Guest Post: Corruption in Covid-19 Vaccine Distribution–Early Lessons from Brazil

Today’s guest post is from Guilherme France, a legislative assistant in the Brazilian Senate

The urgency of halting the Covid-19 pandemic, combined with the limited supply of vaccines, has increased the challenges of distributing the vaccine quickly but fairly. As others have pointed out, including on this blog, there are significant risks of corruption in the vaccine distribution process. Brazil provides a troubling illustration of this problem, with instances of corruption or other improprieties related to vaccine distribution having already sparked investigations into mayors and other local officials. For example, there have been complaints that in Manaus, a Covid-19 epicenter, relatives of a local businessman in were fraudulently appointed as employees in health clinics so that they would qualify for early vaccination. And this is but one of several cases where mayors and other local officials allegedly helped their relatives or close associates cut in the line. There have also been reported attempts to pay bribes to nurses for early vaccine access.

There has been similar line-cutting behavior on a grander scale, with various groups, such as prosecutors and judicial authorities, using their political influence and leverage to attempt (without success) to get priority status for receiving the vaccine, ahead of those, like health care workers and the elderly, who need it more urgently. On other occasions, the government acceded to the use of the “priority status” for vaccine distribution as a bargaining chip. In the midst of strike negotiations, it agreed to place truck drivers and other transportation workers ahead of the general population in the vaccination line.

This behavior, while reprehensible, is understandable. Given how hard Brazil has been hit by Covid-19, access to the vaccine is a life and death matter, and the temptation to cut the line, for oneself or a loved one, is just too great. This is why increased control and transparency for vaccine distribution should be a priority for governments at all levels. Continue reading

A Covid-19 Checkup: How the IMF’s Transparency Measures Have Fared So Far

With a trillion dollars in lending capability, the International Monetary Fund (IMF) is one of the best-equipped institutions to deal with the Covid-19 public health and financial crisis. Since March, the IMF has met an “unprecedented number of calls for emergency financing” with “unprecedented speed and magnitude,” through renegotiations of rapid credit facilities, refinancing initiatives, and debt relief assistance for more than 100 countries, totaling over $100 billion in disbursements so far. In the early days of the pandemic, there was a great deal of concern among anticorruption advocates over the way these emergency funds would be monitored (see collections of pieces here and here). The IMF’s initial approach generally did not impose formal transparency or governance requirements as a condition for receiving emergency Covid relief funds. Rather, the IMF chose to rely more on after-the-fact safeguards: recipient countries were told to spend as needed but to “keep the receipts.”

The IMF’s approach is understandable. As Jason Keene argued on this blog, the IMF at that early stage faced a trade-off between speed and transparency, and may have reasonably concluded that it would not be advisable to bargain over transparency measures if doing so would slow the deployment of much-needed funds. This conclusion, as a May 2020 IMF publication revealed, was influenced by the IMF’s experience with the 2014-2016 Ebola outbreak in West Africa: Many, including a prominent public health journal, blamed the IMF for the lethality of the Ebola epidemic, provoking a backlash against what was seen as unduly burdensome loans, a focus on austerity, and the underfunding of medical systems in vulnerable countries (see here, here, and here). Given this background, it’s understandable that the IMF might, on balance, favor speed over transparency, providing loans for Covid-related public health and budgetary shortfalls without much conditionality.

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Fast-Tracking Justice: India’s New(ish) Strategy to Curb Corruption

How do you deal with the problem of more than 6,000 corruption cases and nearly 5,000 criminal cases pending against politicians, some dating back almost 40 years? The answer, according to India’s Supreme Court: put a one-year time limit on cases involving politicians.

This decision, which was issued this past September in a “public interest litigation” case, seeks to increase public confidence in the judicial process and to make the legal system more effective in addressing India’s pervasive political corruption. Corrupt politicians in India are typically able to slow down legitimate prosecutions, for example by exploiting India’s complex court filing procedures, leading the cases to drag on for years or even decades. This delay increases the chances that key evidence will be lost or obscured—a process that corrupt defendants can and do help along by bribing, threatening, or even killing witnesses. By preventing cases from ending in conviction, corrupt politicians have created a de facto culture of impunity. The problem is particularly acute in the current parliament, where 43% of new members elected in 2019 had pending criminal charges. The Supreme Court’s order seeks to address this and other problems.

This isn’t the first time that the Supreme Court has ordered fast-tracking. The Supreme Court previously called for time-bound trials against politicians back in 2011, during the tenure of the corruption-riddled Congress Party, yet the case backlog remained. There is reason to believe, though, that this time is different. The current ruling Bharatiya Janata Party (BJP) swept into power in part by making anticorruption efforts a priority, and there are signs that the BJP’s general commitment to anticorruption may be having a meaningful impact in the context of the one-year order. Following the Supreme Court’s ruling, the highest courts in (most) states submitted action plans for dispatching cases, and India’s Solicitor General said that he is “100% serious” about completing trials within a year. Despite certain serious challenges to effective implementation of this new fast-tracking program, India’s renewed commitment to moving the wheels of justice more quickly could prove powerful in holding corrupt politicians accountable and restoring public confidence in the judiciary.

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Guest Post: IMF General Counsel Rhoda Weeks-Brown on the Fund’s Role in Promoting Governance, Transparency and Accountability

Since 2018 the IMF has laid greater stress on governance and corruption issues in its annual reviews of member countries’ economic performance and when extending loans to stabilize their economies and restore economic growth. GAB is delighted to publish this post by Fund General Counsel Rhoda Weeks-Brown explaining why the organization strengthened its focus on governance and corruption and what it is doing to help member countries promote good governance and combat corruption.

The COVID-19 pandemic is a crisis like no other. It has brought about tragic human loss and suffering, coupled with disruptions in the social and economic order on a scale that we have not seen in living memory. The IMF’s response to help its member countries manage the crisis and save lives and livelihoods has been similarly unprecedented, including in the sheer speed and size of that effort. In only seven months, the institution has provided lending assistance of more than US$100 billion to over 80 countries, including over US$31 billion in emergency financing to 78 countries (as of December 4, 2020). We can all agree that the dire economic effects projected to result from the COVID crisis—including declines in living standards, increases in inequality, and a reversal of the decades-long declining trend in global poverty—have made the fight against corruption more urgent now than ever before.

Despite the speed of the IMF’s response, we have focused on safeguards to ensure that appropriate governance, transparency and accountability measures are in place even for our rapid emergency financing. This financing supports countries’ commitments to level up healthcare spending and provide income support for affected households and businesses. Our advice to countries has been “spend what you need, but keep the receipts.” Governments in turn have made firm commitments to address governance, transparency and accountability.

The IMF is also providing technical assistance to countries to help them make progress on these commitments. This reflects a clear understanding that improvements in transparency and accountability are driven by changes in institutional practices across multiple institutions involved in budgeting, spending, monitoring the use of public financial resources and responding to instances of misappropriation and misbehavior.

Governancekey to economic success

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Corruption and the COVID-19 Vaccine: The Looming Problem of Distribution

From the earliest days of the COVID-19 pandemic, activists and analysts have called attention to the significant corruption risks associated with the response to both the public health crisis itself and the economic disruption it has caused. Anticorruption advocates have highlighted, for example, the corruption risks associated with the distribution of relief funds and personal protective equipment, and have emphasized the need for reforms like enhancing transparency, requiring audits, and ensuring protections for whistleblowers. (For samples of the discussion of the need for anticorruption measures in coronavirus response, see here, here, here, and here.) Yet there has been surprisingly little sustained discussion or planning concerning a specific issue which, while still prospective, is of pressing global importance: the inevitable corruption risks that will be associated with the distribution of a COVID-19 vaccine, if and when such a vaccine becomes available.

This is not to say that there has been no exploration of the subject. Commentators have discussed the difficulties of ensuring that a vaccine is distributed equitably, as opposed to simply being given to the most affluent, and have called attention to the problems of black markets and price gouging that are likely to emerge once vaccines are available. There has also been some general, abstract discussion of the fact that the distribution of a COVID-19 vaccine, once one exists, has significant potential for both grand and petty corruption. Absent from the discussion, though, has been the development of concrete plans for incorporating anticorruption measures in vaccine distribution—plans that take into account the inherent logistical challenges. The World Health Organization (WHO), to its credit, has released a seventeen-page plan for fair allocation of a COVID vaccine, which discusses detailed measures to ensure that vaccines are distributed fairly. However, the WHO plan devotes little more than a page to promises of “strong accountability mechanisms” in the governing bodies to “ensure protection against undue influence.” The WHO does note that the primary role of its own Independent Allocation Validation Group is to ensure that proposals from the vaccine Allocation Taskforce remain “transparent and free from conflicts of interest,” but while this sort of internal monitoring is laudable, the WHO plan conspicuously lacks any further guidance or recommendations on appropriate anticorruption measures once the vaccines are handed over to their allocated countries.

Although the timeline for a vaccine remains uncertain—and there’s no guarantee that a vaccine will be available any time soon—it would make sense for both international organizations and national governments to identify the most likely corruption risks associated with vaccine distribution and to begin developing safeguards to mitigate those risks. While there are many possible corruption risks associated with vaccine distribution, the two most significant are diversion of vaccines and extortion. Let’s examine each in turn:

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Guest Post: Promoting Procurement Transparency During the COVID-19 Pandemic in Brazil

Today’s guest post is from Guilherme France, the Research Coordinator at Transparency International Brazil (TI Brazil), together with TI Brazil researchers Maria Dominguez and Vinicius Reis.

While the new coronavirus has slashed through Brazil at alarming rates since March, an old problem has undermined the government’s response: corruption. A considerable portion of the government money spent to deal with the pandemic may have already been lost to corruption and waste. To give just a few examples: in Amazonas the state government bought inadequate medical ventilators from a wine store; In Santa Catarina, the government spent over US$5 million on 200 ventilators that were never delivered; and in Rio de Janeiro, fraud led to losses of more than 700 million reais in the hiring of a company to construct emergency hospitals, most of which were never delivered.

As many have pointed out, the corruption risk in procurement is heightened during an emergency, because traditional procurement rules are relaxed or circumvented to allow goods and services to be purchased in a timely fashion. In Brazil, the problem is compounded by a lack of centralization—with over 5,000 independent government entities (federal institutions, states, and municipalities) competing with each other and international buyers for the same equipment.

In this challenging context, efforts to increase the transparency of government procurement and to promote social accountability are essential. To promote greater integrity and transparency in COVID-19 emergency procurement, last May Transparency International Brazil (TI Brazil) and the Federal Court of Accounts jointly published a set of Transparency Recommendations in Public Procurement. These recommendations inspired a methodology for assessing how well government entities were implementing transparency mechanisms to make emergency procurement data available in their websites. (The assessment method examines four dimensions: (1) the presentation of detailed information on suppliers and contracts, (2) the publication of data in open formats that allow complex analysis, comparison, and reuse; (3) information on the government’s own legislation regarding emergency procurement and related matters; and (4) the quality and availability of channels for citizens to make Freedom of Information requests and report on irregularities related to COVID-19 procurement, as well as the existence of committees, with civil society organizations, to monitor emergency procurement.) Using this method, TI Brazil has created an index on Transparency Ranking on Efforts Against COVID-19, which ranks government entities on a 0-100 scale and also assigns a designation of Poor, Bad, Regular, Good or Great, depending on how well the entity performs on the four dimensions of transparency described above. The initial index included an assessment of 53 local governments (states and state capitals), and monthly evaluations have been undertaken since.

The results are impressive so far. Between the first and the third rounds, for instance, every local government analyzed improved its score, and in the most recent round, 33 governments (20 capitals and 13 states) earned a transparency grade of “Good” or “Great”. The average scores increased from 46 to 85 (capitals) and from 59 to 85 (states). Continue reading

Guest Post: The Coalition for Integrity’s New Report on How To Ensure Oversight of U.S. Coronavirus Response Funds

Today’s guest post is by Shruti Shah, the President and CEO of the Coalition for Integrity, a civil society advocacy organization focused on corruption in the United States.

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted in late March to address the economic fallout from the coronavirus pandemic, provides over $2 trillion in various forms of relief, including over $600 billion for the Paycheck Protection Program (PPP), which provides loans to small businesses, and approximately $500 billion in additional discretionary Treasury Department loans. To ensure appropriate allocation of these funds, and to reduce the risks of corruption, fraud, and other forms of misappropriation, transparency and oversight are essential. Indeed, we have already seen the perils of a lack of transparency in awarding the PPP loans. Instead of prioritizing businesses who were in danger of failing without an injection of cash, many large chains and other well-funded companies received loans. Further, there are reports that businesses owned by members of Congress received money under the program, which raises conflict of interest concerns.

Unfortunately, the Trump Administration has resisted even relatively modest measures to assure transparency and accountability in the allocation of CARES Act funds. Treasury Secretary Steven Mnuchin previously announced that the names of PPP recipients would not be made public, making the misguided claim that the identity of PPP loan recipients is the companies’ confidential and proprietary information. But taxpayer have a right to know where their money is going (a principle the U.S. vigorously applies when sending foreign aid dollars overseas). Eventually Secretary Mnuchin relented to pressure to change course, and agreed to provide information regarding PPP loans in excess of $150,000. Yet the administration’s resistance to transparency and oversight has continued, as demonstrated by alarming reports that the Treasury Department’s Office of General Counsel has issued a legal opinion claiming that the Department has no obligation to provide key information to oversight officials, including the Pandemic Response Accountability Committee (PRAC), about the CARES Act’s PPP and discretionary business loan programs.

These reports underscore the importance of keeping up the pressure on Congress and the Administration to take appropriate steps to ensure genuine transparency and accountability in the allocation of pandemic response funds. Congress in particular may need to add new legal provisions to address the flaws in the oversight system. The Coalition for Integrity recently released a new report, entitled Oversight is Better than Hindsight: Anti-Corruption Recommendations for the CARES Act, which documents the current oversight gaps in the CARES Act and presents a set of recommendations on how best to close those gaps. These recommendations include, among others: increasing appropriations for oversight bodies, enacting for-cause removal protections for Inspectors General, enhancing whistleblower protections, requiring the Federal Reserve to comply with Sunshine’s Act meeting transcript or recording requirements, and appointing a chairperson to the Congressional Oversight Commission. The report also highlights a number of measures that the Administration can and should take, including better and more effective cooperation with the oversight bodies, creating a public-facing website with detailed information on contracts awarded under the stimulus program (as was done by the Recovery Accountability and Transparency Board, which oversaw the stimulus funding enacted in response to the 2007-2008 financial crisis), and ensuring more generally that agencies are responsive rather than resistant to requests and recommendations from oversight bodies.

Effective oversight is not a partisan political issue. Misuse of stimulus money will compound the country’s collective misery at a time when millions are already suffering from the grave health and economic effects of the pandemic. In this context, insufficient public transparency and a lack of full cooperation with oversight bodies should worry us all.

 

Should International Organizations Like the IMF Require More Anticorruption Conditions on Their Pandemic Emergency Funding?

In response to the unprecedented COVID-19 pandemic, governments across the world are taking emergency measures to secure and distribute necessary medical equipment to hospitals, front-line medical workers, and at-risk groups. Moreover, to respond to the dangerous economic crisis that has resulted from stay-at-home orders and other essential public health measures, national governments have rapidly adopted new fiscal programs and other measures that have pushed trillions of dollars out the door. Multilateral institutions like the International Monetary Fund (IMF) have also stepped in to assist countries that have seen their foreign exchange inflows drying up due to a variety of factors associated with the pandemic (including lower international oil prices, lack of tourism receipts, and declining remittance flows). These countries urgently need for foreign exchange to purchase critical medical supplies and equipment from abroad. The IMF has existing facilities for providing emergency funding to address balance of payments shortfalls in times of emergency (the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI)), and has  already begun providing funding under these programs, with more funds likely on the way. In contrast to other IMF programs, there are relatively few conditions that recipients need to satisfy up front in order to have access to RCF/RFI financing.

The global anticorruption community has been understandably worried about the risks that emergency response funds could be misappropriated or mismanaged, which would impede the collective public health efforts. (See, for example, the pieces collected here and here). For example, Transparency International has pushed for open data publishing on public procurement, and Sarah Steingrüber, the Global Health Lead for CurbingCorruption, recently made the case on GAB for the establishment of oversight task forces and for directing some donor funds to enhancing anticorruption safeguards (i.e. public financial management improvements and CSO funding). With respect to the IMF in particular, a group of 99 civil society organizations (CSOs) sent an open letter to the IMF, pushing back against what they characterized as the Fund’s “retroactive approach” to anticorruption efforts, and instead called for loan conditions that would require recipient governments to (1) receive all IMF funds in a single Treasury account, (2) hire independent auditors within six months of disbursement, (3) publish a procurement plan with names and beneficial ownership information, and (4) repeal or amend laws that prevent groups from safely monitoring government spending.

While nobody seriously questions the importance of reducing corruption and other forms of “leakage” of funds spent to fight the coronavirus and its associated economic dislocation, much of the emerging commentary from the anticorruption community seems to lack a sufficient appreciation of, and engagement with, the trade-offs between controlling leakage and ensuring a sufficiently rapid response. The CSOs’ open letter to the IMF is an illustrative example of the apparent neglect of these trade-offs. Continue reading

Guest Post: Anonymous Companies Are Undermining Mexico’s Public Health

Today’s guest post is by Miguel Ángel Gómez Jácome, the Communications Coordinator at the Mexican civil society organization Impunidad Cero (Zero Impunity).

The COVID-19 pandemic has already affected millions of people. (As of the time this piece was initially drafted, around 2 million people had been infected; the exponential spread of the virus means that by the time this piece is published, that number is likely to be much higher.) And while Mexico has not yet been as severely impacted as other countries, official statistics (which likely understate the true prevalence) already report thousands of infections and hundreds of deaths. To confront this problem, Mexico, like other countries, will need to marshal its resources effectively. Unfortunately, though, Mexico’s ability to manage the COVID-19 epidemic is threatened by Mexico’s epidemic of embezzlement in the health sector, much of it facilitated by anonymous shell companies. This widespread corruption drains away vital public resources needed to combat public health emergencies like the COVID-19 pandemic.

In March 2020, two civil society organizations (Justicia Justa (Just Justice) and Impunidad Cero (Zero Impunity)), documented the extent of the problem in a research report entitled Fake Invoices: The Health Sector Epidemic. The research found that between 2014 and 2019, 837 shell companies issued 22,933 fake invoices to 90 health institutions across the country (in 30 of Mexico’s 32 states, as well as the federal government), ultimately embezzling a total of over 4 billion pesos (roughly $176 million US dollars) from the health sector—an amount that could have paid for around 80,000 hospital beds or between 3,400 and 6,900 ventilators. (To put this in context, Mexico currently has 5,000 ventilators in the whole country, and the government is looking to acquire 5,000 more.) And the problem is only getting bigger: According to Mexico’s Tax Administration authority (the SAT), the number of anonymous shell companies in the country has increased from 111 in 2014 to over 9,000 in 2020.

To crack down on the abuse of shell companies to embezzle public funds from the health sector (as well as other sectors), the authors of the Fake Invoices report propose three responses: Continue reading

New Podcast, Featuring Sarah Steingrüber

A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Sarah Steingrüber, an independent consultant on corruption and public health issues. Among her other activities in this area, she currently serves as the global health lead for the CurbingCorruption web platform, and was the co-author of the U4 Anti-Corruption Resource Centre’s report on Corruption in the Time of COVID-19: A Double-Threat for Low Income Countries. Much of our conversation naturally focuses on how corruption and related issues may intersect with the coronavirus pandemic and its response, in particular (1) misappropriation of relief spending, and (2) how some corrupt leaders may use the coronavirus pandemic as a pretext to eliminate checks and oversight. A central tension we discuss is how the urgency of emergency situations affects the sorts of measures that are appropriate, and draws on lessons from prior health crises such as the Ebola outbreak in West African in 2013-2016. We then discuss other more general issues related to corruption and health, such as how the monetization and privatization of health may contribute to undue private influence on decision-making processes in the health sector.

You can find this episode here. You can also find both this episode and an archive of prior episodes at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.