The world — including global financial centers — needs to come together to fight kleptocracy. (Photo: Wikimedia Commons)
Corruption is often thought of as an individual problem where a corrupt official abuses his or her government position for personal gain. But what happens when an entire government, or the ruling class of an entire country, is engaged in corruption? When corruption becomes systematic and institutionalized, the damage is much greater – and the tools to fight it increasingly require international cooperation.
Two weeks ago the World Movement for Democracy held its eighth international conference in Seoul, Korea. Discussions of the corrosive effect corruption have on democratic renewal abounded throughout the conference. However, a discussion on kleptocracy chaired by the National Endowment for Democracy’s Carl Gershman brought out the enormous scale of illicit cash flows from kleptocratic governments, and the direct influence they can have on enabling authoritarian push-back was made clear. Presenters on the panel highlighted the need for both international coordination on efforts to improve investigation, journalism, and the tracking of money flows, and also support for in-country efforts to strengthen local watchdogs and activists.
From the CIPE perspective, we offered a strategy based on the old adage “follow the money”: to contend with and reduce capital flows from illicit gains we need to understand how such funds are siphoned off, how they move around the world, and what institutional responses we can promote to slow and stop them. Kleptocrats often use a mixture of state and private institutions to steal money, and then establish complex networks of shell companies and other fronts to launder funds. They then use global financial institutions to move “clean” money into markets where it can be securely invested. A comprehensive strategy is needed to combat this complex crime at all levels.
Corruption has been a major roadblock to a meaningful and sustaining democracy in Thailand. According to CIPE Asia Regional Director John Morrell, “corruption was the stated justification for the military’s ousting of an elected government in 2006 and the Supreme Court’s sacking of another elected government in 2008.” In Transparency International’s 2014 Corruption Perception Index, Thailand was ranked 85th out of 175 countries.
To address this corruption issue in Thailand within the local context, CIPE partnered with Thai Institute of Directors (IOD) and launched a Collective Action Against Corruption initiative in 2010. This project is unique in that CIPE and IOD aim to combating the supply side corruption in the private sector through a coalition of member companies, established in this initiative, which vowed to adhere to the highest standards of corporate governance, compliance, and anti-bribery protocols.
Karen Kerrigan is the president & CEO of the Small Business & Entrepreneurship Council and a board member and former chair of CIPE. For more than twenty years Kerrigan’s leadership, advocacy and training work has helped foster U.S. entrepreneurship and global small business growth.She regularly testifies before the U.S. Congress on the key issues impacting entrepreneurs and the economy, and has been appointed to numerous federal advisory boards including the National Women’s Business Council, the U.S.-Iraq Business Dialog, the U.S. Treasury’s Taxpayer Advisory Panel, and the National Advisory Committee for Labor Provisions of U.S. Free Trade Agreements. Kerrigan regularly engages with the President’s cabinet and key advisors, and has participated in several White House economic summits, scores of events hosted by the U.S. SBA, U.S. Treasury Department and other federal government agencies and departments. She has written hundreds of Op-Eds and newspaper columns, and regularly appears on national television and talk radio programs.
Medhawi Giri interviewed Kerrigan for CIPE.
How did you get started in the path to entrepreneurship and what motivated you initially?
My path to entrepreneurship was a journey. Before starting out on my own, I had a variety of career experiences that helped me build critical skills that are necessary for successful entrepreneurship. These skills and experiences provided me with confidence and know-how. The motivation to start my own business came about when several factors aligned. I saw a need in the marketplace. I had a desire to work on my own terms and innovate and create with fewer restrictions. In addition, I wanted financial independence. Of course, I was passionate about my idea and business opportunity and felt confident in my ability to execute. The bottom line is I wanted more freedom, and entrepreneurship allowed for that.
When you were getting started, how difficult was it to bring your idea to life and to make a business out of it?
Participants at the ITCILO training in Turin. (Photo: ITCILO)
As many previous CIPE blog pieces have pointed out, empowering women entrepreneurs leads to inclusive economic growth around the world. This point was further explored in a recent McKinsey report, The power of parity: How advancing women’s equality can add $12 trillion to global growth:
“We consider a “full-potential” scenario in which women participate in the economy identically to men, and find that it would add up to $28 trillion, or 26 percent, to annual global GDP in 2025 compared with a business-as-usual scenario.”
One way to increase the number of women entrepreneurs is by addressing the bottlenecks that prevent women from becoming business owners or circumstances that prevent them from expanding their businesses. And this can be done through policy reforms via business associations and chambers. To this end, CIPE and the International Training Centre of the International Labour Organization (ITC-ILO) held a joint week-long training-of-trainers session “Women Empowerment through Business Member Organizations (BMOs)” at the ITC-ILO campus in Turin.
Women across South Asia face myriad challenges when it comes to participating in the economy — especially as business owners. Women’s business organizations can help their members learn from each other, overcome barriers, and push for changes to laws and regulations that work against women entrepreneurs.
This August, CIPE held its eighth in an ongoing series of capacity building and networking workshops in Kathmandu, Nepal for its South Asia regional network of women’s business associations. Since its inception, the participants of this network, which includes organizations from Pakistan, Bangladesh, Nepal, Sri Lanka, and India, have been enthusiastic and engaged in learning from both CIPE and their peers.
This year, building on the results of previous projects that aimed to strengthen the internal capacity of these organizations, CIPE has focused on building the advocacy skills of the participants, in order for women entrepreneurs’ voices to be heard in the policymaking process.
A year after the impasse over the 2014 presidential election was resolved, Afghanistan finds itself at a critical juncture in its economic development. Given the dramatic reduction in foreign military presence over the past several years and the decrease in development assistance from the international donor community, concerns are mounting that Afghanistan’s economy will be unable to sustain itself.
A recent study published by the Stockholm International Peace Research Institute (SIPRI) and the International Council of Swedish Industry (NIR) draws attention to the problem. “In its current state,” the report notes, “the Afghan private sector is not the engine of economic growth or instrument of social inclusion it has the potential to be. Popular dissatisfaction with unequal access to economic resources, flawed public services and goods, the adverse security situation, and predatory government activity undermine an effective and sustainable private sector.”
President Ashraf Ghani and the National Unity Government have laid out a wide range of proposals to kickstart economic development, but security conditions and political infighting have made it difficult to implement many of these reforms. Nevertheless, hope for progress and success remains. The Swedish report, while painting a grim picture of the current outlook, provides a concrete set of recommendations to Afghan government policymakers, the international donor community, and other key stakeholders, for incentivizing private sector growth and boosting economic development, thereby improving prospects for peace and stability.
Chief among these recommendations is the need for the Afghan private sector to play a greater role in the policy making process. On October 28, over a hundred leaders of the Afghan business community, civil society, and media, as well as prominent provincial and national government figures, convened in Jalalabad for the official launch of the report of the Nangarhar Provincial Business Agenda.
Learn more about the private sector’s role in reducing insecurity in Tijuana with this short video (10 minutes, Spanish with English subtitles)
Between 2007 and 2010, Tijuana was one of the most violent cities on the planet. Kidnapping, extortion, and homicide became commonplace occurrences, and the notorious Tijuana Cartel, which had been gathering strength during the 1990s, dominated large swaths of the city.
The city’s main thoroughfare, Avenida Revolución, which had previously been full of street vendors hawking their merchandise and U.S. tourists, was deserted. Citizens stayed in their houses after dark and the city’s renowned nightlife ground to a halt. The Mexican government sent troops to the city in a bid to restore order, leading to violent confrontations with criminal elements.
It was with this image of a violent and crime-ridden city that I traveled to Tijuana in April 2015. Instead, however, I was surprised by what I found. Tourists were slowly starting to trickle back to Tijuana, families with young children enjoyed evening strolls in the balmy weather, and federal troops were absent from view. What led to such a drastic change in a mere five years?
The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.