Author Archives: Richard Messick

A Workable Conflict of Interest Law

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My January 28 post on conflict of interest complained that the laws of many countries were unduly vague making it next to impossible for officeholders to know what constitutes an unlawful conflict of interest.  Matthew noted in his comment that lawmakers commonly face a dilemma in such situations.  They can either write a rule that clearly specifies what is prohibited, but which can then be easily circumvented, or draft a broadly drawn standard that covers a wider range of conduct but at the cost of vagueness.  (Click here for more on the rules versus standards dilemma.)

Matthew asked how legislators can resolve the tension between these two conflicting objectives. I recommend that the law distinguish between two types of conflict of interest.

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Banning the Appearance of a Conflict of Interest: Another Misguided Ethics Rule

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Last week I wrote about the problems arising from laws which make “conflicts of interest” illegal but which do not define “interest.”  As I explained, the harm that results from leaving “interest” undefined, or vaguely defined, is of several kinds:  Public employees have no way to know when they should avoid making or participating in a decision; authorities can easily slant enforcement of the law to serve their own ends; and the ease with which charges of conflict of interest can be leveled in the court of public opinion undermines public confidence by creating the impression that conflicts of interest are ubiquitous.

Making “the appearance of a conflict of interest” illegal can do as much, if not more, harm. Continue reading →

What’s the Interest in “Conflict of Interest”?

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“Conflict of interest” is a deceptively simple term devilishly difficult to apply.  It first came into common parlance in the United States in the nineteen fifties thanks to the political uproar sparked when the former CEO of General Motors Charles Wilson, President Eisenhower’s nominee to be the Secretary of Defense, told the Senate that the interests of the U.S. and General Motors were aligned.  Senators questioned that premise given that Mr. Wilson owned considerable GM stock and as Secretary of Defense would make decisions that would affect that stock.  His interest in seeing the value of his stock holdings rise would, they asserted, conflict with his duty to advance the national interest and so they demanded he sell the stock to avoid any conflict of interest.

The ensuing controversy about when a public official must sell off assets or take other measures to prevent a conflict of interest prompted Congress to update and modernize federal ethics laws.  A 1962 statute banned four types of conflicts, those arising from employees: i) awarding themselves government contracts, ii) assisting anyone in pursuing a claim against the government, iii) taking money from someone for discharging their duties as a government employee, or iv) advising, after leaving government employee, an individual or firm on a matter they worked while an employee.

Each of these four involves the possibility that the employee will put his or her personal, financial interest ahead of the public interest when taking a decision.  These are clear, “bright line” rules easy to understand and easy to enforce.  The problem has come with the subsequent expansion of the term “interest.”

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Why Context Matters: The Failure of the Ugandan Revenue Authority to Curb Corruption

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In his 2013 volume explaining why donor-supported reforms often go awry in developing states, Kennedy School Professor Matt Andrews lays the blame on the failure to appreciate how political imperatives, patronage networks, cultural practices, and other elements of local context affect the way reforms are implemented.  While Andrews offers telling examples of how ignorance of context doomed reforms in Argentina and Malawi, the failure to stamp out corruption in Uganda’s revenue collection service provides an even more vivid illustration of the way the very different context in a developing state can cause “best practice” reforms to fail.  The analysis is taken from Odd-Helge Fjeldstad’s classic account of the attempt to reform tax collection in Uganda, “Corruption in Tax Administration: Lessons from Institutional Reforms in Uganda,” chapter 17 of Susan Rose-Ackerman’s 2006 edited volume, International Handbook on the Economics of Corruption.

In 1991 revenue from taxes and customs duties in Uganda were seven percent of GDP, an astonishing low figure even on a continent where tax evasion was the norm.  Under pressure from the IMF, the World Bank, and other donors the then recently installed government of Yoweri Museveni took decisive action.  Following what was then considered best practice for boosting revenues and cutting corruption in a revenue service, the government made the revenue department of the Ministry of Finance into an autonomous agency.  Independent agency status allowed the Uganda Revenue Authority to implement a number of reforms to reduce corruption.  Salaries were raised above civil service levels and strictures on firing non-performing workers removed.  As a new agency, all employees were considered new hires and had to prove themselves during a probationary period; as a result almost 250, or 15 percent, of the old revenue department staff were weeded out.  In addition, “clean” expatriates were hired into senior management positions, and measures were taken to improve morale: offices were upgraded, working conditions improved, and training provided.  All in all, the Uganda Revenue Authority was considered a model for how to create an efficient, non-corruption revenue collection agency.

During the first years of its existence, the authority’s performance suggested these reforms were succeeding.  Revenue collection as a percentage of GDP improved and perceptions of corruption declined.  These early indicators of success, however, soon began to decline.  Forty-three percent of businesses surveyed in 1998 reported paying a bribe to a Uganda Revenue Authority employee; in March 2000 President Museveni termed the authority a “den of thieves,” and in 2003 its former head listed corruption as “problem number one” in the organization.  A Commission of Inquiry of C corruption in the Uganda Revenue Authority was appointed in 2002, and although its report was never released, leaks suggest the commission found massive corruption in the ranks. Continue reading →

National Anticorruption Strategies: A Request for Assistance

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GAB editor-in-chief Matthew Stephenson and I have been asked by the United Nations Office on Drugs and Crime, which serves as the Secretariat to UNCAC’s Conference of States Parties, to write a guide to support the development and implementation of effective and sustainable national anti-corruption strategies.  The guide will contain an outline of the key stages in the development of a national strategy, an explanation of the role different stakeholders can play in developing it, models for implementing a strategy, and a discussion the methods for monitoring and evaluating its implementation. Good practices and success stories at all stages of the process — development, implementation, monitoring and reporting — will be highlighted.

We are in the early stages of collecting information and would welcome readers help in identifying useful materials: copies of national strategies, evaluations of their effectiveness, and so forth.  We will of course build upon the fine analysis of Asian countries’ experiences with national strategies that the UNDP Bangkok office released in December, which I wrote about here.  We also have the very useful policy notes posted on the websites of U4 and TI.

To date we have identified 60 plus the countries that have or have had a national anticorruption strategy.  They are listed below.  Additions to this list would also be welcome.

Afghanistan, Albania, Armenia, Australia, Azerbaijan, Bhutan, Bosnia And Herzegovina, Bulgaria, China, Croatia, Czech Republic, Egypt, Estonia, Ethiopia, Georgia, Ghana, Greece, Haiti, India, Indonesia, Iraq, Jamaica, Jordan, Kenya, Kosovo, Kuwait, Kyrgyz Republic, Latvia, Lithuania, Macedonia, Malawi, Malaysia, Maldives, Moldova, Mongolia, Montenegro, Mozambique, Namibia, Nepal, Pakistan, Palestine, Papua New Guinea, Philippines, Poland, Romania, Romania, Russia, Saudi Arabia, Serbia, Sierra Leone, South Africa, Southern Sudan, Tajikistan, Tanzania, Thailand, Uganda, UK, Ukraine, Vietnam

Anything from newspaper stories to policy papers to academic analyses would be appreciated.  Thanks to Google translate, we will be happy to receive material in any language. You can post suggestions either as a comment on this post, or send your input using the contact page. Thanks in advance!

Combating Corruption in Uganda or Merely Displacing it: The World Bank’s Public Expenditure Tracking Survey

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A World Bank-initiated effort to reduce corruption in school funding in Uganda is widely, and rightly, celebrated for its results (click here and here for background).  In the early nineteen nineties on average 87 percent of the monies the Ugandan central government budgeted for textbooks and other school supplies “leaked out” somewhere between departing the Finance Ministry and arriving at the school house front door.  Yearly data revealed that 73 percent of the schools received less than five percent of the monies to which they were entitled, and only ten percent received more than half.  The 1996 Bank project had an immediate effect on the rate of losses.  By 1999 the government found schools were receiving on average 95 percent of what they were supposed to receive, and a 2002 World Bank study likewise showed a sharp drop in fund leakage.

The dramatic improvement is attributed to the enormous publicity the data on losses garnered.  Parents were outraged and the government and donor agencies embarrassed.  Within the development community, the Uganda Public Expenditure Tracking Survey, as the work to dig out and publicize the loss data became known, has been enormously influential, the story becoming a parable for how to fight corruption.  A Uganda-like PETS project is now routinely prescribed for attacking corruption in public expenditures, and a Google search on “Uganda PETS” yields over 100,000 hits and returns some 20,000 citations on Google scholar.

But for all the attention the effort has generated, there is evidence that it may not have had any impact on the level of corruption in Uganda.  It is possible that all it did was force those raking funds off the school fund program to turn elsewhere.  The Uganda PETS thus may simply have displaced the corruption in the school funding program rather than ending it. Continue reading →

The Political Will to Fight Corruption: Lessons from Nigeria

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“Political will” is often said to be the sine qua non of a successful anticorruption policy (click here, here, and here for some examples), yet the term remains, as Linn Hammergren complained almost two decades ago, one of “the slipperiest concepts in the policy lexicon.”  Derick Brinkerhoff tried to pin down what those advising on anticorruption meant by it in a 2010 U4 policy brief.  He concluded that most used the term to refer to some combination of commitment by controlling corruption by top-level political leaders together with the ability to do something about it.

While a reasonable definition, a moment’s reflection will show that advising developing countries that to fight corruption they must have political will is empty advice.  If a country’s leadership had the commitment to deal with corruption and the tools for doing so, it wouldn’t need advice on what to do, it would be in the heat of the battle.  The reason most countries remain on the sidelines is that their leaders lack the necessary commitment and capacity.  So telling developing countries that a successful anticorruption effort begins with political will assumes away the problem.

What would help is advice on how to create the commitment and ability to fight corruption.  Continue reading →

Conflict of Interest and Democratic Theory: Lessons from Bruce Cain’s Democracy More or Less

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Although written for Americans worried about what ails their democracy, non-Americans will profit from a close study of Stanford Professor Bruce Cain’s new book Democracy More or Less: America’s Political Reform Quandary as well.  Cain’s thesis is that different views about the role of citizen participation, representative institutions, interest groups, and apolitical experts in governing the United States produce sharply different prescriptions for reforming its political system.  Non-Americans will recognize that these same views inform reform in their countries, from community driven-development programs that bypass representative institutions to the replacement of elected governments with a cabinet of technocrats.  What makes Cain’s book so valuable, to Americans and non-Americans alike, is that he shows when and why reforms inspired by these competing views improve governance and when and why they make matters worse.

GAB readers will find particularly instructive his analysis of how different theories of government influence the ongoing effort in the United States to police conflicts of interest by elected officials, civil servants, and judges

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National Anticorruption Strategies: Lessons from the Asia-Pacific Region

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The 173 nation that have ratified the U.N. Convention Against Corruption are obliged by article 5 to “develop and implement or maintain effective, coordinated anticorruption policies . . . .”  Many meet this requirement by adopting a national anticorruption strategy, and such strategies are so common that the World Bank, the U4 Anticorruption Resource Centre, and Transparency International have all published works advising how to develop and implement them.  The latest, and most useful entry, comes from the Bangkok office of the U.N. Development Program.   Released December 9,  Anticorruption Strategies: Understanding What Works, What Doesn’t and Why — Lessons from the Asia-Pacific Region draws on the experience of 14 countries in the region  to  help guide policymakers wanting to promulgate a national strategy or revise an existing one. Continue reading →

Corruption Risks in the Criminal Justice System

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The U4 Anti-Corruption Resource Center has just published the introductory chapter to a new U4 issue paper, Corruption Risks in the Criminal Justice Chain and Tools for Assessment.  The forthcoming paper has separate chapters that examine where corruption is most likely to arise in the 1) investigation, 2) prosecution, and 3) trial of a criminal case and in 4) the detention of suspects and incarceration of convicted defendants.  The chapters also describe what tools exist to to assess these risks.  The introductory chapter, co-authored by this writer, summarizes the four chapters.

U4 will release the other four chapters one by one in January 2015.  Join U4’s linked-in group for updates and to interact with the authors who will answer questions and respond to comments in these weeks: