MONGOLIA CORRUPTION BENCHMARKING SURVEY April 2009

BENCHMARKING SURVEY 2006 - 2008

BENCHMARKING SURVEY 2009

HOUSEHOLD LEVEL CORRUPTION CONTINUES TO FALL,

AND PUBLIC SENTIMENTS IMPROVE FURTHER. Introduction

Between March 13 – 17 the Sant Maral Foundation completed data collection for the seventh semi-annual corruption benchmarking survey. More than 1,000 adult participants were surveyed in Ulan Baatar, and in Zavkhan, Sukhbaatar, Tov and Khovsgul aimags (provinces). This is the largest sample undertaken since the first that was conducted in March 2006, and thus it more statistically significant than the intervening surveys when the sample size was 600. Corruption remains a problem, and the Government must sustain efforts to promote accountability and governance, and transparency. Public perceptions and the patterns of change continue to trend in the right direction – and over three and one half years of surveying this conclusion is robust. Corruption was perceived by 28% of the population in 2006 to be a major problem – the figure in 2009 is 8.5% - a major move. The percent of households paying a bribe fell by nearly half over the same period, from 28% to 15%. Public intolerance is increasing with more than 51% of respondents saying that they would not pay a bribe, up from 34% in 2006. These and other positive statistics suggest that public education and awareness are having an impact. But the greatest factors fueling improved public perceptions are probably ongoing evidence of government commitment to fighting corruption, the increasing success of the Independent Authority Against Corruption in investigating corruption, and the incarceration of a growing list of middle and senior-ranking officials on corruption charges. With all of the good news, why then don’t more people have confidence in the Prime Minister or in the Independent Authority Against Corruption? And why aren’t the numbers of IAAC supporters increasing? The answer to both questions probably has a lot to do with awareness. The IAAC, the Prime Minister, and government officials have engaged the press intermittently on the topic of corruption, and this probably isn’t enough. In order to influence public opinion, and dent corruption, the Prime Minister and all ministers must express more openly and actively their commitment to fighting corruption. This is an important precept of ethical leadership, which is one of the four pillars supporting the government’s Anti-corruption Action Plans, that were produced at the mid-April seminar convened by the Prime Minister for the second consecutive year.

Mongolia – Corruption-Free for fairness and justice

Major problems shows problem with the corruption awareness

Since the corruption benchmarking survey was launched in March 2006, public perceptions of government efforts to combat corruption have trended steadily higher, and the identification of corruption as a major problem has moved strongly in the opposite direction. In March 2009, only 8.5% of Mongolians said that corruption was a major problem, far behind economic concerns which include inflation, rising unemployment and poverty, which are chronicled in recent reports by the international financial institutions.

Table 1

Is Corruption a major problem? A smaller fraction of Mongolians think so.

8,5

12,5

18,2

22,2

16,3

27,6

28,8March 06

Sept 06

March 07

Sept 07

March 08

Sept 08

March 09

Table 2

What are the major problems?

33.2

23.3

16.4 16

8.5

0

5

10

15

20

25

30

35

Unemployment Crisis Poverty Inflation Corruption

Although the perception of corruption as a problem has diminished relative to economic concerns, an overwhelming percentage of the population continues to believe that corruption is common. In data not included in this report, the perception that political life, for instance, is affected by corruption has increased substantially. The number of Mongolians who thinks that political life is affected “to a large extent” increased from 39.8% to 45.7% between September 2008 and March 2009. There are two possible explanations: Over the past six months the Government has prosecuted, and the courts have jailed, three major political figures and a significant number of lower-ranking officials, on corruption charges. The convictions were generally well-covered by the media, and this may paradoxically have contributed to the perception that politics is increasingly corrupt. Greater visibility and press coverage of positive events may have the perverse affect of inflating general corruption perceptions in society as a whole. Another explanation could be associated with the upcoming Presidential election, and memories of the problem-plagued June 2008 Parliamentary election. The public perceived gross malfeasance associated with registration fraud and vote buying. Subsequent events further undermined public confidence and trust in elections, elected officials and government institutions. But, as we will see in later tables, perceptions are not always consistent with reality.

Table 3

Is corruption common in Mongolia? Consistently, most say yes.

91 89.3 88.9 8985.6 83

87.5

0

10

20

30

40

50

60

70

80

90

100

Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09

Household incidence of corruption

This corruption benchmarking survey is different from all others because it measures households’ experience with corruption. Respondents report on whether they paid a bribe over a three-month recall period, and if so to whom, the reason, the amount, and the impact on the household budget. Measuring the incidence of corruption at the household level provides a robust indicator that is empirically verifiable, and which is not biased by opinion or perception. In March 2009 the percentage of households that paid a bribe fell to 15% - the lowest level recorded since the survey began three years ago. The significant decline appears to be the result of increasingly successful deterrence – corrupt officials have been convicted and jailed. Prevention has

also reduced systemic risk and vulnerability in national and local level administration, and the establishment of national hotlines now provides citizens a way to complain. A less prosaic explanation may simply be that Mongolians were poorer in March 2009 due to inflation and unemployment. They simply had less cash to pay bribes. Increasing poverty may explain reduced incidence of bribe-paying, but growing intolerance is also a factor. The percentage of people reporting that they will not pay a bribe (Table 12) increased to 51.8% - public intolerance seems to be on the rise.

Table 4

In Table 5 immediately below, the average bribe paid rose in nominal terms over the past year. Over the same period, the tugrik depreciated close to 40% against the dollar, and so in real terms, the size of bribes really hasn’t changed that much. Encouragingly, over the past period the frequency of bribe paying among households continued to shift away from multiple payments, towards a single payment. In prior surveys, many households reported multiple payments.

Table 5

The Size of the Bribe

March 2008 Sept. 2008 March 2009

Average bribe (in thousands MNT) 180 298 397

% of households giving bribes 19% 21% 15%

Total amount paid1 (in bln MNT) in 3

months

22 41 39

1 The calculation formula is: (average bribe) x (number of households) x (% of bribe givers)

Table 6

Frequency of bribe paying: Once, twice, three times or more?

56,2

26,1

12,4

4,6

0

10

20

30

40

50

60

Once Twice Three times

Four and more

March 09

52

30,4

9,68

0

10

20

30

40

50

60

Once Twice Three timesFour and more

September 08

Decreasing incidence of corruption is corroborated by more positive sentiments regarding the prevalence of corruption. When asked about the prevalence of corruption - close to 22% said that corruption had decreased, which is up close to five percent from the autumn.

Table 7

How does the prevalence of corruption compare to last year?

46,1

21,8

29,2

2,9

March 2009

Increased Decreased Same n/a

49,8

17,3

30

2,9

Sept. 2008

Increased Decreased Same n/a

Among respondents who paid a bribe, the majority paid in order to receive a service to which they were entitled, such as medical services, administrative services or others. This is consistent with findings from all prior surveys.

Table 8

Why did people pay bribes?

71,2

18,4

22,4

September 08

A bribe was offered to receive a service entitledA bribe was offered to avoid a problem with the authoritiesA bribe was directly asked for

70,630,1

28,1

March 09

A bribe was offered to receive a service entitledA bribe was offered to avoid a problem with the authoritiesA bribe was directly asked for

Note: The question above was multiple choice. The numbers reported in the pie chart therefore do not add to 100%

With inflation and unemployment ravaging household income, and with the nominal cost of bribes on the rise, it is unsurprising that a far greater percentage of the households that paid a bribe, said that it affected their budgets seriously.

Table 9

March 2008 Sept. 2008 March 2009

% of households whose budget was

‘seriously’ impacted by corruption 16.5% 24.8% 42.5%

Table 10

How much has corruption hurt household income?

8,8

17,6

44,8

24,8

4

September 08

Not at all A little

Somehow Seriously

DK/NA

3,9

17

35,3

42,5

1,3

March 09

Not at all A little

Somehow Seriously

DK/NA

Table 11 below vividly demonstrates the extraordinary seasonality of bribery among teachers and clerks, and to a lesser extent, police. For the past three years payments to teachers and school administrators have spiked in the autumn when children return to school. Local level clerks and police tend to see increases in the spring, when annual registration is required for a variety of services, such as vehicles. The health sector is consistently reported by survey respondents to be among the most corrupt, but in March 2009 reported medical sector (doctors) corruption soared. Almost half of the bribes that were reportedly paid, 43%, went to doctors or hospital administrators. There is no obvious explanation for this increase.

Table 11

Who got the money?

29,10%

39,30%

22,10%

36,60%

21,10%

34,10%

17,10%

38,40%37,60%

32,10%32,50%

35,10%

29,30%

42,80%

35,70%34,10%

39,70%

33,30%

39,50%

35,00%

29,60%

21,70%22,70%

25,20%

13,80%

18,40%

13,80%

17,80%

10%

15%

20%

25%

30%

35%

40%

45%

Mar 06 Sept 06 Mar 07 Sept 07 Mar 08 Sept 08 Mar 09

Teacher Doctor Clerk in state administration Policeman

Public intolerance of corruption has risen consistently over the past three years, and in the current period, more that half of respondents (51.8%) said that they would not pay a bribe if solicited. The percentage saying that they will report the crime to law enforcement has also increased consistently over the three-year period, suggesting that citizens may be more aware of the corruption reporting hotline maintained by the IAAC, or of other means to register complaints.

Table 12

What will citizens do if asked for a bribe?

I will not payI shall report to

managemennt

I shall report to law

enforcementI shall report to press

I shall pay if have

moneyLook for helpDo nothing just wait

Mar 07 34,1 15,4 15,2 11,4 45,7 33,9 18,1

Sept 07 38,1 15,9 16,7 9,5 37,6 34,4 19,5

Mar 08 42 14,4 15,4 10,2 27,6 35,5 23,1

Sept 08 41,5 17,3 16,1 10,7 29,3 37,7 21,8

Mar 09 51,8 15,3 17,4 8 32,3 35,4 22,3

0

10

20

30

40

50

60

Note: The question above was multiple choice. The numbers reported in the graph therefore do not add to 100%

Perceptions of Corruption

Land utilization and mining top the perceptions list in March 2009, which has been the case more or less for the past three years. Both have high index scores, and relatively low standard deviations, indicating greater consensus among respondents. Interestingly, police, the health system, city administration, and education are relatively low on the list of perceived corruption, despite household incidence being focused on these four sectors or areas.

Table 13

Where does corruption lie?

Mean Std. Deviation

1. Land utilization 4.36 .891

2. Mining sector 4.15 1.022

3. Judges 3.99 1.028

4. Customs 3.95 1.076

5. Prosecutors 3.93 1.056

6. Political parties 3.87 1.097

7. Advocates/Lawyers 3.85 1.093

8. Police 3.84 1.106

9. Registry and permit service 3.78 1.227

10. Health system 3.73 1.099

11. Parliament / legislature 3.63 1.183

12. City/ Aimag administration 3.61 1.100

13. Tax office 3.56 1.213

14. Education 3.41 1.118

15. International aid and donor projects implementation 3.39 1.375

16. PM office 3.28 1.244

17. President 3.22 1.288

18. Business/ private sector 3.18 1.278

19. Bank, financial sector 3.15 1.351

20. Social Security/Insurance Agency 2.83 1.290

21. Media 2.55 1.221

22. NGOs 2.44 1.211

23. Utilities service (telephone, electricity, water supply) 2.31 1.174

24. Military 2.01 1.143

25. Religious bodies 1.87 1.222

Note: The ranking above is measured on a 1-5 scale, with 1 signifying no corruption, and 5 representing much corruption.

Over the past six months, Parliament and Government have engaged in actively in negotiations for major mining licenses in the south Gobi and elsewhere. Civil society has had extraordinary access to government officials who are directly involved in the negotiations, and civil society has engaged in discussions related to the projects and the agreements themselves. Nevertheless, public confidence that the agreements will be fair is low. Skepticism is increasing, as is the public belief that the transactions will benefit local and foreign elite, and will not benefit the population at large. Because the mining sector and the large projects are under a public spotlight, it is imperative that the government redouble its efforts to communicate early, often, and in simple terms that can be understood by citizens who have little if any expertise in mining, economics or finance.

Table 14

Mongolians believe that the Mining Law benefits elites and insiders

78.7 75.9 74.278.8

61.8

69.676

0

10

20

30

40

50

60

70

80

90

Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09

Over the past three years public sentiment regarding past and future corruption have generally improved. The fraction of the public reporting that corruption has decreased is moving higher, as the percentage reporting that corruption has “increased a lot” has moved much lover. The same patterns are visible in reports of expected corruption: More Mongolians think that corruption will decrease a little or a lot than in any prior poll. Improving public sentiment may be due to deterrence, prevention and public awareness. Highly-publicized convictions of government officials may be inspiring increased confidence in GOM will and commitment to fight corruption. The establishment of corruption reporting hotlines and other complaint mechanisms could be empowering citizens, and are thereby fueling higher expectations. And increasing outreach and communication by the IAAC, the Prime Minister, the Cabinet Secretary and other GOM officials could also impact views positively by conveying information and reinforcing messages.

Table 15

The state of corruption:What’s happened in the past 3 years?

47,3

15

18,8

4,7

0,3

13,8

28,2

21,1

23,2

9,7

0,8

17,1

0

5

10

15

20

25

30

35

40

45

50

Increased a lot

Increased a little

Is the same Decreased a little

Decreased a lot

DK/NA

September 08 March 09

Table 16

What’s going to happen in the next 3 years?

19,8

10

16,715

3,8

34,7

14,6

11,7

17,917,2

4,3

34,3

0

5

10

15

20

25

30

35

40

Increase a lot

Increase a little

Stay the same

Decrease a little

Decrease a lot

DK/NA

September 08

March 09

The Rural – Urban Divide

Patterns and trends are consistent for both urban and rural populations, though gains are greater in urban areas. This is probably due to relatively greater citizen access to reporting mechanisms, and because of better access to information. It is also true that the IAAC has not had the staff or financial

resources launch a rural anti-corruption campaign as aggressively as it has launched urban campaigns. Between 2006 and 2009 the percentage of urban and rural respondents paying a bribe fell by comparable fractions. The average bribe paid increased in both rural and urban areas, though the nominal sum paid was greater in urban areas where there tends to be greater wealth and income. Conversely, the impact of bribe paying on rural households was reportedly greater.

Table 17

Urban-Rural incidence of corruption

22,5

31,7

14,117,1

0

5

10

15

20

25

30

35

40

Rural Urban

2006

2009

Table 18

Bribes are higher in the cities

110,8

257,3

362,5

439,1

0

50

100

150

200

250

300

350

400

450

500

Rural Urban

2006

2009

Table 19

But corruption affects rural households more.

5,1

19

47,4

28,5

6,3

22,2

41,3

30,2

3,6

11,9

32,1

52,4

4,5

23,9

40,3

31,3

0

10

20

30

40

50

60

Not at all A little Somehow Seriously

Rural 06

Urban 06

Rural 09

Urban 09

Anti-corruption efforts and the government

Prime Minister Bayar continues to enjoy relative support with 21% reporting that he will do better than the prior government, and 17% reporting that he will do worse. While this is generally encouraging, support for the Prime Minister is significantly down from a year ago when 46.4% of respondents said that he would do better, and only 3.3% said that he would do worse. What explains the slide? Over the past year significant progress was registered across the board in deterrence, prevention and in public awareness. It may be, however, that Prime Minister Bayar is not credited with these gains, even though he was critically important. PM Bayar and his government have engaged in widely-covered negotiations for large mining projects. The mining sector is generally viewed by respondents to be corrupt, and thus by association PM Bayar’s numbers may have fallen.

Table 20

Will PM Bayar’s government do better than its predecessor fighting corruption?

21%

60%

17%

2%

Will do better with corruption

Stay the same

Will do worse

DK/NA

The IAAC continues to top public expectations among agencies that should lead the fight against corruption, according to more than half of the respondents. Public expectations have generally improved over the past three years, but it is disappointing that the IAAC does not curry greater support, and that it continues to get only average marks on performance.

Table 21

Who should lead the fight against corruption? The IAAC!

40,742,4

51,5 52,3 53,2

56,6

54,1

46,6 46,4

27

39,9

33,6 33,4

35,5

26,4

22,9

30,2

21,3

28,4

24,2

31,2

20

25

30

35

40

45

50

55

60

Mar 06 Sept 06 Mar 07 Sept 07 Mar 08 Sept 08 Mar 09

IAAC

Government

Citizen

Table 22

How is the IAAC performing?

Very good Good Average Bad Very bad DK/NA

Mar 07 0,7 8 22,3 20 9,2 39,9

Sept 07 1,7 11,7 27,2 25,5 8 26

Mar 08 3,6 11,1 28,4 21 10,5 25,4

Sept 08 1,5 8,7 30,2 27,3 13,7 18,7

Mar 09 1,8 12,7 27,4 29,5 10,5 18,1

0

5

10

15

20

25

30

35

40

45

50

Although a modest majority of respondents believes that the IAAC is the preferred or best-equipped institution to lead the fight against corruption, confidence has not moved significantly higher over the past three years. The fraction reporting high and low confidence has remained largely unchanged, and this should not be the case. With an increasingly long and credible list of successes, confidence in the IAAC should be climbing, but it’s not. The IAAC is doing a good job of public awareness, but it may not be enough to substantively influence public opinion. The IAAC should set specific targets for public support and confidence that it works to achieve through a more deliberate array of public awareness and outreach interventions.

Table 23

Mongolians are more confident than not in the IAAC, but just barely.

Very

confidentConfident

Rather not

confidentNot confident DK/NA

Mar 07 7,8 32 31,3 10,2 20,5

Sept 07 7,3 34 26 9,7 23

Mar 08 7,7 30,5 32,3 9 20,5

Sept 08 5,5 26,8 30,8 16,2 20,7

Mar 09 5,6 31,5 33,8 11,8 17,5

0

5

10

15

20

25

30

35

40