Corruption In Iraq & World

Foreign Policy: 11 Proposed Steps to Reduce Corruption in Afghanistan

July 26, 2011 - Here is an interesting, but rather ponderous Foreign Policy article by Jaron S. Wharton on ideas to reduce corruption in Afghanistan.  It focuses on specific actions for the International Security Assistance Force (ISAF).

One interesting point is that it refers to a "2010 Counterinsurgency (COIN) Contracting Guidance" publication, and has a link to it.  It contains some ways to beef up contracts to reduce corruption potential.

Another good idea is to "Map Criminal Patronage Networks(CPNs)".    This reminds me of my time in Iraq in 2005 when I was talking to a DFID officer (UK's version of USAID, but I think the guy was more like a spook).  He blamed lots of corruption in Iraq government purchases on three major family syndicates in Baghdad.  Since Iraqi procurement rules required 3 bids on purchase contracts, they would all bid after sitting down at a table, setting maximum profit prices, and deciding who would win the bid.   Thus this recommendation approaches that problem.  Here is Wharton's full text on that issue:

7. Map Criminal Patronage Networks (CPNs). While some corruption is petty and lacks strict organization, the most serious forms of corruption are perpetuated by CPNs which sponsor systematized corruption in and out of government, across the public and private sectors. The exclusionary nature of these networks discredits and weakens government and security forces, robs the state of revenue, undermines Afghan sovereignty, and perpetuates dependence on international assistance. In order to marginalize these networks, we must improve intelligence collection, analysis and dissemination to better understand their behaviors. We must integrate military, counternarcotics, and law enforcement efforts to apply a broad range of instruments to change their behavior or isolate them from sources of strength and support. Our devoted attention (to mapping) during advising and partnering efforts is critical to better understand these networks.

Here is the article:

http://ricks.foreignpolicy.com/posts/2011/07/26/11_proposed_steps_for_isaf_to_help_respond_to_corruption_in_afghanistan

vj

 

New SIGAR Audit Criticizes US Methods to Reduce Afghanistan Foreign Aid Bribery & Corruption

July 23, 2011 - Just another in a stream of repeated issues, but here is the latest.  I assume the audit was issued at the end of June at www.Sigar.Mil.

The article and report talk about smuggling of cash out of airports by bypassing customs checks.  When I was in Afghanistan in 2009, I watched as cars drove up to the stairs to the aircraft I was on and the passengers brought heavy suitcases right up the ramp to the plane.  I am sure I have pictures of it, because it was clear to me what was happening.

vj

Audit Highlights Afghan Aid Woes

By NATHAN HODGE And MATTHEW ROSENBERG

WASHINGTON—A lack of U.S. coordination compounded by Afghan foot-dragging has stymied efforts to track billions of aid dollars poured into Afghanistan's economy in the past decade, providing potential opportunities to launder money and finance the insurgency, according to Afghan officials and a new U.S. government audit.

The audit, released Wednesday by the Special Inspector General for Afghanistan Reconstruction, or Sigar, faulted both Afghan and U.S. agencies for failing to tighten controls over Afghanistan's financial sector. The report focuses on fumbled efforts to monitor large amounts of cash moved through the country's main commercial airport. The money is intended for aid and reconstruction efforts.

"Because of the level of corruption in Afghanistan and the continuing insurgency, the U.S. government's lack of visibility over its funds is a significant concern," the audit states. "Reports of as much as $10 million a day in cash leaving the Kabul International Airport have added to these concerns."

Most of the problems detailed in the report have been well-publicized over the past 18 months. The failure to address them underscores how little progress the U.S. and its allies have made toward one of the key aims of the counterinsurgency strategy unveiled by President Barack Obama in 2009: restoring the battered credibility of Afghanistan's often weak and ineffective central government.

Instead, Afghan pushback has forced the allies to scale back their ambitions. The Afghan government in May forced out of the central bank American advisers helping crack down on money laundering. The U.S. Treasury "has no plans to re-engage at the central bank as the working conditions there for advisors has become hostile," according to a memo from the U.S. Embassy in Kabul that was included with the Sigar audit.

Afghan and U.S. officials didn't immediately provide comment.

Many mid-ranking Afghan officials are similarly frustrated with what they describe as widespread corruption. One example offered by customs official Mirwais, who like many Afghans uses only one name, detailed how top politicians and well-connected businessmen avoid a new rule requiring those passing through the VIP section of Kabul airport to have their bags searched. The measure is designed to forestall large sums of cash leaving the country.

The VIPs, including cabinet ministers, had their vehicles driven straight to departing planes so their bags could be put aboard unhindered, Mirwais said in an interview before the audit's release. Worried that too many cars on the tarmac would lead to an accident, customs officials soon reversed themselves and stopped searching bags at the VIP section, Mirwais said.

The U.S. has appropriated more than $70 billion for aid projects in Afghanistan. Officials worry that because of the lack of oversight, a significant chunk of those funds, along with other Western aid, have been siphoned off by corrupt officials or have ended up in the hands of militant groups, most of which are loyal to the Taliban.

Efforts to track the flow of money have increased in recent years with four U.S. agencies committing more than $20 million to monitoring Afghanistan's financial sector. Coordination among different U.S. agencies creates the risk that U.S.-funded programs may work at "cross purposes," the audit states.

Likewise, the audit faults the U.S. military and civilian agencies for relying on cash transactions to pay contractors, leaving funds vulnerable to misuse or diversion.

The informal nature of the Afghan economy also means most many contractors use "hawalas"—largely unregulated private money transfer businesses—to pay for suppliers and subcontractors, a potentially problematic if often unavoidable situation because the formal banking system remains in its infancy.

The formal banking system is also riddled with problems, and Afghan officials have stymied efforts to improve regulation, the audit states.

Write to Matthew Rosenberg at matthew.rosenberg@wsj.com

http://online.wsj.com/article/SB10001424053111904233404576457793195376636.html 

Here is a GREAT article about Corruption in Ghana and the Writer's Recommendations

Tavares, FL - July 20, 2011  Here is a great article I found on a Ghana website about their problems with corruption and recommendations to fix it.

First is the text, followed by the comments I posted:

The text from the article:

The Genesis And Effects Of Corruption In Ghana

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=214048&comment=0#com 

By Kwesi Atta Sakyi

July 2011

Corruption is any act undertaken with the aim of personal pecuniary or financial gratification. It is an illegal, unethical and bad behavior which is unprofessional, unpatriotic, unchristian and inhuman. It involves soliciting for bribes, kickbacks or acting deliberately to delay service delivery in order for the recipient of the service to do something, to speed up the process by offering something by way of gifts or kola. In some cases involving women, it may end up as ‘bottom power’ where sexual favors are sought in order to award contracts or obtain a job or get promoted or obtain a high exam mark or obtain a passbook to obtain goods for sale. Corruption in Ghana is of old because in the Gold Coast era, our first black civil servants engaged in bribery when giving import licences or passbooks to women traders, be it SCOA, Leventis, PZ, UAC, UTC, CFAO and the like. Under the first Republic of Kwame Nkrumah, there was corruption but be that as it may, it was very low in scale as the Osagyefo was very severe with himself and he was a role model par excellence. His secret service ticked and the thought of being locked up behind bars at Nsawam Maximum Security Prisons was enough to scare the daylights out of culprits. In the Akyeampong era from 1972 to 1978, there was the famous green pen syndrome whereby top brass military corrupted young ladies by giving them chits and notes written in green ink for them to go to GNTC and the banks to get goods for sale(essential commodities or groceries or ‘essenco’) or access soft loans. It became known as ‘fa wo to begye Golf.’ The generals seduced young girls in Accra as they seduced them with brand new bright Golf cars. Some of them, like Utuka, Kotei, Amedume, Yaw Boakye, F.W.K. Akuffo, among others, faced the wrath of revolutionary fervor in June 1979. Sad as it may seem on recollection and sober reflection, the young army rebels thought of cleaning the Aegean stables once and for all in their high falutin utopian zeal. But alas, they themselves later became victims of corruption. Under Rawlings, many people complained of the EWE hegemony as all the Security services and top government agencies were manned by Ewes.

Was that not nepotism or homeboyism? That never happened under Nkrumah. When John Agyekum Kufour took over from Rawlings in 2000, we found out that he tried to settle scores by appointing his siblings, cousins, nephews and other Ashantis to top positions, most especially in the Foreign Service. That was also corruption of another hue. Currently, NDC stalwarts are pressuring President Mills to give jobs to the foot soldiers but he is not.

CAUSES OF CORRUPTION IN GHANA

Our extended family system in Ghana means we have a heavy dependency load. This is because we lack national institutions to take care of the unemployed, aged and destitute. Our SSNIT and Pension Funds are full of heavy doses of corruption as the workers there are now the supposed beneficiaries and the actual beneficiaries are relegated into limbo. A poor worker in Ghana with meagre pay has to fend for himself and a host of dependants whose expectations are high, especially among the Akans who practice matrilineal inheritance. The annual trip home to celebrate Afahye, Fetu, Aboakyir, Odwiraa, Ahobaa, Hogbetsetso, Homowo, Kundum, Okyir, Ohum, Dagbon, Akwambo, Akwesidae and Kotokro festival is a nightmare because you have to go on a shopping spree at Game Stores or Shoprite or Accra Mall to buy presents for all your loved ones or else they will brand you a bad boy or girl and they may curse you or practise witchcraft or juju you.    In this scenario, who will not succumb to bribes at the workplace? Coupled with this is the mad Ghanaian materialistic craving to build extravagant mansions and to buy expensive cars and clothing to show off. We forget that real happiness lies within and if we go by platonic absolutes, the real world is the spiritual or abstract world and that is in accord with our Christian aspirations. I think to combat corruption in Ghana, we need to douse our flame and knack for excessive material things. I enjoin Ghanaians to read more spiritual and philosophical books, especially the Bible, Plato, Aristotle, Bertrand Russell and others. It is important to fight corruption by breaking the cycle of the dependency syndrome. Everybody should be up and doing rather than relying on remittances from relatives working abroad. It is however, not out of step to bend backwards to help our relatives whenever we can but then this should not be overdone as it reduces our marginal propensity to save and to accumulate capital for investment. This syndrome could be an indirect cause of corruption in Ghana. Corruption also rears its ugly head in the public and civil services where subsistent wages abound and there are poor working conditions. If you consider soldiers and civil servants, their remuneration is nothing to write home about. The most corrupt institutions in Ghana are the police, customs, internal revenue, accountant general’s officers, judiciary and the public hospitals. Fancy someone in a very critical health condition who goes to Korle Bu Teaching Hospital or 37 Military Hospital and the surgeon asks this poor folk to pay 2000 new Ghana Cedis. This type of extortion and corruption is heinous and inhuman. In the civil service, meritocracy is minimal because recruiters only employ those who can pay heavy bribes. What about admission to our state colleges and universities? It is the same story of tribalism, nepotism, political party cardreism and heavy practice of homeboyism. Lucrative jobs are given to cronies who know next to nothing about their jobs or remit. How can we increase real GDP growth if these anomalies persist in Ghana? In management science, there is the famous Peters’ principle of being promoted to one’s highest level of incompetence. Here, we find square pegs in round holes or what is called sinecure. Tribalism is a cankerworm which must be uprooted in this country because it is divisive, retrogressive and it breeds corruption. During the time of Nkrumah (1951 – 1966), corruption was not entirely absent but it was really tamed within bounds because as a principled leader, he led by example and woe betide you. if his secret agent agents reported you to him. In his time, Nkrumah embraced all the tribes in Ghana and worked with them on the basis of merit, fidelity and commitment to the cause of Ghana and Africa.

In the boarding secondary schools and training colleges across Ghana, we mixed freely and interacted beautifully. We had friends even from Nigeria and there was nothing like tribalism in Ghana. Who then are those who have introduced tribalism in Ghana? I notice that this took root from the early 80s up to now. Another cause of corruption in Ghana is the behavior of charlatan pastors and so-called prophets and men of God who use their vantage positions to mislead the flock. Many priests and bishops are engaged in dubious acts such as adultery, pedophile, kleptomania, homosexuality, Satanism and ostentatious living. Instead of serving and ministering to the flock the word of God, they have reversed roles and they want to be served. They buy themselves expensive cars, mansions and habiliments and extort monies from their gullible congregations. They have turned Judas Iscariots by dipping their hands in church coffers ad stealing collection money and offerings. This reminds one of the papacy during the Reformation when Martin Luther criticized bitterly in his 95 theses, issues such as sale of indulgencies, doctrine of transubstantiation, question of the celibacy of the clergy and the questionable acts of the loyal-royal bishops who had concubines and mistresses. If the church itself and its priesthood are corrupt, God save us. Despite the proliferation of religious fervor in Ghana, paradoxically corruption is exploding at the seams. There are numerous cases of corruption in schools, courtrooms, police, and political party conventions, award of government contracts, at state house or seat of government. Trade Union leaders and workers’ representatives have become corrupt as they use union and membership subscriptions to line their pockets, without doing the work of promoting workers’ interest.

These days, it is not even safe to deal with commercial banks as some workers there have resorted to pilfering or stealing monies from clients’ deposits. I remember about eight years ago, I went to one of the leading banks in Accra to cash a foreign cheque and the employees gave me a merry-go-round by putting seemingly insurmountable obstacles in my way in order to earn favors. Luckily, a friend who had an account with the bank branch came to my rescue by depositing the cheque in his account and he gave me the money. Many of these employees live off the bribes they obtain from clients, yet they are well remunerated. Is it greed which makes them corrupt? Remember, corruption started at the Garden of Eden when Eve was tricked by the Serpent to eat the forbidden fruit. It was corruption of our soldiers which led to Nkrumah’s ouster in 1966. It was corruption which saw the demise of Ghana Airways and the sale of state enterprises such as STC, Nsawam Cannery, Ghana Telecom, Black Star Lines, among a host of others. We find a lot of corruption at the Scholarship Secretariat in Acca where, from time immemorial, some students have been granted state scholarships to study abroad, not on merit but on what is popularly known in Ghanaian parlance as ‘connection’. Do we mean well for our country by engaging in ‘waawaa’ connections and ‘keteasehye’? How long should we sit down for a few people to abuse their offices in feathering their nests at our expense? This does not call for a call to arms but rather being vigilant and scrupulous in reporting saboteurs and corrupt officials. Perhaps, the police and security agents may be in kahoots with the perpetrators of corruption. Despite corruption being endemic in humans, its prodivities can be drastically minimized by removing all semblances of pseudo-bureaucracy and administrative encumbrances and encrustations. We need to streamline and simplify office procedures to reduce the cost of doing business in Ghana. Singapore has done it. In oil-rich Moslem countries such as UAE, Kuwait and Saudi Arabia, Sharia law is in force and it reduces crime in general. Why cannot we tighten our laws and statutes?

THE SINGAPORE MODEL

One can state that abject poverty and poor service conditions of workers in Ghana are heavily and positively correlated with the incidence of corruption. This is why the Millennium Development Goals which are targeted to be achieved by 2015 are cardinal. Poverty reduction and intervention mechanisms need to be intensified to minimize the inclinations to be corrupt. Now that Ghana has discovered oil and gas in commercial quantities, we should be very careful in not contracting the contagious Dutch Disease of complacency and reckless spending. We need to be circumspect in our marginal propensities to consume, import, and tax. To alleviate poverty and bridge the wide income gap, there is need for tax reform to broaden the tax base and also close up the tax leakages in the informal sector. Workers’ tax burdens need to be made light so that they have more take-home pay or disposable income. We need to increase domestic production to reduce inflation and help reduce government expenditure and debt service burdens so that national savings can be used to mitigate dire poverty by providing adequate social and public infrastructure such as quality schools, hospitals, roads, water and electricity supplies, among others. Our oil, gas and mineral resources are finite and non-renewable so we should ensure that their exploitation does not mortgage or jeopardize the interests of future generations by ensuring sustainable development. We should ensure that the current pension and social security contributions to government do not become a heavy burden for future generations who will be taxed to pay those retiring. It is known that oil has the potential to create many scandals. Singapore is a tiny island state at the tip of the Malay Peninsula and it is an archipelago or collection of islands, including part of the mainland where Malaysia is. It is a city-state which straddles a very important sea route from the west to the east at the Strait of Malacca. At the independence of Ghana in 1957, Ghana and Singapore were at par socio-economically in terms of development indicators or indices..

But now in 2011, Singapore is an Asian Tiger with a considerable per capita income far greater than Ghana’s of 1350 dollars. Singapore has no minerals as they derive most of their revenue from stevedoring and docking fees, just as the Suez Canal is to Egypt. Thousands of ships dock there for refuelling and repairs on a very busy sea route to Japan, Australia, New Zealand, Philippines and the Far East. They have huge oil refineries, second largest in the world and they derive substantial revenues from casinos, tertiary and quartnary services such as hospitality industries, software and hardware development, tourism and others. Their first Prime Minister, Lee Kuan Yew, modernized the economy by investing heavily in quality education, human capital development and attracted a lot of FDI from Japan, Indonesia, Britain, USA and neighboring countries, as a safe haven. Many businesses relocated there from Europe, China, Indonesia and South Korea because of their skilled manpower. The Singapore government set up an anti-corruption commission which they empowered with hefty perks and excellent conditions of service to encourage them to become corruption-busters. Thus, it became a transparent and highly efficient society and foreign investors were attracted there to do business. They created industrial processing zones, tax havens or free ports and provided attractive conditions for talented expatriates. The absence of corruption meant low set-up costs for investors. Ghana can follow this model in order to extirpate and eradicate corruption.

RECOMMENDATIONS TO FIGHT CORRUPTION IN GHANA

• Set up Anti-Corruption Commission in Ghana with support from donors such as JICA, DFID, USAID and SIDA.
• Intensify national campaigns to educate and enlighten citizens about the ill effects of corruption on the Ghanaian economy
• Set up welfare schemes (the dole) for vulnerable groups. Not only government but churches and NGOs can partner with government in PPP (public private partnerships) to look after the old. In Zambia here, the UCZ church has a pension scheme for old church members.
• Improve salaries and service conditions of public servants such as civil servants, teachers, police, medical staff, army and local government workers.
• Decentralize most of the governmental services for development to trickle down to the grassroots because effective development is bottom-up and not top-down.
• To strengthen the auditor-general and accountant general’s staff by training more professional accountants
• Monitor closely the lifestyles of public servants and bank employees, using the BNI
• All public servants to declare their assets before and after leaving office
• Intensify the teaching of ethics in schools and colleges
• Set up Ethics Committees in all institutions and ask all institutions to publicise their social charters and ethical codes of conduct. These committees to serve as watchdogs and vigilantes or whistle-blowers.
• To enforce corporate governance in all public and private institutions by following the examples of the UK’s Combined Code or the Sarbannes-Oxley Act 2002 of the USA, the Singapore Code, Australian Code or the King’s Code of South Africa.
• To strengthen oversight and gate-keeping functions of the professional bodies by encouraging as many employees as possible to enroll and register with reputable bodies such as CIMA, CA (Ghana), ACCA, CIM, CIPS, ABE, ICSA, CFA, CPA, GAAS, MAG, GUJ among others.
• Strengthen and reform the law on corruption and to recommend stiffer penalties for culprits
• Encourage public servants to go for refresher courses
• Journalists to intensify investigative journalism to expose scams and scandals.

The author is a teacher who resides in Zambia. Email comments to: - kwesi.sakyi@yahoo.com

Comment by Vance Jochim

You wrote a great article on corruption .  I was a US anti-corruption adviser in Iraq for 23 months.  I helped setup the Iraqi anti-corruption agency in 2004-2006, and our biggest problem was the Iraqi government would not allow prosecution of many government employees.  We followed the Hong Kong anti-corruption commission model, similar to Singapore - both created by a British consultant many years ago.  It probably wasn't until 2007 that the Iraqi government changed the law to allow prosecution of Ministry officials and employees due to public pressure.  Another issue is that to PREVENT corruption, you need vastly improved internal systems and internal audit departments and that affects success. You not only have to have prosecution oriented leaders but those who have authority to review agency systems and mandate procedure improvements.   Most anti-corruption commissions focus on prosecution and education, but don’t have the power, for instance, to audit the purchasing system in a Ministry and mandate improvements that make it harder to implement corrupt practices.   In my case, in Iraq, we tried to initiate audits, but were refused because our Anti-Corruption commission charter didn’t allow us to initiate audits.   We were told only the separate government audit agency could do that, but they did not have the training or skills.   We did create internal and operational audit training programs for the Iraqi Inspector Generals and central audit agency, however, and had it taught by one of the offices of a large international accounting and auditing firm.

 

You can read my blog on Corruption in Iraq and the World at http://webworks.typepad.com/corruption_in_iraq/   Look in the PAGES section for my white paper on 28+ ways to reduce corruption in developing countries.  Send questions to FiscalRangers@comcast.net .

 

Vance Jochim

Lake County Fiscal Rangers

Chief Fiscal Watchdog

Volunteers Searching for Ways to Improve Local Government Fiscal Management, Efficiency & Effectiveness

Tavares, FL 32778

Mobile:  352-638-3578

FiscalRangers@comcast.net

www.FiscalRangers.com   

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CLICK HERE to see recommended internet links related to Local Lake County government fiscal issues.

 

End of the Line - This is my last Corruption in Iraq Posting

Tavares, FL - July 17, 2011 -  I give up.   I have been writing this blog on corruption in Iraq and the World, including Afghanistan, since mid-2006.

The news on corruption keeps repeating itself and the US State Dept and USAID don't improve, and neither does the corruption climate in Iraq or Afghanistan.  Congress keeps having hearings, and issuing reports, but they don't fire anyone and establish known methods to reduce corruption in foreign aid and reconstruction programs in "conflict" countries.

Besides, the Wall St. Journal now has a "Corruption Currents" blog with daily postings and two guys who are PAID to do it, so why compete?   However, they have no clue how to FIX corruption, just report it.

Here is the link to one of their recent postings on their online blog:

http://blogs.wsj.com/corruption-currents/2011/07/15/high-tide-from-metros-sagging-shares-to-ancient-egyptian-artifacts/?mod=WSJBlog  

If you want to see my lists of actions to take to reduce corruption in foreign countries, look in the PAGES section in the right column for my article on Vance Jochim's 28+ Ways to Reduce Corruption.

If you are on a US Congressional Committee investigating Corruption, and want to learn how to actually fix it and not just listen to people talking about it and issuing reports, contact me.

And, if you are a country leader and want to actually fix corruption, and not just talk about it, send me an email to FiscalRangers AT Comcast DOT net.

Vance Jochim  -  July 17, 2011

US Anti-Corruption adviser to the Iraqi anti-corruption agency, Commission on Integrity, 2004-2006.

 

 

US Chamber of Commerce Trying to GUT the US Foreign Corrupt Practices Act

The US Foreign Corrupt Practices Act (FCPA) has been in existence for 30+ years.  I remember it being passed after Lockheed was convicted of bribing foreign government officials to approve defense programs sold by Lockheed (jets?).

The main focus is to prevent or dissuade US firms from paying bribes to foreign government officials, and the article below claims the US Chamber of Commerce is trying to gut the law.   FCPA critics will say we shouldh't hamper US firms from doing business like foreign competitors.  German, French and other companies have no problems paying bribes, so why put the US firms at a competitive disadvantage?

It is a values thing.

The article is quite interesting, explaining how little the US government uses FCPA anyway against US based companies.

http://pogoblog.typepad.com/pogo/2011/07/corrupt-arguments-in-opposition-to-the-foreign-corrupt-practices-act.html 

vj