How can we fight the scourge of corruption?

By : Leonard Frank McCarthy

It was his struggle against corruption-influenced rule that made Nelson Mandela stand up and speak up against oppression, injustice and neglect of the poor. With the passing of giants like Mandela, we cannot help but reflect upon who we are as a global society and be inspired to improve our world. Having lost the man who embodied the best of human nature, we need to muster the perseverance to take on one of the greatest challenges in our lifetime: corruption.

The urgency of the matter

Four billion people are stuck in poverty or are on the verge of falling into poverty. At present, 10% of the world’s population owns 85% of the wealth. Inequality, joblessness and climate change are major threats to society, aided and abetted by corruption. Resource-rich countries plagued by corruption are squandering their best opportunity to lift their people out of poverty. Roughly half of low-income countries are fragile or conflict-affected, and 2.5 billion people still do not have access to formal financial services. While net private capital flows are about $1 trillion per year, unfortunately, so are the estimated overall costs of corruption.

We may be at a tipping point. We see governments come to power on the wave of promises to eradicate corruption. Some actually lose power when public indignation rises over a failure to deal with corruption and plunder. Financial institutions, many situated in the United States, have paid roughly $92 billion in settlements over the last four years to redress their misconduct. Tax, trade and transparency are becoming the next frontier, as the international community seeks to assert regulation and order.

As the president of the World Bank announced recently at a panel we hosted in Washington DC, “Corruption is public enemy number one”, which can only be overcome by the momentum of an inclusive and coordinated movement. At the same event, Huguette Labelle from Transparency International appealed to our global conscience, reminding us of the sober picture her organization describes in its Corruption Perception Index, released last December.

Esteemed opinion-makers argue that there is a deficit of – and therefore a need to restore – public trust in government and institutions. Paul Volcker, former chairman of the US Federal Reserve, wrote recently that a weak rule of law is closely related to stunted economic growth, an inability to escape poverty and an absence of human rights.

This year’s annual meeting at Davos focuses on “reshaping the world”. Earlier this week, the World Bank posited that the global economy may be at a turning point, whilst the International Monetary Fund warned against deflation. In this context of changing global dynamics, we need to re-examine the pace and scope of anti-corruption. The time is opportune for integrity to hold prominent sway in economic, political and social decision-making, as we define the next decade.

Charting a way forward

While acknowledging global initiatives such as the United Nations global compact, the Partnering Against Corruption Initiative and other international instruments, their continued and universal success relies on execution and complementary action. As global leaders descend on Davos, we need to:

Reignite citizen involvement to shame and conquer corruption. People’s sense of responsibility and ownership is a strong driver to foster a culture of integrity. Newly elected heads of state can no longer turn a blind eye to corruption. Influencing the way a decision-maker responds to corruption can be effective in engaging the public, whose pursuit of accountability as a touchstone for legitimate leaders ought to be a globally shared prerogative.

Sharpen mechanisms and approaches to share and apply knowledge about creating and sustaining institutions with greater integrity, free from the trade winds that often come with negative changes in government or society.

Generate new energy for a groundswell movement, involving governments, the private sector and citizens, to act together now to prevail over corruption. In this way, we can influence the way decision-makers in the public and private sector respond to corruption, through “social marketing” campaigns, effective at changing behaviours and values.
Transform the private sector risk equation by making the case that responsible corporations experience lower cost of capital, can attract better talent and strengthen their reputational equity. The CEO Vanguard Initiative in Davos is a masterstroke, seeking to map corruption out of the business environment.

Set evidence-based, measureable targets for regulatory action, law enforcement, crime prevention and recovery of illicit assets in corrupt environments, to inject public confidence in the systems of government, especially as they relate to poor people.

Shape an international regime where corrupt actors are obligated not only to provide restitution, but also to support reparations for the harm they caused. In the environmental field, polluting firms are mandated to clean up and compensate the communities that are severely affected as a result of their violation of environmental rules. There is no good reason why there should not be an analogous reparations regime in corruption cases.

While we don’t have a white canvass to paint on, there is a vast wasteland to plough. It’s time for a new vision, fresh impetus, novel thinking and a confident commitment.

Leonard Frank McCarthy is Vice President of integrity at the World Bank and chairs the World Economic Forum’s Global Agenda Council on Anti-Corruption and Transparency. He is participating in the World Economic Forum’s Annual Meeting in Davos-Klosters.

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