GAB is pleased to welcome back Jesper Johnsøn, Senior Advisor at the U4 Anti-Corruption Resource Centre, who, along with his colleagues Nils Taxell and Thor Olav Iversen, contributes the following guest post:

A new study from the European Parliament entitled Cost of Corruption in Developing Countries – How Effectively is Aid Being Spent? shows that, despite an impressive track record of ambitious anticorruption reforms in countries working toward European Union membership, the EU’s overall anticorruption strategy marginalizes efforts to address corruption through development aid. The EU could spend aid more effectively, the report concludes, if it prioritized corruption control in developing countries. The analysis in the report suggests several measures that the EU should adopt to reduce corruption in its development aid programs:

• First, and most straightforwardly, the EU needs more in-house expertise to effectively disburse funds, oversee the implementation of programs, and control how money is spent. More spot checks, random specialized audits, whistle-blowing systems, and fraud checklists (red flags) would likely lead to less corruption.
• Second, though, the EU needs a strategy for supporting anticorruption efforts that does not rely solely on audits and untargeted public financial management reforms. Less aid would be lost within EU programming if audits were complemented with other corruption prevention tools, and if the EU worked more actively to strengthen anti-corruption institutions and reforms in partner countries.
• Third, the EU needs to focus not only on improving its own institutions, but also in ensuring appropriate anticorruption safeguards are adopted by its implementing partners. While the EU can rely on partners like the Council of Europe and the OECD to implement anticorruption interventions in countries within Europe (such as countries seeking EU accession), the EU cannot use these trusted partners outside Europe and its periphery. Elsewhere, EU aid programs are usually implemented through NGOs, contractors, or other multilateral donors – without a clear plan for due diligence, monitoring, and evaluation.
• Fourth, the EU must not only strive to combat fraud in its own programs, but should support the development of strong national integrity systems in the countries that receive EU development aid (regardless of whether that aid is delivered by the EU itself, through implementing partners, or as budget support). Yet the EU currently provides little financial support or strategic guidance for staff on how to strengthen the integrity systems of partner countries. The EU should – jointly with other donors – support the establishment of strong local systems for corruption control. This includes central and local government systems on audits, procurement, and open budgets, but also social accountability mechanisms to enable watchdogs and citizens to check the state. Little of this is actually done today. Investments in corruption risk management should be proportional to the overall aid budget, regardless of the chosen mode of aid delivery.

The EU is lagging behind other donors in terms of tackling corruption in aid. The good news is that the cost-benefit ratio of better corruption controls and support to anti-corruption reforms is bound to be high. Considering the current low level of investment in strengthening partner governments’ anti-corruption systems, the expected reduction in funds that are lost to graft or wasted would likely be substantial with increased investment. Less leakage will promote better development results.