Effective Anti-Corruption Strategies: One Size Does Not Fit All ... 26

4. Country Case Study: The Republic of Sierra Leone ... 29
4.1. Methodology of the Country Case Study ... 29
4.2. The Country: The Republic of Sierra Leone Against the Background of Africa ... 30
4.2.1. Similarities ... 30
4.2.2. Distinctiveness ... 31
4.2.3. Common Cultural and Historic Features ... 33
4.2.3.1. Cultural Commonness: The tradition of gift-giving and the primacy of the oral word ... 33
4.2.3.2. Historical Commonness: The Colonial Background ... 34
4.3. The Republic of Sierra Leone ... 37
4.3.1 General Information ... 37
4.3.2. Historic Background ... 38
4.3.2.1 The Colonial Era (1808-1961) ... 39
4.3.2.2. The Post-colonial Era (1961-1990) ... 40
4.3.2.3 The Civil War (1991-2002) ... 41
4.4. The Reconstruction Phase (2002- now) ... 43
4.4.1. The Kabbah Government (1996, 1998-2007) ... 44
4.4.1.1. Consolidating Stability ... 44
4.4.1.2. Reconstructing the State ... 45
4.4.1.2.1. Institutional Overview ... 45
4.4.1.2.2. Government Activity ... 47
4.4.1.2.3. Donors’ Activity ... 54
4.4.1.3. Profiling Corruption and State of Play. 57
4.4.1.4. Assessing the Kabbah Government ... 59
4.4.2. The Koroma Government (since 2007) ... 60
4.4.2.1. Reforming the State ... 62
4.4.2.2. Profiling Corruption and State of Play ... 67
4.4.2.3. Assessing the Koroma Government ... 69
4.4.2.4. Challenges to the Koroma Government ... 69
4.5. Evaluating the Reconstruction and Anti-Corruption Process ... 74

5. A United Nations Anti-Corruption Package of Measures for Fragile States ... 83
5.1 Outlining the Content of the Package of Measures ... 84
5.2. Pointing out Certain Elements of the Package of Measures ... 85

6. Conclusion: Taking Forward a United Nations Anti-Corruption Package of Measures in Fragile States ... 98

7. Table and Charts ... 100
7.1. Organizational Chart: UNODC ... 100
7.2. Table: Pecking Order of Anti-corruption Reforms ... 101
7.3. Indices Charts ... 102
7.3.1. Chart 1: Corruption Perception Index ... 102
7.3.2. Chart 2: Worldwide Governance Indicators: Control of Corruption ... 103
7.3.3. Chart 3: Worldwide Governance Indicators: Sierra Leone ... 104

8. References ... 105
8.1. Bibliography ... 105
8.2. Legal References ... 113
8.3. Information on Providers of Internet Resources ... 114

1. Introduction

The recent corruption scandal by Siemens reminded the German population of the fact that corruption can be found everywhere and at any time. Beginning in the mid-1990s, Siemens executives started to create slush funds, embezzled the company’s money, and used kickbacks as well as an estimated US $1.4 Billion in bribes to foreign officials worldwide to secure government contracts for projects (cf. Lichtblau/Dougherty 2008: 1). On the other side of the coin are the bribe receivers, among them government officials and state leaders. One of the world’s most corrupt leaders is former President of Zaire [1] Mobutu Sese Seko. During his 32 years of rule, Mobutu allegedly embezzled US $5 Billion of Zaire’s public funds, including aid money (cf. Denny 2004: 1-3) and deposited much of his fortune in Swiss banks.

Both examples show the numerous ways in which corruption is operated, its systemic nature, as well as its international reach and impact. They also illustrate that corruption is not a trivial offence and that much Third World corruption has major First World participation (cf. Klitgaard 1997: 1). However, whereas corruption in industrialized countries is generally more associated with the private sector and characterized as business corruption, in developing countries corruption pre-dominantly manifests itself as political corruption by the state and bureaucratic corruption by the public administration. Nevertheless, all forms of corruption are closely inter-linked and in the aggregate they have, as former United Nations Secretary-General Kofi Annan notes:

“a wide range of corrosive effects on societies. It [corruption] undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish. This evil phenomenon is found in all countries […] but it is in the developing world that its effects are most destructive. Corruption hurts the poor disproportionately by diverting funds intended for development, undermining a government’s ability to provide basic services, feeding inequality and injustice and discouraging foreign aid and investment” (United Nations Convention against Corruption: foreword). [2]

Attributed to the focus on fragile states, being the least developed of developing countries, this study deals with political and bureaucratic corruption. Therefore, corruption in this study is broadly defined as the misuse of public office for private gain.[3]

Indeed, many fragile states figure among the most corrupt in the world, and public sector[4] corruption is one of the key concerns of local populations (cf. Le Billon 2005: 73). Due to competing definitions among scholars regarding fragile states, this study applies a broad definition, which encompasses failing, failed and recovering states, thereby aligning itself to the research referred to hereafter. However, all definitions share one common denominator, namely, all fragile states are characterized by some type of significant state failure or dysfunction, resulting in the loss of legitimacy and governing effectiveness and ultimately in political instability (cf. Grono 2007: 1; Ballentine/Sherman 2003b: 9).

At present an estimated 900 million people live in fragile states where the public sector is often perceived as corrupt and unaccountable and where weak state capacity and/or political will prevent the implementation of pro-poor policies (cf. Chêne 2008c: 1f, 11; Mathisen 2007: 1, 11). When states abuse or neglect their own citizens, they often present a significant threat to regional and international security and economic growth. Thus, weak and failing states have been identified as both causes and consequences of armed conflicts (cf. Fukuyama 2005: xi; Grono 2007: 1; Ballentine/Sherman 2003b: 9). The attacks of 9/11 represent the critical turning point that linked the problem of state failure with issues of international security. This incident demonstrated how dangerous failed states like Afghanistan can be, not only to their own people, but for international security. Consequently, international actors[5] have come to realize that first, effective state-building requires much more than short-term military-led stabilization operations and second, that security and effective governance are essential prerequisites for sustainable development (cf. Klotzle 2006: 5, 12; Grono 2007: 1f).

As a result, the international community’s concern with corruption issues is far from being a passing phenomenon. The devastating impact was acknowledged by the international community[6] over the last two decades as increased linkages between corruption and development evolved and while the costs of corruption became quantifiable and visible. It is estimated that corruption is costing the developing world billions of dollars each year.[7] This provided for the development of projects promoting greater monitoring, transparency and accountability and for several transnational conventions and international agreements on corruption (cf. Matsheza 2007: 2; Eigen 1998: 2; Eigen 2005: 1), ultimately leading to the entry into force of the UNCAC in 2005. Upon the coming into effect of the UNCAC, the first global treaty that addresses the corruption problem in a comprehensive manner, worldwide efforts to eradicate corruption gained new momentum (cf. Fenner/Mahlstein 2009: 241).

All of the above factors highlight the urgent need for implementing and/or improving (national) anti-corruption strategies in fragile states. Given the complexity of corruption and the common understanding that any successful anti-corruption strategy has to be country-specific, designing a package of anti-corruption measures for governments in fragile states that applies to all seems insurmountable. Nevertheless, this study examines whether and in what way the United Nations Corruption and Economic Crime Section (CECS) could develop such a package of measures for governments in fragile states. This objective evolved during my internship with the CECS and at suggestion of my supervisor there.

Designing and implementing a national anti-corruption strategy is a long-term and expensive undertaking that will almost always require the assistance of the international community (cf. UNODC 2004³: 45f). This study does not explicitly provide recommendations for anti-corruption approaches of donors and/or agencies in fragile states, key elements are pointed out where they strongly affect the recipient governments’ political will and capacity for anti-corruption reform. Since the package of measures intends to provide governments with a range of options that enable them to assemble their national strategy, this paper is streamlined to anti-corruption measures in post-emergency or reconstruction phases of emergency situations. This phase encompasses rebuilding the destroyed statehood, including institutions and infrastructure, as well as restoring livelihoods and communities with a focus on long-term development. In contrast, the emergency or relief phase sets priority on saving lives and restoring basic services (cf. Fenner/Mahlstein: 244).

Whereas the clandestine or hidden nature of corrupt practices makes it difficult to study, heightened interest in (anti-) corruption issues by international policy-makers and the international community in general provided for a wealth of information from academia, different organizations and individual governments. This thesis is therefore exclusively based on an extensive literature review, including existing institutional, theoretical and anthropological studies,[8] most recent empirical research, in-depth countries case studies, survey research, [9] investigative reports, analytical insights,[10] lessons of experience and available grey literature produced by the various stakeholders.

However, this study does not claim to be based on a comprehensive review or to provide a comprehensive anti-corruption package of measures. Instead, its intent is to assess whether a UN anti-corruption package of measures is feasible, and, if it is feasible, an idea of what the content of such a package could incorporate and proposes key elements of anti-corruption strategies to be included in the package.

Against the background of corruption, this thesis is based on the following structure; it starts with the international level, followed by the transnational and then national level. It then reverses back through the same levels. Chapter 2 sketches anti-corruption efforts by the international community and integrates them into the larger context of development and intervention policy. In addition the chapter outlines certain features of the UNCAC and depicts the work of the CECS. Due to the complexity of the phenomenon of corruption, chapter 3 provides a general background of corruption and profiles the many aspects of government corruption. It then outlines the (anti-) corruption situation and condition in fragile states, the principles of addressing corruption in such environments and the broader principles of an anti-corruption strategy.[11] Chapter 4 intends to exemplify an anti-corruption approach in one country. It highlights key elements of the anti-corruption strategy to examine how they work in practice and to unveil the complexity of such a strategy. It points out the methodology of the country case study and explains why Sierra Leone was chosen. The historic background and the country’s development, as well as distinctive corruption processes are highlighted. Emphasis is put on assessing anti-corruption action taken by the two Sierra Leonean Governments[12] after the civil war of 1991 to 2002, as well as on donors’ anti-corruption and reconstruction action. Chapter 5 then draws out lessons for tailoring anti-corruption strategies and promotes ideas and recommendations for a UN package of anti-corruption measures for governments in fragile states. [13] Chapter 6 encompasses concluding remarks.

This Magister Artium thesis paper aims to contribute to the growing policy dialogue and to initiate further research on anti-corruption issues. Accordingly, it hopes to be of interest not only for the CECS but also to governments in fragile states, as well as to governments and other organizations working on anti-corruption issues in fragile states.

2. The Role of the International Community

The end of the Cold War produced a fundamental shift of international politics and international security threats. While the twentieth century was characterized by clashes between large, powerful and well-organized states, the twenty-first century has seen instability springing from states that are too weak, resulting in intrastate and regional conflagrations as the primary source for international conflict. Due to the strong correlation between state fragility and conflict, fragile states are now perceived as breeding grounds for the main international humanitarian and security threats, including terrorism, the proliferation of weapons of mass destruction, drug and human trafficking, migration, pandemic diseases, and organized crime (cf. Klotzle 2006: 5f; Fukuyama 2005: xi).

At the same time, international institutions, particularly the UN, were no longer polarized and paralyzed by the power struggles among its members states that had persisted during the Cold War era. Subsequently, the demand for international and multilateral intervention and/or involvement in peacekeeping, post-conflict reconstruction and conflict prevention operations, as well as development aid increased (cf. Klotzle 2006: 5f).

In recent years, the international community acknowledged that good governance is a key part of any development strategy. The subsequent recognition of the important role of the state and its institutions in development (cf. Fukuayama 2005: xi), as well as the fact that corruption looms in the background, thereby posing a serious obstacle to a positive outcome (Mathisen 2007: 2), ultimately resulted in the promotion of good governance, including democracy and an effective bureaucracy, as a key element of any development strategy. Governance refers to the norms, traditions and institutions by which power and authority in a country is exercised. It is described as good when it is pre-defined, clearly articulated, consistent, participatory, transparent, responsive and accountable[14] to the people who should accept it (cf. Matsheza 2007: 6f).

In this context, democratic institutions are viewed as a key component of accountability. Studies also found that they are one of the most important determinants of corruption (cf. Shah 2006: 14). Particularly in fragile states, where public sector corruption is often endemic, citizen voice [15], transparency and accountability have been recognized to be crucial factors in the amelioration of good governance and public sector performance (cf. Chêne 2008c: 1).

Indeed, the fight against corruption and the promotion of good governance recurs like a leitmotif in the debates surrounding international assistance and development aid. Moreover, efficiency, accountability, transparency and the rule of law became the keywords of a new form of aid conditionality (cf. Blundo/de Sardan 2006b: 6). This means that donors make financial assistance conditional to the recipient country’s governance performance by attaching ex-ante conditions to the delivery of aid. The failure to meet these conditions prevents the disbursement of aid, which gives this strategy a punitive character (cf. Chêne 2008c: 3). However, evidence suggests that using aid conditionality to support anti-corruption reform has failed to bring about sustained political will for reform (cf. Chêne 2008b: 3f; Poate et al. 2008: 58; ICG 2008: ii; Mathisen 2007: 21). Consequently, international actors are now focussing on promoting national ownership of the development process and on developing strategies that involve national actors. On the other hand, as Harald Mathisen, a political scientist with a focus on governance and anti-corruption issues, argues: although emphasis should be given to non-interference of donors, it is not unreasonable to demand key concessions, such as anti-corruption efforts from the government. Against the background that the international community is deeply involved in fragile states and that many authorities in fragile states claim to be too weak to take action, which is a false statement in most cases, the international community has to coordinate its efforts, that is to say to co-operate and use its diplomatic influence to initiate nationally-owned and driven reforms (cf. Mathisen 2007: 8f).

This concept of good governance, democracy, anti-corruption efforts and aid conditionality was recently corroborated and promoted by United States’ President Barack Obama during a question-and-answer session, following his speech in Strasbourg on April 16th 2009 [16]:

“[…] America has an obligation to provide Kenya help on a whole range of issues, but if Kenya doesn’t solve its own corruption problem, then Kenya will never grow. It will never be able to provide for its own and so there is nothing wrong with the developed nations insisting that we will increase our commitments, that we will design our aid programs more effectively, that we will open up our markets to trade from poor countries, but that we will also insist that there is good governance and rule of law and other critical factors in order to make these countries work. We spent so much time talking about democracy and obviously we should be promoting democracy everywhere we can. But democracy, a well functioning society that promotes liberty, and equality and fraternity; a well-functioning society does not just depend on going to the ballot box, it also means that you are not gonna be shaken down by the police, because the police aren’t getting properly paid. It also means that if you wanna start a business, you don’t have to pay a bribe. I mean, there are a whole host of other factors that people need to recognize in building a civil society that allows a country to be successful and hopefully that approach will be reflected not just in my administration’s policies, but in the policies that are pursued by international agencies as well.”

Corruption has been to the fore since the 1990s and universal condemnation of corrupt practice not only changed the moral and political climate towards the inaccessibility of corruption, but also led to the removal of some country leaders (cf. Fukuayama 2005: xii; Shah 2006: 3) and the ratification of several international treaties on corruption, such as the Inter-American Convention on Corruption (1996), the Council of Europe’s Corruption Law Conventions (1999), and the African Convention against Corruption (2003) to name a few. In comparison with other international anti-corruption instruments, the UNCAC (2005) addresses the issues of corruption in the most comprehensive manner, containing provisions and measures on private sector corruption (Art. 12, 21, 22, 39 UNCAC), international and transnational corruption and on other issues linked to corruption, such as extradition (Art. 44 UNCAC), money laundering (Art. 14 UNCAC) and asset recovery (Chapter V UNCAC).

In this context, it is reasonable to introduce the CECS, not only since it is the main target audience of this thesis, but also because it serves as the Secretariat to the UNCAC.

The CECS belongs to the UNODC, an office of the UN Secretariat.[17] More accurately, the CECS is part of the Treaty and Legal Assistance Branch, which is subordinate to UNODC’s Division for Treaty Affairs. [18] Given the CECS organizational location, it is neither an internal oversight body of the UN, nor an anti-corruption watchdog agency for UN member states. Rather, the CECS conducts research and analytical work, in order to coordinate and facilitate the development of benchmarks, methodologies and approaches for a global assessment of corruption, as well as anti-corruption efforts. The materials produced, including several technical and policy guidelines such as the aforementioned Toolkit therefore have a specific global logic and their relevance is not only limited to one specific country (cf. UNODC 2009a: 1f). According to Art. 64 UNCAC, the CECS is mandated to provide substantive service to the States Parties to the UNCAC and to assist in both the ratification and implementation of the UNCAC, as well as with the revision, adoption or development of national legislation on anti-corruption compatible with the UNCAC.

The above mentioned instruments provide useful guidance for governments, private-sector and civil society actors who are committed to contributing to the fight against corruption. However, while their strict and comprehensive implementation is a prerequisite for any progress and success to be achieved, additional and more targeted efforts are required (cf. Fenner/Mahlstein: 241). Besides the necessary firm commitment from all the different stakeholders involved in combating corruption, there is the need to develop and implement more effective solutions, including addressing issues of accountability, transparency and inequity at various levels of social and economic systems (cf. Cheema/Bonvin 1998: 3). Notwithstanding that in recent years international actors have devoted much human and financial resources to combat corruption and to develop more effective and targeted anti-corruption strategies (cf. Chêne 2009: 1f; Eigen 1998: 1), so far they have not managed to develop an anti-corruption agenda, with an emphasis on state building, beyond broad principles for donor engagement (cf. Mathisen 2007: 2).

Similarly, international actors have been attempting to develop strategies and instruments that more effectively address the problem of fragile states. Despite certain improvements, more targeted instruments have to be developed in order to support good policy decisions even when resources are scare (cf. Klotzle 2006: 4).

In both cases, international co-operation, as well as coordination and coherence among national, regional, and international actors are crucial for the successful implementation of strategies (cf. Klotzle 2006: 4; Cheema/Bonvin 1998: 3).

The international community has an important role to play, both as catalyst and supporter for anti-corruption reform efforts (Cheema/Bonvin 1998: 3), particularly against the background that anti-corruption strategies have to be an integral part of any development strategy. A UN anti-corruption package of measures for fragile states could be an effective starting point. At the same time, it is pivotal that the strategy be nationally-owned. This thesis aims at contributing to the initiation and design of such a package.

3. Corruption

3.1. Corruption: General Background

Corruption exists everywhere, in private as well as public sectors, in rich as well as in poor countries. In fact, the private sector is involved in most government corruption. Moreover, the globalisation of markets and developmental inequalities that drew renewed attention to problems of corruption in the first place also facilitated corruption as transnational crime. Cross-border corruption is a serious problem in affluent and developing countries alike, and it is commonplace that much Third World corruption has major First World participation (cf. Klitgaard 1997: 1f; Johnston 1998: 13).

Another important aspect is the difference between corruption of the state by outside forces, and corruption by the state itself. Outside forces refers to individuals or groups from a different country, as well as to forces within the country but outside the state apparatus, such as the private sector or organized crime. In any case, corrupt practices by outside forces will almost always require the cooperation of local officials to carry out and conceal their schemes. While both are politically detrimental, government corruption is more damaging (cf. Karklins 2002: 24; Johnston 1998: 14; Chêne 2008d: 2, 4f), not least because it furthers corruption by outside forces. Consequences of corruption by the state will be discussed in more detail in 2.1.4.

Regardless of its features, corruption is seldom a stand alone crime, but accompanied by other domestic and transnational crimes. There is evidence of strong linkages between corruption and organized crime, including trafficking in persons, drugs and arms, as well as terrorism. Thus, while in some countries and regions corruption is both facilitator and cause of insecurity, it is certainly a security threat to all countries (cf. TI 2008: 1, 3f; UNODC 2008b: 2; Chêne (2008d: 2, 4).

Given the complex phenomenon of corruption and the study’s focus on fragile states, characterized by endemic corruption within the system, this chapter intends to characterize only the many faces of government corruption and possible anti-corruption strategies thereof in general and specifically in fragile states.

3.1.1. Definition of Corruption

Perceptions of corruption and what constitutes corrupt practices – morally and legally – significantly differ across cultures. As a result, there is no single, universally accepted legal definition of corruption. Instead most countries and indeed international instruments criminalize certain activities or elements that constitute corruption (cf. Matsheza 2007: 1-3). According to Art. 15-25 UNCAC, those acts include bribery, embezzlement of public funds, money laundering, obstruction of justice, inside trading, abuse of public functions, and illicit enrichment.

3.1.2. Causes of Corruption

There is evidence that the dominant direction of causation is from weak governance, including high corruption, to a low growth rate, with only few exceptions to this rule. The relationship between different institutional structures and corruption is believed to be often quite strong as well, but the causal arrow may go both ways – from institutions to corruption and vice versa (cf. Rose-Ackerman 2006b: xxiii, xxv). Likewise, consequences and causes of corruption are difficult to distinguish, because the causal arrow frequently goes both ways, too (cf. Graf Lambsdorff 2006a: 4). There is empirical evidence supporting some of the claims that deep-rooted cultural, historical and social factors are the fundamental determinants of corruption. They also attribute to governance, the establishment of formal[19] and informal [20] institutions that constitute the rules of the game, the incentives of political actors and the opportunities for societal groups to mobilize. Besides, cultural and social factors are related to a country’s level of corruption. Reported corruption is high in countries, where family ties are very important. However, this does not imply that countries cannot escape their history, but that anti-corruption reforms in countries with background conditions associated with corruption and low growth may need to be more radical and far-reaching than in other countries (cf. Unsworth 2007: 2; Rose-Ackerman 2006b: xx, xxii). Cultural relativism alone cannot explain corruption, as proved by the fact that one common feature of corruption in government activity across the globe is that the public sector - specifically the fields public procurement, customs, taxation, police, provision of services and government appointments - is identified as the body most vulnerable to corruption in each country (cf. UNDP 2001: 13-4, 13-5).

(1) Corruption is often regarded as a problem of poor governance that principally can be attributed to a failure of institutions and a lack of capacity to manage society by means of a framework of social, judicial, political and economic checks and balances. Highly corrupt systems are characterized typically by:

- Concentration of powers in the executive with weak or non-existent checks and balances

- Poor transparency of executive decisions combined with restricted access to information

- Elaborate regulatory systems allowing for discretionary decision making

- Weak systems of oversight and enforcement

- Soft social control systems and a high tolerance of corrupt activities (cf. UNDP 2004: 2f).

(2) From an institutional perspective, corruption evolves when public officials[21] have monopoly authority, little accountability and perverse incentives, or when their accountability responds to informal rather than formal forms of regulation (cf. O’Neil 2007: 7; UNDP (2004: 2). Robert Klitgaard, a leading scholar of corruption devises the equation (Klitgaard 1997: 2):

C (Corruption) = M (Monopoly) + D (Discretion) – (Accountability)

Corruption equals monopoly control of public officials wielding discretionary powers in the absence of accountability systems. The UNDP amended this equation by proposing the following formula (UNDP 2004: 2):

C (Corruption) = (Monopoly + Discretion) – (Accountability + Integrity + Transparency)

In this study, integrity refers to the use of entrusted power according to the values and purposes for which it has been entrusted, ideally in fulfilment of a justified sense of public honour (cf. UNDP 2004: 19).

(3) In terms of incentives, the reward structure within the state administration appears to be a key determinant. Corruption as a crime of calculation, rather than passion, generally arises among public officials, when the expected benefits from corruption are higher than the expected costs. In practice this is the case when their salaries are meagre, the size of the bribe is large, the chance of being caught is small, and the penalty if caught is meagre (cf. Klitgaard 1997: 2, UNDP 2004: 2f).

(4) As a consequence, since it is difficult to engineer incorruptible officials and citizens, combating corruption starts with better systems. This includes reduction of monopolies, clarification of official discretion, enhancement of transparency, increasing the probability of public officials being caught, and the rise in penalties for corruption for both givers and takers (cf. Klitgaard 1997: 2, UNDP 2004: 2f).

3.1.3. Forms of Corruption

Corruption is found in various forms and degrees in every country. Therefore, by evaluating the corruption level of a country, it is important to take into account whether corrupt practices are perceived as an exception to the rule within a functioning system, or whether corruption is systematic, either as an accepted form of exercise of office or as means of maintaining power and staying in office (cf. Klitgaard 1997: 1). Corruption is often categorized into four broad types:

- Petty corruption is often referred to as bureaucratic, everyday or low-level corruption since it occurs between public officials and citizens. It takes place, usually on an ad hoc basis and within a framework of basic laws and regulations, where implementing officials seize upon opportunities to benefit personally, for example through fraud and extortion, by diverting public funds or demanding bribes, and by awarding favours in return for personal considerations. Although only a small amount of resources is involved in each transaction, in the aggregate, this provides for a substantial amount of loss of public recourses.

- Grand corruption is characterized by both, the embezzlement or misuse of vast amounts of public resources by state officials or politicians and bribery of those with influence over large projects and important contracts (cf. Shah 2006: 4; Rose-Ackerman 2006b: xviii). In addition, it refers to the intentional imposition of distortions in the prescribed implementation of existing laws, rules and regulations.

- State capture refers to the exercise of illicit influence by individuals or groups on the formation of laws, government policies and political decisions at the highest level of any branch of government through provision of private benefits to politicians or incumbents. Such capture is directed toward extracting rents from the state for a narrow range of individuals with potentially enormous losses for the society at large (cf. World Bank 2000: xv-xvi).

- Patronage and clientelism is a form of structural corruption as opposed to the above mentioned individual acts of corruption and comprises nepotism, patrimony and tribalism, depending on the origin of the client or the relationship between the politician or official as patron and the individual or group as client. Patrons may use their official position for appointments to offices, to directly distribute government resources to their clients, to offer them preferential treatment in dealing with the public sector or to provide the same assistance on a quid pro quo basis to colleagues from an informal network. The misuse of power to make personnel decisions can be used as bribes or to ensure incumbency (cf. Nawaz 2008: 1f; Karklins 2002: 27f).

3.1.4. Consequences of Corruption

Consequences of corruption are potentially devastating and very complex, carrying major economic and political costs. In any case, corruption has direct costs for the citizenry, while the type and impact of those consequences depend on the form, degree and the actors involved in corrupt practices (cf. Karklins 2002: 23).

Economic costs of corruption for the citizens arise because funds are diverted from paying for public goods such as safety and social service. For the state, these costs result in the undermining of investment and market competition. Usually grand corruption has a more destructive impact on undermining the economy than petty corruption. It can even render the state to the edge of outright failure, ultimately leading to a decrease in foreign aid and foreign investment, if not to their complete absence (cf. Karklins 2002: 23; Rose-Ackerman 2006b: xix; UNDP 2004: 3).

The political costs of corruption are manifold and can be as harmful as the economic ones. Grand corruption at the elite level can undermine the political will for reform (cf. Chêne 2009: 2). Generally, the misuse of office entailed in corruption means that it undermines the purpose of public institutions. The type of political damage depends on the institutions involved in corruption. While citizens often tolerate to purchase public goods such as education or health care, state legitimacy and efficiency are seriously undermined if judicial procedures and legal judgments are for sale. Undermining the rule of law not only severely limits accountability in all sectors of the state and public life (cf. Karklins 2002: 23f), alongside it also furthers (organized) crime and violence, and in most extreme cases, as occurred in Sierra Leone, leads to war. Another important factor is the commonness of corrupt acts. Most systems can stand some bribery and petty corruption on an ad hoc basis. Once corrupt practice becomes systematic or institutionalized regardless of the type of corruption and the sector of occurrence, the bureaucratic rules have been replaced de facto and a new political regime created in the administration that changes the political system of the entire state (cf. Karklins 2002: 24; Klitgaard 1997: 2). There is a difference between the misuse of public money for private gain, predominantly found in petty and grand corrupt practices and the misuse of private money to influence public policy by state capture and elite networks (cf. Karklins 2002: 23f). Patronage system and elite networks can equally undermine state legitimacy and the effectiveness and credibility of institutions by creating informal ways of political competition and decision-making. Not only do patronage systems provide limited resource distribution to a small group of clients, they also account for a limited voter choice at election through curtailing the pool of candidates, illicit financing of the latter or simply by vote buying (cf. Nawaz 2008: 4f).

In short, corruption harms the reputation of and erodes confidence in the state. It lowers the quality of public service, increases income inequality and poverty, and reduces economic growth and development. Beyond, corruption violates human rights and disproportionately impacts the poor who cannot afford to pay bribes even for the bare necessities and whose share in economic wealth is already scant (cf. UNDP 1998b: 3; Fenner/Mahlstein 2009: 241; Shah 2006: 2). Therefore, corruption is far from being a victimless crime, instead corruption costs lives (cf. Eigen 2005: 1).

3.2. Corruption in Fragile States

3.2.1. The Situation on the Ground

All of the aforementioned forms of corruption are prevalent in fragile states and their consequences are even more devastating and far-reaching than in developing countries. Fragile states figure among the most corrupt in the world and corruption is one of the key concerns of local populations. Besides, they are characterized by a vicious circle of weak governance, instability and underdevelopment. In some cases, governance was missing altogether as a result of conflict (cf. Fukuyama 2005: xi). Although fragile by definition, they vary greatly in their respective degree of (in) stability. One important aspect of instability is the breakdown of internal security, the inability of states to exercise effective control over their territory, to exert a monopoly on the use of force, and their lack of capacity or desire to provide public goods. In most instances, fragile states struggle with security challenges caused by the breakdown of law and order, organized crime and corruption (cf. Klotzle 2006: 14f, 37; Cater 2003: 27, 41; Ballentine/Sherman 2003b: 9).

(1) It is commonplace that political stabilization in any country entails the redistribution of incomes. In developing and fragile states, the productive or private sectors are small. In addition, not only do those states dispose of low national income, but they can typically tax a much smaller share of this low income. Often the budget is already in deficit after the salaries of public employees have been paid. Political stabilization therefore involves off-budget transfers, usually exercised through political corruption. Fragile states try to achieve political stability by selecting the most powerful or dangerous faction and transferring resources through informal patron-client networks to accommodate these groups (cf. Khan 2006: 227-229).

(2) Most fragile states are therefore characterized by neo-patrimonialism, a system of governance, where the formal rational-legal state apparatus co-exists with patrimonial practices[22] (cf. O’Neil 2007: 2; Nawaz 2008: 2). Whereas informal institutions as a feature of all human societies co-exist with formal institutions in all states, in stable polities, complementary formal and informal institutions usually govern the political rules of the game. In neo-patrimonial states, however, these informal institutions are supplanted by patrimonial norms and practices, which often override the formal institutions. Beyond, neo-patrimonial states, not only lack a common set of predictable rules, but formal and informal rules are often multiple and contradictory, resulting in institutional hybridity. While this creates insecurity for all actors, it also allows them a degree of room for manoeuvre (cf. O’Neil 2007: 2f, 8). Basic elements expressing the informality of neo-patrimonial states are:

- Weak separation of the public and private spheres:

This provides space for corrupt practices and moral ambiguity about these. Private appropriation of the public sphere, the use of public resources for political legitimization and sustained clientelism are often the result (cf. O’Neil 2007: 3, 9f).

- Primacy of vertical over horizontal ties:

Characterized as predominantly agrarian or pre-capitalistic countries with weak class formation, the populace in neo-patrimonial states tend not to identify their interests with, and organize along, horizontal lines. Instead, they predominantly maintain vertical relationships and/or those based on primordial ties, including ethnicity and religion, which facilitates corrupt and rent-seeking activities (cf. O’Neil 2007: 3, 10).

- Personalism:

Neo-patrimonial states are suffused by personalism, both in the form of leadership (presidentialism) and in the nature of power and relations which is replicated at all levels of society. In this context, presidentialism refers not only to the formal political system, but also to the fact that “power is concentrated in one individual ‘who dominates the state apparatus and stands above its laws’” (O’Neil 2007: 3f).

Overall, a neo-patrimonial system of governance can ensure relative political stability as long as corruption reproduces itself and the balance between extraction and redistribution is kept (cf. Blundo 2006: 51). While resource distribution is always motivated by the patron’s incentive to secure loyalty, the specific resources and distributive mechanisms depend on the cultural, economic and political institutions found in particular countries and therefore vary (cf. Nawaz 2008: 2).

(3) There is a strong correlation between state fragility and conflict. Not all states with conflict are fragile, but most of them are. Likewise, not all fragile states are experiencing conflict, but almost all of them are or recently have. In 2006 the World Bank identified 26 states as fragile, of which all bar two are post-conflict or conflict affected (Grono 2007: 1). Hence, almost all fragile states are post-conflict countries and corruption often predates hostilities, as well as, in many cases, such as Sierra Leone, triggered political unrest and facilitated conflict escalation in the first place. Wartime generally sees an entrenchment and diffusion of corrupt practices as governmental structures break down. Armed factions use corruption as a tool for sustaining power structures, public authorities for their economic gain and ordinary people as a means of informal survival practice. Corruption is thus frequently entangled in the political economy of conflicts, creating a self-sustaining circle of corruption and conflict. Conflict also destroys the social system and stable values, which results in a persistent legacy of corruption, especially in the form of patronage networks. Therefore a continuum of corruption exists between the emergence of the conflict, the dynamics that sustain it and the post-conflict phase (cf. Le Billon 2005: 73; Carver 2007: 8-10; Galtung 2007: 3). This continuum may be intensified through the international intervention itself. For instance, UN sanctions and arms embargos also create an economic opportunity structure for illicit trade, contributing to the proliferation and strengthening of cross-boarder black market networks and encouraging closer ties between political leaders and the criminals. This structure can equally become entrenched and persist long after sanctions are lifted and the conflict is over (cf. Andreas 2008: 163-165).

Opportunities for corruption in post-conflict reconstruction tend to be greatest at the outset, when an air of confusion can reign, institutions are being built and huge international resource flows are coming into the country (cf. Jennett 2008: 3; Galtung 2007: 1f). These circumstances constitute a new framework within which corruption plays itself out. In recent years, post-conflict reconstruction assistance by the international community has become multi-dimensional. Beyond rebuilding the physical infrastructure, the post-conflict menu often includes at first humanitarian relief and then institution (re)building, resettling displaced communities, rebuilding the infrastructure, restoring civil society, and consolidating peace and democracy. These tasks bring together many bilateral and multilateral agreements as well as a wide-ranging group of political, economic and military actors as well as the media. The resources provided by these actors flow through weak institutions and corrupt, inefficient and ineffective government and public service bureaucracies that lack administrative, financial and management skills. Most post-conflict countries are simply not prepared to deal with the massive intervention by the international community, including donors, International Organizations (IO), hundreds of international Non-Governmental Organization (NGO) and thousands of national NGOs. Therefore, resource allocation and mobilization usually shifts into the hands of donors, who drive the reconstruction process and control their projects (cf. Jabbi/Kpaka 2007: 17, 19-22; Mathisen 2007: 8, 19). Although available information suggests that most of the corruption within post-conflict countries occurs through the state itself (cf. Le Billon 2005: 74f, Box 5.1), it has to be noted that corruption also occurs within donor agencies and NGOs, as well as between them and their local counterparts, including local population and local politicians (cf. Jabbi/Kpaka 2007: 17, 22; Fenner/Mahlstein 2009: 245f).

As corruption by outside forces in fragile states, in the context of this chapter by donor agencies and NGOs, is not subject of this study, they are only acknowledged, notwithstanding their devastating impact and far-reaching consequences for the local population and the government. In general, it has to be recognized that neither state structures (or structures controlled by the state) are per se corrupt and ineffective, nor are institutions formed by civil society per se virtuous (cf. Blundo 2006: 59), neither in fragile states, nor in any other country.

3.2.2. Addressing Corruption in Fragile States

The international community has been uncertain about how to prioritize corruption reform efforts in such fragile environments, due to the pressure of maintaining peace and consolidating security and stability (cf. Jennett 2008: 2). Although it is imperative to address corruption from the beginning, being a source that could derail the whole transition process, combating corruption should not take precedence over peace consolidation, but rather complement it. The first priority therefore is to maintain security for the population, the investigators and prosecutors and their institutions. Since a corrupt government rarely receives support of its population, the second priority is to restore the populations’ confidence in its government, the political process and the security sector (cf. Jennett 2008: 3; Le Billon 2005: 81). Corruption in security sector reform should be addressed immediately in order to build trust amongst the population, since a corrupt police and/or judiciary perpetuate instability (cf. Jennett 2008: 3f).

Good governance, in other words democracy is therefore acknowledged as the key element for reducing corruption in fragile states for the long term (cf. Jennett 2008: 4; Le Billon 2005: 77). Generally, it is argued that democracy limits corruption through increased competition for political mandates which enables societies to get rid of those leaders performing particularly poorly. Beyond, it ensures that incumbents can be held accountable for their actions. However, studies show that democracy only reduces corruption after a long period of exposure to democratic practices and only after a certain threshold is passed (Lambsdorff 2006a: 10f). The transition to democracy, and in many instances to a market economy, usually increases the level of corruption. It usually takes place in a weak or highly politicized institutional framework. Whereas the formal instruments of party financing are absent, the transition to democracy reinforces their importance, often resulting in political corruption. At the same time, the economic transition offers major corruption opportunities, for instance through privatization of state enterprises that play into the hands of local corrupt elites (cf. Le Billon 2005: 74) or the privatization programs themselves (Lambsdorff 2006a: 5).

Improving governance by fighting corruption has therefore institutional, normative, and political dimensions. Reforms that focus on transforming and strengthening state institutions are difficult to implement, not only because those institutions are deeply steeped in the local traditions and culture of their respective society, moreover can they also potentially threaten the interests of wealthy and powerful elites (cf. Fukuyama 2005: xi-xii).

Hence, the toughest question regarding the post-emergency phase is how to create the political process in a way that is sustainable and will not in itself use the manner in which it is created and the opportunities thus provided to control the economy or the population (cf. Carver 2007: 10). In fragile states, patronage networks usually have a head start succeeding either a preceding system dominated by an exclusive, self-serving and corrupt status elite or an imbalanced power or political status quo inherited from the conflict. The core issue is the extent to which neo-patrimonialism and patron-client networks survive the transition phase and continue to function with slight modifications, thereby undermining democratic development (cf. Khan 2006: 230f). A thorough assessment of key spoilers of anti-corruption reform in politics and public administration therefore needs to be conducted, resulting in their conviction or at least their removal (cf. Jennett 2008: 3). Another important aspect in this regard is party financing, which is a major cause of political corruption. It is particularly hard to tackle post-conflict environments as the incumbent party generally plunders the state in advance of elections. Ideally, these issues should have been addressed at the stage of the peace agreement through preventative measures, such as prohibiting the sale of state assets for an interim period, creating a framework for the international supervision of public accounts and laying out the rules for party financing (cf. Le Billon 2005: 78).

Moreover, addressing corruption in a sustainable way often involves economic and social reforms (cf. UNDP 1998b: 9), as well as extensive transformation of legal instruments, sometimes including the constitution. When revising legislation, causes and mechanisms of corruption have to be taken into account. A new constitution should therefore include an effective separation of powers and government structures, a commitment to fight corruption, and the creation of transparency and accountability mechanisms as key elements of corruption prevention. Furthermore, the rules of political party financing need to be reformed (cf. Jennett 2008: 4f). Since local civil society organisations and media, which usually pressure government institutions to be accountable, are weak or non-existent, a short-term priority is to keep the public informed about what is happening and how it affects the general citizen (cf. Le Billon 2005: 80f). In parallel, to minimize the incentives for public officials to become corrupt, as well as to depoliticize and professionalize them, a public sector reform is crucial.[23] Besides effective reconstruction management and procurement procedures have to be created (cf. Jennett 2008: 4; Le Billon 2005: 77).

Not only is addressing corruption in fragile states very different from normal development contexts (cf. Fukuyama 2005: xi), but the extent and nature of the problem also differ substantially. This requires a differentiated approach to the prioritization and sequencing of reforms. Nevertheless, it is not possible to reform even the most optimally designed institutions or change norms unless there is political will to do so. The international community can help individual countries to some degree with the will and to a certain degree with the capacities, but it is ultimately up to the national elites to change the political culture (cf. Le Billon 2005: 81; Fukuyama 2005: xii; Klitgaard 1997:1).

[...]


[1] Following the end of Mobutu’s rule in 1997, Zaire was re-named Democratic Republic of Congo.

[2] Hereafter referred to as UNCAC.

[3] This definition was advanced by the World Bank and is most commonly-used by development practitioners.

[4] Public Sector in this study comprises the general government sector, including civil service, the security, education and health sector, as well as state enterprises and all public corporations.

[5] This study applies a broad definition of international actors including governments, organizations and (donor) agencies, involved in international, multi-lateral or bilateral assistance.

[6] International community incorporates governments, organizations and (donor) agencies.

[7] Cf. Fenner/Mahlstein (2009: 241); Matsheza (2007: 2); Fukuyama (2005: xi, xii); Eigen 2005: 2).

[8] With regard to colonialism and the historic background of public sectors in Africa, the thesis is particularly based on three sources: (i) an anthropological study on corruption in African countries: Blundo/de Sardan (2006a); (ii) a research project of the Advisory Board for Irish Aid on neo-patrimonialism in Sub-Saharan Africa: O’Neil (2007); (iii) and a university dissertation, proposing the concept of the Shadow State for post-colonial Sierra Leone: Reno (1995).

[9] The U4 Anti-Corruption Resource Centre conducts applied research and provides many papers on most recent results of anti-corruption efforts. The U4 papers most often cited are by Marie Chêne.

[10] Susan Rose-Ackerman, a leading scholar on corruption issues, provides a standard work: Rose-Ackerman (2006a).

[11] Papers from Robert Klitgaard, another leading scholar on anti-corruption issues and the UNDP were particularly used as references on the causes of corruption (section 3.1.2): (i) Klitgaard (1997) (ii) UNDP (2004).

The forms of corruption (section 3.1.3) and the pecking order of reforms regarding anti-corruption strategies (section 3.3), are primarily based on working papers for the World Bank, inter alia: Shah (2006).

[12] For evaluating the first Sierra Leonean post-war Government of President Ahmed Tejan Kabbah, the study primarily relied on a national integrity system survey, conducted by the National Accountability Group (NAG), a Sierra Leonean civil society organization (CSO): Jabbi/Kpaka (2007).

The assessment of the second Sierra Leonean post-war Government under President Ernset Bai Koroma, is particularly based on a report of the International Crisis Group (ICG), an international non-governmental organization (NGO): ICG (2008). When referring to a particular administration or government, for example, the Kabbah or the Koroma Government, government is written starting within a capital letter. In addition, Government relates to all branches of the state, not only the Executive.

[13] With regard to both the elements comprising such a package and the general steps of anti-corruption policies, chapter 5 incorporates suggestions from the Toolkit.

[14] Due to the lack of conceptual clarity in current research, this study will adopt the definitions of accountability, and transparency as applied by the UNDP. The term accountability means holding individuals or organizations responsible for performance by ensuring that their behaviour corresponds to the law or to a code of ethics. This includes critical systems of control internal to the government. As regards the public sector, accountability requires the administrative to render an account for its actions to some external, independent organization, be it the legislature, an auditor or ideally the public at large. Transparency, as the most basic level of accountability, comprises all means of facilitating citizens’ access to information and their understanding of decision-making mechanisms (cf. UNDP 2004: 19).

[15] According to the Overseas Development Institute, a British think tank on international development and humanitarian issues, voice , in terms of governance assessment, refers to “the capacity of all people – including the poor and the marginalised – to express views and interests and demand action of those in power. The focus is not on the creation of voice for its own sake but on the capacity to access information, scrutinise and demand answers with a view to influencing governance processes.” (Overseas Development Institute 2007: 1, 2, Box 1).

[16] See enclosed CD, containing the speech by United States’ President Barack Obama in the Town Hall of Strasbourg during his visit in respect of the 50th anniversary of the NATO on April 16th 2009. Time Code 40:45:00.

[17] UN 2009: The United Nations System (Organizational Chart).

[18] UNODC 2008a: UNODC Organizational Chart; organizational chart section 7.1.

[19] Formal institutions are explicit and concretised in written documents, such as constitutions, laws and regulations, civil service codes and procedures. Cf. Brinkerhoff/Goldsmith (2002: 1).

[20] Informal institutions are implicit and based on unwritten understandings including socio-cultural norms, routines and traditions. Cf. Brinkerhoff/Goldsmith (2002: 1).

[21] This study applies a broad definition of public officials, including civil servants, police and army officers, as well as education and health workers and so on.

[22] Patrimonialism is defined as a social and political order where the patrons ensure incumbency and loyalty by bestowing benefits to their clients from own or state resources in the absence of any legal-rational institutions. Cf. Nawaz (2008: 2).

[23] Cf. Chêne (20089: 6); Blundo/de Sardan (2006b: 7); Fukuyama (2005: xii); Le Billon (2005: 78).

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Title: Anti-Corruption Measures in Fragile States. Adressing Change through a United Nations Anti-Corruption Package of Measures