Post on 20-Aug-2015
Session 1. An introduction to preventing corruption
John ButterworthIRC International Water and Sanitation Centre
Mael CastellanWater Integrity Network
Contents
1. Key definitions and the importance of this topic: what do statistics tell us?
2. Frameworks for understanding corruption
3. Case studies
4. Designing pro-poor strategies to prevent corruption
5. Links and further information
1.1 Some key definitions
Transparency = sharing information and acting in an open manner
Honesty/ Integrity = working and acting in ways that reflect known best practices, and following ethical principles
Accountability = objectively holding people and agencies responsible for their performance
Corruption = the abuse of entrusted power for private gain
1.2 Governance, poverty and WASH indicators in 10 selected countries
Transparency International CPI
Index (Rank of 163 countries: 1=best,
163=worst)
Population below national poverty
line, total, percentage
(Most recent year with data 1997-
2004)
Water supply coverage %(most recent
year e.g. 2004)
Sanitation coverage % (most recent
year e.g. 2004)
Children under five mortality rate
(per 1,000 live births, 2005)
Ghana 70 39.5 75 18 112
Burkina Faso 79 19.2 61 13 191
Uganda 105 37.7 60 43 136
Ethiopia 130 44.2 22 13 164
South Africa 51 Nd 88 65 68
Mozambique 99 69.4 43 32 145
India 70 24.7 86 33 74
Philippines 121 21.5 85 72 33
Honduras 121 29.5 87 69 40
Colombia 59 55.0 93 86 21
Sources: www.transparency.org; http://mdgs.un.org/; http://www.wssinfo.org/
1.4 Key questionsAre there causal linkages, as well as correlations, between corruption, WASH sector performance and poverty?
Will increased WASH sector investment (to meet MDGS) have the desired impact without better governance?
What are the most important forms of corruption and levels at which it occurs?
Why might the WASH sector be prone to corruption?
How much leakage should we expect to find?
What could be achieved with existing investments if we tackled leakage?
Should corruption ever be tolerated?
2.1 Interaction frameworkPublic to public
Diversion of resourcesAppointments and transfers Embezzlement and fraud in planning and budgeting
Public to privateProcurement collusion, fraud, briberyConstruction fraud and bribery
Public to Citizen / consumerIllegal connectionsFalsifying bills and meters
Source: Janelle Plummer
Public Officials
Public Actors
Consumers Private
Corruption occurs between
public officials
and 3 different sets of actors
2.2 Interaction framework
PUBLIC PRIVATE
interactions
PUBLICCONSUMER interactions
PUBLIC PUBLIC
interactions
Tendering and Procurement
Construction/Operations
Payment Systems
Policy-making and regulating
Planning/budgeting / transfers
Management
PUBLIC PRIVATE
interactions
PUBLIC CONSUMERinteractions
PUBLIC PUBLIC
interactions
• Distortions and diversion of national budgets
• Administrative fraud
• Document falsification
• State Capture of policy and regulatory frameworks
• Bribery, fraud, collusion in tenders
• Fraud/bribes in construction
• Bribery/fraud in community procurement
• Elite capture
• Illegal connections
• Speed bribes• Billing/payment
bribes
PUBLIC to PUBLIC
interactions
Planning and budgeting
• Corruption in planning and management
• Bribery and kickbacks in fiscal transfers
Management and Program Design• Appointments, transfers• Preferred candidates• Selection of projects
Policy-making/Regulating•Diversion of funds•Distortions in decision-making, policy-making
Early warning indicators
• Monopolies/tariff abnormalities
• Lack of clarity of regulator/provider roles
• Embezzlement in budgeting, planning, fiscal transfers
• Speed/complexity of budget processes
• No. of signatures• % spending on capital
intensive spending
• Unqualified senior staff
• Low salaries, high perks, cf. HH assets
• Increase in price of informal water
Anti-corruption Measures
• Policy and tariff reform• Separation• Transparent minimum
standards • Independent auditing
• Citizen oversight and monitoring
• Technical auditing• Participatory planning
and budgeting
• Performance based staff reforms
• Transparent, competitive appointments
Early warning indicators
• Same tender lists• Bidders drop out• Higher unit costs
• Variation orders• Low worker
payments
• Single source supply
• Change in quality and coverage
Anti-corruption Measures
• Simplify tender documents
• Bidding transparency
• Independent tender evaluation
• Integrity pacts• Citizen oversight
and monitoring• Technical auditing• Citizen auditing,
public hearings• Benchmarking• SSIP support
mechanisms
PUBLIC toPRIVATE
interactions
Procurement
• Bribery, fraud, collusion in tenders
Construction
• Fraud/bribes in construction
Operations
• Fraud/bribes in construction
PUBLIC to CONSUMER
interactions
Construction
• Community based WSS – theft of materials
• Fraudulent documents
Operations
• Admin corruption(access, service, speed)
Payment systems
• meter, billing and
collection – fraud and bribery
Early warning indicators
• Loss of materials
• Infrastructure
• failure
• Low rate of faults
• Lack of interest in connection campaigns
• Night time tanking
• Unexplained variations in revenues
Anti-corruption Measures
• Corruption assessments
• Citizen monitoring and oversight
• Report cards
• Transparency in reporting
• Citizen oversight and monitoring
• Complaints redressed
• Reform to customer interface (e.g.
women cashiers)
2.4 Local governance
Specific governance challenges at local level require different approaches
Decentralisation brings new challenges and opportunities
Corruption has more immediate and corrosive impact
Improvements may also be more rapid and wide reaching
In WASH, community management as a key paradigm
Tackling poverty is a key issue
3.1 Decentralization versus centralization in India
Davies (2004) identified high levels of corruption
Petty corruption (falsify meter reading, speed repairs etc)
Kickbacks from contractors
Transfers within administration
Decentralisation linked to higher levels of corruption. Why?
Opportunity to plan activities linked to decentralisation programmes
3.2 Report cards in India
Public Affairs Centre (PAC) in Bangalore developed report cards for citizens to rank performance of public service agencies (including water)
Monitored public satisfaction with staff behaviour, quality of service, information, and corruption (speed money)
Initially showed lows levels of public satisfaction, agencies not citizen friendly, lacked customer orientation, corruption a serious problem
Second survey 5 years later revealed limited improvements
Third survey 4 years later showed noticeable progress by all agencies
3.2 Report cards in India
Report cards influenced key officials in understanding perceptions of ordinary citizens
Public agencies launched reforms to improve the infrastructure and services
Government agencies showed greater transparency and more responsiveness
CRCs acted as a catalyst in the transformation of services in Bangalore
3.3 Using freedom of information lawsIndia adopted a Right to Information Act in 2001
The citizens group Parivartan in Delhi has been active in supporting its use
There have been examples where an application under the act has brought immediate results on a water issueSource: Earle & Turton
3.4 Lesotho Highlands Water ProjectLargest international water transfer was from Lesotho-South Africa
Construction contracts awarded fraudulently
Foreign companies paid bribes
Successful prosecutions set precedentsSource: Earle & Turton
3.4 Lesotho Highlands Water ProjectPrecedents from prosecution
Bribes are still illegal even if not acted on after corrupt agreement
Jurisdiction can be takenwhere the impact is felt
Crucially, courts can gain access to Swiss bank accountsSource: Earle & Turton
3.5 Pipe manufacturers in ColombiaProcurement is vulnerable to price fixing and collusion
Private sector pipe manufacturers in Colombia introduced self-regulation
Adopted an integrity pact not to pay or accept bribes
Support given by professional association, Transparency International and government
Half of 167 manufacturers have signed up
Prices have reduced by 30%
3.6 Phnom Penh, Cambodia
Transformation of a public utility under difficult post- conflict (civil war) conditions
High levels of illegal connections and unaccounted for water, including bribery of utility officials
Indicators 1993 2006
Staff per 1,000/connections 22 4
Production Capacity 65,000 m3/day 235,000 m3/day
Non Revenue Water 72% 8%
Coverage area 25% 90%
Total connections 26,881 147,000
Metered coverage 13% 100%
Supply Duration 10 hours/day 24 hours/day
Collection Ratio 48% 99.9%
Total revenue 0.7 billion riels
(US$180,000)1
34 billion riels
(US$8.7 million)
Financial situation Heavy subsidy Full cost recovery
3.6 Phnom Penh, Cambodia
Corruption was tackled effectively, due to
• Leadership
• Culture of change
• External support
Led to reform and new investment
3.6 Phnom Penh, Cambodia
Human resources management improved
Revenue collection improved
Rehabilitation of services achieved harnessing local resources
Illegal connections were tackled, reducing unaccounted for water
Tariffs were increased
3.7 Sanitation in Kerala
The NGO SEUF targeted diversion of funds to reduce costs (by ½ to ⅔) in latrine construction
Mix of strategies to tackle corruption:
• more information
• extra checks & spot checks
• public postings
• double signatures
• action on complaints at lowest level
• referral of problems
3.8 Money diverted from education in Uganda Public expenditure tracking (PET) survey in Uganda
Tracked central funds allocated for school construction
Only 13% of funds arrived at schools
Transparency campaign published, information about the grants
Led to capture being reduced from 87% to 18%
Schools near newspaper and communication points did better in receiving their funds Source: Reinikka, R. and Smith, N. Undated
3.9 Kecamatan Development Project (KDP) Tackling grassroots corruption in a large rural development project KDP – a central government project focused on poor villages and highly dispersed Very high risk environment Weak institutions for control Mapping is a key step in tackling thisSource: Guggenheim (2007)
3.9 Kecamatan Development Project (KDP)
Mapping identified sources of corruption• Bribing officials to get
projects• Cuts taken at high levels• Illicit fees• Under-delivery of
materials/ work• Embezzlement by staff
3.9 Kecamatan Development Project (KDP)
Solutions identified• Reducing discretion• Reducing transactions• Promoting competition• Lowering costs of
acquiring information• Promoting social controls• Strengthening formal
oversight• Applying sanctions
Effect of Audits on Percent Missing
Wages
Wages
Materials
Materials
0%
5%
10%
15%
20%
25%
30%
35%
Control Audits
Per
cen
t M
issi
ng
4.1 Pro-poor anti-corruption strategiesAre all information, transparency and accountability initiatives likely to benefit the poor?
Could they even be harmful?
Evidence shows that anti-corruption actions can harden and shift its forms
Source: Janelle Plummer (2007)
4.2 Diagnose A key starting point is to understand what types and level of corruption exist
Frameworks can be used to map different types of corruption and help to identify appropriate solutions
Severe lack of diagnosis of corruption and its impacts on the poor in the WASH sector
Poorly informed anti-corruption activities risk merely hardening or shifting it to other forms
Look before you leap
Diagnose
Monitor Target
MitigateConnectsolutions
4.3 Target Focus on water and sanitation services that reach the poor May include small-scale providers and community managed systems Local government a key level in WASH - an opportunity to prevent corruption before it takes root Decentralisation to service providers and agencies that are closer to communities can encourage more accountability Weak local agencies may be more susceptible to being corrupted than stronger State agencies
Diagnose
Target
ConnectsolutionsMitigate
Monitor
4.4 Example: Indonesia
15% get water directly from utility networks
20% get water indirectly or illegally
65% rely on community-managed systems, self-supply and small-scale providers
4.5 Connect solutions
Effective anti-corruption programmes combine a mix of strategies.
Supply side measures include high level institutional reforms to tackle corruption
Demand side measures strengthen the ability of poor people to seek improvements
Diagnose
Target
ConnectsolutionsMitigate
Monitor
4.6 Mitigate
In some places petty corruption may be a necessary evil to get access to services
Anti-corruption measures take away this coping strategy
Programmes should do no harm
put back what is lost
identify alternatives so that the poor do not need to engage in petty corruption
Diagnose
Target
ConnectsolutionsMitigate
Monitor
4.7 Monitor
WASH sector has little experience in reducing levels of corruption
Vital to observe which strategies are effective and which aren’t
Implementation programmes should be flexible and build on what works best
Diagnose
Target
ConnectsolutionsMitigate
Monitor
4.8 Key messages
Be informed and anticipate
Be inspired by examples and success stories
Use multiple strategies to improve access to information, transparency and accountability…and prevent corruption
Act in partnerships
Learn what works
5.1 Links and further information www.waterintegritynetwork.net is the website of the Water Integrity Network based at Transparency International in Berlin
www.irc.nl/transparency includes materials from the IRC International Water and Sanitation Centre and links to other useful sources
www.transparency.org is the website of Transparency International, a global civil society organisation in anti-corruption
5.2 Links and further informationAstana, A.N. (2004). ´Corruption and decentralization: evidence from India’s water sector´. In proceedings of the 30th WEDC International Conference, held at Laos, 2004.Loughborough, London, WEDC.Balcazar, A.R. 2006. The establishment of an anti-corruption agreement with pipe manufacturing companies: a Colombian experience [online] Available at www.waterintegritynetwork.net/page/238 (A 5 minute video about the Colombian integrity pact between pipe manufactures can be viewed at www.waterintegritynetwork.net/page/254)Davis, J. (2004). ´Corruption in Public Service Delivery: Experience from South Asia’s Water and Sanitation Sector´. In: World Development, vol. 32, no. 1, pp. 53–71, UK, Elsevier Ltd. www.elsevier.com/locate/worlddevGonzález de Asís, M., O’Leary, D., Butterworth, J. & Ljung, P. (forthcoming) Training modules for the Programa para mejorar la transparencia, la rendición de cuentas y el acceso a la información en el sector del agua en Honduras y Nicaragua. World Bank Institute. Available in English and Spanish (forthcoming)Gonzalez de Asis, M. (forthcoming) Reducing Corruption at the Local Level. World Bank.Plummer, J., & Cross, P., 2006 A framework for tackling corruption in the water and sanitation sector in Africa. In proceedings of the 32nd WEDC International Conference held in Sri Lanka, 2006. Loughborough, London, WEDC.Plummer, J. 2007. Making Anti-Corruption Approaches Work for the Poor: Issues for consideration in the development of pro-poor anti-corruption strategies in water services and irrigation. Swedish Water House, SIWI and WIN. [online] Available at www.swedishwaterhouse.se Satyanand, P.M. and Malick, B. 2007. Engaging with citizens to improve services: overview and key findings. Water and Sanitation Program-South Asia, New Delhi, India [online] Available at www.wsp.org Shordt, K., Stravato, L., & Dietvorst, C. 2007. About Corruption and Transparency in the Water and Sanitation Sector. Thematic Overview Paper 16. IRC International Water and Sanitation Centre, the Netherlands [online] Available at www.irc.nlSijbesma, C., Mathew, S., and Balachandra Kurup, K. (forthcoming) Preventing corruption in sanitation: A case from Kerala, India. World Bank Institute, Washington.Sohail, M & Cavill, S. 2007. Accountability arrangements to combat corruption – case study synthesis report and case study survey reports. Partnering to combat corruption series. [online] Available at www.lboro.ac.uk/wedc/publications/ Stålgren, P. 2006. Corruption in the Water Sector: Causes, Consequences and Potential Reform. Swedish Water House Policy Brief No. 4, SIWI, Stockholm, Sweden [online] Available at www.swedishwaterhouse.se TI & UN-Habitat. 2004. Tools to support transparency in local governance. Urban governance toolkit series [online] Available at www.transparency.org/tools/e_toolkit/ TI. The 2008 Global Corruption Report is focused on the water sector. Forthcoming at www.transparency.org Woodhouse, A. 2002. Village corruption in Indonesia: Fighting corruption in the World Bank’s Kecamatan Development Program. World Bank, Washington.