Today is the International Day of Democracy, when the world celebrates the importance of democracy and democratic governance. But the role of the private sector in building democracies that deliver prosperity and opportunity to all citizens is often overlooked. That is why the contribution made by private sector participants at the 8th Ministerial Conference of the Community of Democracies (COD) is particularly noteworthy.
The Community of Democracies was founded in 2000 as an intergovernmental coalition specifically focused on promoting democracy and democratic ideals (at the time, only 68 of 189 UN member states were democracies; today the number has risen to 84). This year’s Ministerial, which took place on July 22-24 in El Salvador, gathered representatives of civil society, parliaments, the private sector, and youth in the capital of San Salvador. The leading theme for El Salvador’s 2013-2015 presidency of the organization was “Democracy and Development.” About 800 participants from more than 70 countries attended.
This post originally appeared on the Corporate Compliance Trends blog.
When I visited Nairobi a few weeks ago, the signs of President Obama’s recent visit to attend the Global Entrepreneurship Summit were still clearly visible all around – from welcome posters to the spruced-up cityscape. I was in Kenya to work with CIPE’s partner organization, Kenya Association of Manufacturers (KAM), on a training-of-trainers workshop devoted to anti-corruption compliance and practical ways in which mid-sized companies in particular can implement robust compliance programs. The topic is quite timely.
Corruption remains a key problems in Kenya, affecting both the country’s democratic and economic development prospects. It was one of the leading issued discussed during President Obama’s visit, which resulted in an agreement signed between the Kenyan government and the U.S. to introduce new anti-graft measures. The 29-point deal stipulates, among other things, that Kenya will step up investigations into corruption cases, increased U.S. assistance and advice to Kenyan anti-corruption agencies and advice on relevant legislation, and international commitments by Kenya to join the Egmont Group of Financial Intelligence Units and the Extractive Industries Transparency Initiative (EITI).
At the same time, profound challenges persist. Within days of Obama’s visit, Kenya’s Office of the Auditor-General released a troubling report that brought to light some uncomfortable numbers. According to the report, only 26% of money spent and collected by the government has been fully approved in an audit for 2013-2014. The health department alone failed to account for 22 billion Kenyan shillings ($216 million) worth of spending. What is more, over 12,000 false names were discovered on the government payroll.
What are the drivers of and institutional responses to corruption? Are current anti-corruption instruments used domestically and internationally effective? These were the key questions of a fascinating day-long event organized last week in Washington, DC by the George Washington School of Law and the International Bar Association, among others.
The event gathered a distinguished group of speakers from the government, academia, international organizations, law firms, and non-profits, as well as an engaged audience of anti-corruption scholars and practitioners.
While the discussion touched upon a multitude of corruption-related topics, the following aspects of corruption raised at event were the most valuable insights for me:
- Corruption as a violation of public trust. Janine Wedel, a Berkeley-trained anthropologist and a professor at George Mason University, emphasized that corruption is more than just simple quid pro quo. Instead, it is a sophisticated network rooted in informal power, influence elites, and often aided by the post-Cold War global economic openness as the revolution of the digital age.
- Corruption as a governance problem. Nikos Passas, professor at the Northeastern University, pointed out the roots of corruption in discrepancies between legitimacy and legality (lawful but awful conduct by government officials or businesses) and in unlawful but useful behavior (e.g., bribing a doctor to treat a patient in a failing healthcare system). International norms such as the United Nations Convention Against Corruption help by creating agreed-upon legal standards, but improving on-the-ground governance in countries around the world still has a long way to go. Read a Q&A with Nikos Passas here.
- Private sector as a force for anti-corruption. Baker & McKenzie’s Tom Firestone stressed that a broad-based business community in a given country can be an effective force in anti-corruption efforts. He recounted his experience in Russia where local businesses resisted corrupt encroachments of the state. Local firms, after all, have a strong interest in the rule of law and a level playing field in the business environment. But they can’t do it alone.
- Inter-governmental cooperation makes a difference. Kathryn Nickerson, Senior Counsel at the Department of Commerce highlighted the importance of the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery in International Business Transactions responsible for monitoring and implementation of the OECD Anti-Bribery Convention.
- Corruption as an attack on human dignity. Sarah Chayes, the conference’s keynote speaker, talked about her recently published book, Thieves of State: Why Corruption Threatens Global Security. She pointed out that there is a moral dimension to corruption – it leads to widespread moral decay and individual humiliation that goes beyond money. In extreme cases of corruption-ridden countries, it is not the weakness of the state that leads to corruption. Rather, the institutions of the state have evolved to make them a conduit for corruption that permeates entire societies.
Anna Nadgrodkiewicz is Director for Multiregional Programs at CIPE.
An increasing number of policy and governance challenges around the world demand private sector participation to generate viable solutions. Such challenges include poverty reduction, inclusive growth, government accountability, business integrity, national competitiveness, innovation, and access to opportunity. Although the obstacles to dialogue can be high, the value of dialogue is now widely recognized by governments and business leaders alike. Notably, the 4th High Level Forum on Aid Effectiveness in Busan, Korea, recommended that countries embrace “inclusive dialogue for building a policy environment conducive to sustainable development.”
In CIPE’s latest Economic Reform Feature Service article, Benjamin Herzberg, Program Lead, Leadership, Learning and Innovation at the World Bank Group, my colleague Kim Bettcher, Senior Knowledge Manager at CIPE, and I explore the importance of PPD and discuss its practical applications around the world.
Is democracy in decline? This question is on the minds of people around the world in these uncertain times. We have witnessed both triumphs of democracy, including Pakistan’s first-ever orderly transition of power through elections, and challenges to democratic progress such as increasingly authoritarian Russia or (with the exception of Tunisia) the implosion of the Arab Spring. That crucial question became the theme of the Journal of Democracy’s latest issue and framed the discussion at an event organized yesterday by the National Endowment for Democracy (NED) and Johns Hopkins University Press to celebrate the 25th anniversary of the Journal.
The choice of the democracy-in-decline theme may at first seem odd for the anniversary issue and its commemorative event. Marc Plattner, the founding coeditor of the Journal of Democracy and vice-president for research and studies at the NED, explains:
“Here in our twenty-firth anniversary issue, we feel compelled to confront head-on the questions of whether democracy is in decline. Why? There are two aspects to the answer, which although intertwined are in some measure separable. The first deals with what is actually taking place on the ground: How many countries are democratic? Is their number rising or shrinking? What is the situation with respect to such liberal-democratic features as freedom of the press, rule of law, free and fair elections, and the like? The second, more subjective, aspect concerns the standing of democracy in the world: How is it viewed in terms of legitimacy and attractiveness?”
Last week I celebrated Thanksgiving in an unusual way. Instead of turkey and cranberry sauce – Italian pizza and pasta. Instead of family and relatives, over 30 new acquaintances who are impressive women business leaders from around the world. All this thanks to a generous invitation from the International Training Centre of the International Labour Organization (ITCILO) in Turin to a stock-taking conference “Employers’ Organizations and Women Entrepreneurs: How to Reach Out?”
The conference was the final event of a three-year ITCILO initiative conducted with the support from the Dutch Employers Cooperation Programme (DECP) to better connect employers’ organizations with women entrepreneurs, who tend to be underrepresented. This initiative set out to build capacity of employers’ organizations on how to organize and represent women entrepreneurs effectively, and to ensure that women entrepreneurs can benefit from being part of a collective business voice in terms of access and influence over policymaking and direct benefit from the services provided by business organizations to their members.
A series of regional workshops ensued in Eastern and Southern Africa, Asia-Pacific, West Africa, the Caribbean, and the Maghreb, culminating in the Turin event where representatives from the organizations who participated in these workshops came together to exchange lessons learned and produce guidance on best practices.
The World Bank was founded on the principle of non-interference in the political affairs of its member countries, with the focus exclusively on fighting poverty through economic development. For decades, that meant that corruption was a taboo subject in the global discourse on development, even as it crippled the economies and societies of countries around the world.
That changed on October 1, 1996 when then-President of the World Bank, James Wolfensohn delivered his famous speech at the Annual Meetings where he called corruption what it is: a cancer on development.