The Role of Transparency International in Fighting Corruption in Infrastructure by Donal O’ Leary Senior Advisor Tra

1. The Role of Transparency International in Fighting Corruption in Infrastructure by Donal O’ Leary Senior Advisor Transparency International Berlin, Germany Prepared for ANNUAL BANK CONFERENCE ON DEVELOPMENT ECONOMICS, TOKYO, MAY 29-30, 2006

2. OUTLINE OF PRESENTATION • INTRODUCTION TO TRANSPARENCY INTERNATIONAL • SOURCES OF CORRUPTION IN INFRASTRUCTURE (‘GRAND’ AND ‘PETTY’) • INSTRUMENTS FOR ADDRESSING ‘GRAND’ CORRUPTION • INSTRUMENTS FOR ADDRESSING ‘PETTY’ CORRUPTION • THE WATER INTEGRITY NETWORK (WIN): SETTING UP A COALITION TO COMBAT CORRUPTION ISSUES ABCDE Conference, Tokyo 2006: Infrastructure and Governance

3. INTRODUCTION TO TRANSPARENCY INTERNATIONAL • INTERNATIONAL NGO FOUNDED IN BERLIN IN 1993 • IS A GLOBAL NETWORK INCLUDING MORE THAN 90 LOCALLY ESTABLISHED NATIONAL CHAPTERS AND CHAPTERS-IN-FORMATION • THE CHAPTERS BRING TOGETHER RELEVANT PLAYERS FROM GOVERNMENT, CIVIL SOCIETY, BUSINESS AND THE MEDIA TO PROMOTE TRANSPARENCY IN ELECTIONS. IN PUBLIC ADMINISTRATION, IN PROCUREMENT AND IN BUSINESS • CHAPTERS ALSO SUPPORT ADVOCACY CAMPAIGNS AGAINST ANTI-CORRUPTION • POLITICALLY NON-PARTISAN, TI DOES NOT UNDERTAKE INVESTIGATIONS OF ALLEGED CORRUPTION OR EXPOSE INDIVIDUAL CAUSES ABCDE Conference, Tokyo 2006: Infrastructure and Governance

4. Exhibit 1. How Does Corruption Happen in Infrastructure Projects ? Contracting Decision Contracting Process/Bid Evaluation Contract Implementation Contract design ABCDE Conference, Tokyo 2006: Infrastructure and Governance

5. Exhibit 1. How Does Corruption Happen in Infrastructure Projects ? Contracting Decision Contract Implementation Contracting Process/Bid Evaluation Contract design • Unnecessary • Tagged • Conflicts of interest • Tagged • Over-designed, • Under-designed • Documents are confusing • Poor quality, defective, specifications • Contract renegotiation • Claim non-existent damages • Supervisors are biased • Decision makers are biased • Selection procedures are non-transparent, or not objective • Clarifications are not shared with other bidders • Confidentiality during the process • Award decisions are not made public or are not justified ABCDE Conference, Tokyo 2006: Infrastructure and Governance

6. ‘PETTY’ CORRUPTION IN INFRASTRUCTURE PROJECTS • ILLEGAL CONNECTIONS • FALSE METER READINGS • INCOMPLETE/TARDY BILLING • INCOMPLETE/TARDY COLLECTIONS • UNDULY HIGH CONNECTION CHARGES (LEADING TO ‘UNAUTHORIZED’ CONNECTIONS) IN SUM, ‘PETTY’ CORRUPTION CAN ACCOUNT FOR 20% OR MORE OF SYTEM LOSSES IN POWER OR WATER DISTRIBUTION NETWORKS. ABCDE Conference, Tokyo 2006: Infrastructure and Governance

7. INSTRUMENTS FOR ADDRESSING ‘GRAND’ CORRUPTION • INTERNATIONAL • NATIONAL INTEGRITY SYSTEMS • INTEGRITY PACTS • BUSINESS PRINCIPLES FOR COUNTERING BRIBERY ABCDE Conference, Tokyo 2006: Infrastructure and Governance

8. INTERNATIONAL INSTRUMENTS FOR ADDRESSING ‘GRAND’ CORRUPTION • UN Convention Against Corruption • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions NEED FOR CONSTANT MONITORING AND FOLLOW UP TO ASSURE THAT THESE AND OTHER CONVENTIONS ARE BEING ADHERED TO ABCDE Conference, Tokyo 2006: Infrastructure and Governance

9. NATIONAL INTEGRITY SYSTEMS • Institutional Pillars for the National Integrity System • Rules and Practices for the Institutional Pillars ABCDE Conference, Tokyo 2006: Infrastructure and Governance

10. Exhibit 2. Pillars of Integrity ABCDE Conference, Tokyo 2006: Infrastructure and Governance

11. Integrity Pacts • Process • Rights and Obligations • Monitoring • Sanctions ABCDE Conference, Tokyo 2006: Infrastructure and Governance

12. Business Principles for Countering Bribery (BPCB) The Business Principles state: • The enterprise shall prohibit bribery in any form whether direct or indirect • The enterprise shall commit to implementation of a Program to counter bribery. These principles are based on a commitment to fundamental values of integrity, transparency and accountability. Enterprises shall aim to create and maintain a trust-based and inclusive internal culture in which bribery is not tolerated. ABCDE Conference, Tokyo 2006: Infrastructure and Governance

13. Implementation of the BPCB A program is the entirety of an enterprise’s anti- bribery efforts including values, policies, processes, training and guidelines. • The BPCB • Program Implementation Requirements • Implementation: The TI Six Step Process ABCDE Conference, Tokyo 2006: Infrastructure and Governance

14. BPCB – SUPPORTING TOOLS • A Guidance Document provides background on each section of the Business Principles, explains how to implement each Principle, answers frequently asked questions and gives examples of corruption and of good practice. • The TI Six-Step Implementation Process is a how-to guide for companies who wish to introduce an anti-bribery programme within their organization. This tool is also available as an interactive electronic module. • TI is currently developing a Self-Evaluation Module to assist companies in assessing their anti-bribery performance, which can also serve as the basis for external verification. ABCDE Conference, Tokyo 2006: Infrastructure and Governance

15. ABCDE Conference, Tokyo 2006: Infrastructure and Governance

16. INTERNATIONAL CORPORATE REPORTING INITIATIVES/INDICES USING THE BPCB • FTSE4Good Index • UN Global Compact • Global Reporting Initiative • World Economic Forum Partnering Against Corruption Initiative ABCDE Conference, Tokyo 2006: Infrastructure and Governance

17. SECTOR-WIDE ANTI-BRIBERY AGREEMENTS • COVER THE WATER PLASTIC PIPE MANUFACTURING SECTOR • FIRST AGREEMENT SIGNED IN COLOMBIA in April 2005 • SECOND AGREEMENT SIGNED IN ARGENTINA in December 2005 • FOLLOW UP AGREEMENTS ARE UNDER PREPARATION ABCDE Conference, Tokyo 2006: Infrastructure and Governance

18. INSTRUMENTS FOR ADDRESSING ‘PETTY’ CORRUPTION • Management Contracts • Benchmarking • Business Principles for Countering Bribery • Citizens’ Report Cards ABCDE Conference, Tokyo 2006: Infrastructure and Governance

19. THE WATER INTEGRITY NETWORK (WIN) • OBJECTIVES • SCOPE • MEMBERSHIP • ACTIVITIES • NETWORK ORGANIZATION ABCDE Conference, Tokyo 2006: Infrastructure and Governance

20. WIN GOVERNANCE Chair and Steering Committee • Elect • Monitor Secretariat + Host organization (TI) Members/National groups • Manage ABCDE Conference, Tokyo 2006: Infrastructure and Governance

21. WIN GOVERNANCE (Contd.) Decisions Taken at Interim Steering Committee Meeting, Berlin, May8/9, 2006 • Chair Elected (Hakan Tropp, SIWI) • TI Designated WIN Manager (Donal O’Leary) • Work Program Prioritized and Endorsed • Financing Strategy Agreed • Launch at WWW, Stockholm, August, 2006 ABCDE Conference, Tokyo 2006: Infrastructure and Governance

22. ISSUES • Can Reformers Address Corruption on a Sector-Specific Basis? • Can Reformers Develop Generic Sectoral Anti-corruption Tools? • How do the Efforts of Civil Society Fit with the Efforts of Other Reformers? Example of the Integrity Pact ABCDE Conference, Tokyo 2006: Infrastructure and Governance

23. HOW CAN INTERNATIONAL STAKEHOLDERS SUPPORT ONGOING ANTICORRUPTION EFFORTS IN INFRASTRUCTURE? • Vigorously Support Institutionalization and Enforcement of Existing International Anti-bribery Conventions   • Provide Financial Support for and Implement the Integrity Pact in their Own Organizations • Support and Actively Participate, as Appropriate in Promoting the BPCB  • Provide Financial Support and Participate in the WIN ABCDE Conference, Tokyo 2006: Infrastructure and Governance

24. the coalition against corruption THANK YOU FOR YOUR ATTENTION! Donal O‘Leary Senior Advisor Transparency International Alt Moabit 96 Berlín 10559, Germany Tel: (49) (0) 30 343820 30 Fax: (49) (0) 30-3470 3912 Email: doleary@transparency.org ABCDE Conference, Tokyo 2006: Infrastructure and Governance