Handout for Interactive Session V: Conditions for the Judiciary to Curb Corruption?

1. At the Comprehensive Legal and Judicial Development Conference Handout for Interactive Session V: Conditions for the Judiciary to Curb Corruption? Tuesday, June 6th Marriott Hotel Salon 4 1:45 - 3:45 pm • Interactive Panelists: • Hon. Gherardo Colombo, Judge, Italy • Hon. Paul Magnuson, Chief Judge, District of Miinnesota • Luis Moreno Ocampo, Chair, Transparency International, Latin America • Hon. Maher Abdel Wahed, Prosecutor General, Arab Republic of Egypt • Daniel Kaufmann, Senior Manager, World Bank Institute • Moderator: Maria Gonzalez de Asis, World Bank Institute • “Option Finder” Interactive Survey will take place at the outset of session at 1:45pm The attached handout was prepared at wbi with ti-lac contribution to generate participatory discussion during the session. The data in the attached is to illustrate. Their margins of error do not warrant “fine” ranking comparisons between countries. The original sources for this data are varied and external, and do not reflect official endorsement by the World Bank or its Executive Directors, or necessarily signify endorsement by all session panelists. For further details, visit website at http://worldbank.org/wbi/governance

2. Role of the Judiciary in Controlling Corruption: Selected Questions and Data for discussion at Session V • Interactive and Participatory Panel Session • At the outset of the participatory session: An ‘Instant [Option Finder] Survey’ on the Role of the Judiciary in Anti-Corruption • Key Questions: 1. Mechanisms to address corruption within the Judiciary (countries where it is a serious problem)? 2. How can the Judiciary contribute to an Anti-Corruption (and Governance-improvement) program?

3. Some Issues arising from Empirical Evidence • Enormous Variation in Quality/Implementation of Rule of Law and of Judiciary/Courts Worldwide • Effective Rule of Law institutions are essential for controlling corruption, … but … • What to do when such Rule of Law institutions are afflicted by corruption? • Where systemic corruption in state institutions, the Judiciary is often very vulnerable as well (data says) • Surveys suggest high correlation between judiciary and bureaucratic bribery Cont. next slide

4. Slide cont. • Promoting Civil Liberties and participation vital? • Judiciary Independence as key?…. • ...But perhaps insufficient?: political independence vs. independence from Corporate Elite interests -- Business can also ‘capture’ judicial/legal system? • Do Transnational corporations and FDI have corporate responsibility for integrity in this area? • On the high Social Costs of a dysfunctional (and/or dishonest) legal and judiciary system? • Need for Comprehensive Approach to Institutional and Political Reform? How can donors support?

5. Application of Rule of Law Varies by Region (based on aggregation of surveys/polls 1997-99*) High Index of Rule of Law Appli- cation Low Index OECD East Middle South Eastern Latin Sub- Former Asia East Asia Europe America Saharan Soviet Africa Union Note: Regional Averages shown for discussion purposes, and hide large intra-regional variation in each case. Thin vertical line reflects estimated margin of error. Source: Kaufmann, Kraay and Zoido-Lobaton (1999). "Aggregating Governance Indicators" and "Governance Matters" PWRP 2195 and 2196. http://www.worldbank.org/wbi/governance

6. Quality of Courts Varies Enormously Within Each Region (Corporate Sector View in Transition Countries: Four Dimensions; Larger area within red Diamond means Better) Russia Kazakhstan Ukraine A 1 A A 1 1 D 0 B D 0 B D 0 B C C C Hungary "Nirvana" Estonia A: Uncorrupt A A 1 1 1 D: Enforces Decisions B: Fair 0 D 0 B D 0 B C C: Reliable C Quality Dimensions Measured: A - Uncorrupt B - Fair C - Reliable D - Enforces Decisions Source: Hellmann, Jones, Kaufmann and Schankerman (2000). "Measuring Governance, Corruption, and State Capture" Policy Research Working Paper 2312, The World Bank, Washington, D.C. and BEEPS Survey (1999). http://www.worldbank.org/wbi/governance Note: Four-pronged diamond on a scale of 0-1, where 1 indicates 100% of firms respondents giving highest rating in relevant court decisions. The last panel, hypothetical "Nirvana", represents an ideal benchmark, where 100% of firms would give perfect scores on all four dimensions.

7. Control of Corruption and Effective Application of Rule of Law are Highly Correlated Low corruption DNK SWE FIN NZL CHE CAN NLD SGP ISL CYP GBR NOR LUX DEU AUS IRL AUT USA HKG FRA ISR ESP PRT QAT CHL SVN GRC FJI ITA JPN BEL MYS KWT TWN HUN EST CRI ROM BWA TTO POL BHS MLT OMN URY CZE NAM WBG MUS ZAF CUB Control of Corruption LSO KOR JOR MAR BRA SVK LTU TUN SWZ SLE SUR GUY GMB BRN ARE CIV JAM LKA MNG THA GNB MWI PER BHR PHL TGO SEN EGY LVA MEX ARG BGD CHN GHA IND ZWE VNM TUR BIH SLV BFA MDA LBN BOL ETH RUS PAN UGA HRV MDG MLI COL MKD HTI MOZ PRK BGR SAU TCD COG RWA ZMB KEN BLR VEN GEO PAK KGZ BEN DOM SYR IDN ARM GTM ECU NIC GIN IRN YEM PNG AGO KAZ LBY DZA UKR TZA HND NGA UZB PRY ALB YUG AZE SDN GAB SOM LBR CMR MMR IRQ TKM TJK r = .86 ZAR NER High corruption Effective Application of Rule of Law Poor Good

8. But Overall Corruption and Judiciary Bribery are also related High 2.5 Denmark Switzerland Finland Sweden New Zealand 2 Canada Netherlands Singapore Iceland United Kingdom Norway Germany Luxembourg Australia Ireland 1.5 Austria United States Hong Kong Portugal Israel France Spain Overall Control of Corruption (kkz97-99) Chile 1 Greece Italy Japan Taiwan Belgium Malaysia Hungary 0.5 Poland Czech Republic South Africa Korea, South Jordan Brazil Slovak Republic 0 Peru Thailand Argentina Philippines Egypt Mexico China India Zimbabwe Vietnam Turkey Colombia -0.5 Russia Low Venezuela Pakistan Indonesia r = 0.90 Ukraine -1 2 3 4 5 6 7 8 High Low Lack of Bribery in the Judiciary (gcs98) Illustrative, sample include only 59 countries. Subject to margin of erro.

9. Corruption/Absence of Rule of Law & Civil Liberties High Corruption [and Absence of Rule of Law] Low Not Free Partly Free Free Civil Liberties Based on averages of data from 160 countries.

10. DNK SWE NZL FIN CAN NLD SGP ISL GBR LUX DEU AUS IRL AUT USA HKG FRA ISR PRT ESP CHL GRC ITA JPN BEL MYS TWN HUN POL CZE ZAF KOR JOR BRA SVK PER PHL EGY ARG CHN IND ZWE VNM TUR COL RUS VEN PAK IDN UKR Judiciary Independence Can Help Control Corruption Good CHE NOR Control of Corruption THA MEX Poor 2 3 4 5 6 7 Low High Judiciary Independence

11. But Political Independence for the Judiciary is not enough? • Business can also Capture the Judiciary/Legal System • (Selected country cases: Azerbaijan/Russia vs. Estonia/Hungary )

12. Transnational Corporate Responsibility Matters as Well: % of firms that 'Purchase' Legislation and Decrees in Transition Economies 12% 10% 8% % firms 'purchase' legislative 6% 4% 2% Domestic With Investor FDI Note: For transition economies, average of 20 countries. Source: Hellman, Jones and Kaufmann, 2000 (www.worldbank.org/wbi/governance)

13. Social Cost: Corporate Capture of Legal System Undermines Property Rights 80% % firms 60% report Secure Property 40% Rights 20% Low Capture Countries High Capture Countries Firms Not purchasing legislation Firms Purchasing legislation Note: For transition economies, average of 20 countries. Source: Hellman, Jones and Kaufmann, 2000 (www.worldbank.org/wbi/governance)