Submission to the IDC Sub-Committee on the work of the Independent Commission for Aid Impact (ICAI)

Written evidence submitted by Transparency International

on the ICAI report “DFID’s approach to anti-corruption and its impact on the poor” Introduction

1. Transparency International (TI) is the leading, global NGO working against corruption. The international movement of Transparency International operates in more than 100 countries through a network of National Chapters. TI National Chapters are locally established and fully independent national NGOs that are strongly rooted in their own country; they have local boards and staff, and set their own priorities and strategies according to national context and needs, while operating in line with the overall TI vision, mission, and strategy. To achieve our vision, the TI movement focuses on promoting reforms within the public and private sectors that increase transparency and accountability, on mobilising citizens, and on empowering civil society to advocate for and monitor such reforms. This evidence is submitted by the Transparency International Secretariat and by its UK national chapter Transparency International UK.

2. Disclosure: The UK Department for International Development is a donor to the Transparency International movement, including the TI-Secretariat and TI-UK. DFID is the largest donor providing unrestricted funding to the TI-Secretariat and also supports the Defence and Security Programme run by TI-UK. In addition, DFID supports a range of TI National Chapters across the world. TI-UK was interviewed by the researchers for the ICAI report.

3. TI supports any effort that seeks to cast light on the use of public funds and promotes greater accountability of such funds. ICAI therefore plays a key role in scrutinising the use and effectiveness of taxpayers’ money going towards aid. Such scrutiny helps to create a constructive dialogue between the state and its citizens.

4. The UK Secretary of State for International Development has spoken persuasively and perceptively in public about the need to tackle corruption; and the Prime Minister has taken a strong lead on governance and transparency in several international forums such as the G8, OGP and pushing for governance to be included as one of the future Sustainable Development Goals. In addition, DFID is respected among the international donor community as one of the leaders in the anti-corruption field. Transparency International welcomes the UK’s leadership on these issues.

5. Corruption is hard to tackle and hard to measure. TI has

been doing both for twenty years, and while progress can be made, there are seldom easy answers. DFID faces a particular difficulty in that its mandate runs to some of the most difficult areas of the world with regard to corruption. While it is important that DFID has an effective strategy to deal with corruption, the size of the challenge should not be under-estimated. We believe that the UK government can and must do more to tackle corruption; but not in the way that ICAI suggests.

TI evidence on ICAI report

6. The ICAI report is a significant document which makes some helpful observations and recommendations. Transparency International fully agrees with certain recommendations, has substantial reservations about others, and overall considers that the report is not strong in its understanding and analysis of how corruption operates, and therefore what is necessary to combat it and improve the lives of the poor who are so often its victims.

7. The ICAI report emphasises the need for evidence in what

works, and what does not, in the fight against corruption, and notes DFID has ‘not sought sufficient evidence to understand whether its anti-corruption activities are having an impact on

the poor’ (page 1). There is a large academic literature on the difficulties of measuring corruption and the problems in evidencing impact. The ICAI report itself suffers from the very flaw that it cites for DFID: it draws a range of conclusions not sufficiently backed by evidence, and in doing so, oversimplifies how corruption can be fought and understood. As a piece of work, the report in general does not offer adequate evidence in support of its conclusions.

8. Transparency International research consistently

demonstrates that it is the poor who suffer most from the effects of corruption. However the ICAI report’s very selective focus on work “which targets the poor”, suggests a simplistic understanding of the nature of corruption. The political challenges of working on corruption, especially for a donor are only given cursory attention (p 11). Corruption is often systemic, frequently requiring a holistic and multifaceted response. The types of corruption that poor people are most likely to encounter directly are often embedded in systems supported by corruption. The report recognises DFID’s work on supporting the fight against money laundering, promoting transparency in the extractive sector, and improving anti-corruption law enforcement institutions - but implies that although worthy these are not work which “which targets the poor”. Just because poor people do not directly witness acts of grand corruption (e.g. political bribery), does not mean they are not very adversely affected. To dismiss so many of DFID’s projects as not relating to the problems of “the poor” is a rather narrow reading.

9. To illustrate this point, consider a health centre in which

the medical staff only dispense vital free vaccines if they are given a bribe. A short-term fix would be to hire a nurse to stand at the gate with a portable vaccine kit, and dispense vaccinations to those who arrive. However, the community’s long-term need is sustainable medical provision, which will ultimately help more people in more ways. That will require reforming the health centre, reforming the regional and national health hierarchy, and making sure that senior health department officials and politicians have not stolen the health budget – leaving local staff without salaries and resorting to demands for bribes to pay their wages. This hypothetical example illustrates how tackling corruption at systemic and political level will often have a greater long-term impact on the lives of the poor than the unspecified ‘direct’ actions that the ICAI report suggests.

10. Related to the above point, TI believes the report’s definition of what it means to address corruption to benefit the poor is fundamentally misconceived. We run anti-corruption reporting centres in 60 countries and have received over 100,000 citizen reports; we also regularly poll citizens throughout the world, most recently 114,000 in over one hundred countries. We have chapters working on the ground in one hundred countries. Our twenty-year experience is that to address corruption in a way that most improves lives of the poor, you precisely do need to address systemic and institutional corruption. While it might be easier to count direct beneficiaries through on-the-ground actions working directly with the poor, there is a real risk that the number of beneficiaries would go from potentially millions to perhaps tens of thousands (just because we can count them). Direct work and systemic change are not mutually exclusive; in an ideal strategy they will go hand in hand. But a strategy that ignores the need for systemic change is effectively giving up.

11. The challenges of understanding what works in

fighting corruption are not unique to DFID. The report is overly critical in this respect. The centre of excellence ICAI recommends already in part exists for DFID (U4), and includes a helpdesk for DFID advisors.

12. The report notes that “In our view, it is highly problematic for DFID to support government systems and structures that are known to be corrupt, especially if they increase the perception among the poor that corruption is a necessary and legitimate way of acting”. TI strongly agrees that the UK government needs to take on the challenge of addressing corruption at the systemic and political level, despite the inherent difficulties involved in doing so. We are concerned that ICAI’s line of argument might be

used by some to conclude that the answer to systemic corruption is to stop giving aid. This ‘solution’ however punishes poor people twice: with corrupt government, and by taking away the funds needed for health, education and the other Millennium Development Goals. If aid itself is perpetuating corruption, then the answer is to seek to reform institutions and deter and punish corrupt individuals, not to stop the services on which the poor depend. DFID, together with other donors, civil society, and other aid providers, should work together to tackle endemic corruption that inhibits aid being provided to where it is needed most and to work on how we evaluate this and the issue of aid dependency – where the impact of aid provision is clearly being reduced.

13. The report makes the point that DFID’s anti-corruption focus in recent years has been on preventing fraud in its own operations and work and that ‘DFID country offices lacked engagement from senior management on corruption’ (2.33). The report also implies there needs to be more focus on anti-corruption programming. In Transparency International’s view, donor interventions are not about one or the other of these options, but about all of these. Donors have a responsibility to prevent and address corruption in their own operations and grantmaking, while at the same time building and supporting accountable institutions which allow resources, including aid, to benefit those who need it most.

14. In reference to the evidence base, the report has not sufficiently assessed the work done by other stakeholders supported by DFID. For example, there is limited reference to the work undertaken by civil society organisations tackling corruption at the global and national level, work which is often supported by DFID. On a related note, the report focusses on two countries and neglects effective work done elsewhere. For example, the statement on Impact in the Executive Summary is a significant and apparently unjustified extrapolation from the evidence in the report, which is based on a partial study of only two countries.

TI feedback on the key recommendations (page 1)

15. Recommendation 1: Transparency International strongly agrees with this recommendation, which highlights the need for a coordinated approach by the UK Government, and a coherent strategy that identifies the UK’s ‘ambition, commitment and positioning’ with regard to corruption. However, we note the 4-month gap in appointing a new Anti-Corruption Champion between July and October this year as an unfortunate example of poor commitment and opaque strategy. Regarding coordination, we particularly flag the need to include the MOD alongside FCO in terms of work in fragile and conflict areas, along with other relevant departments such as the Home office.

16. Recommendation 2: TI agrees with the need for anti-corruption work to focus on long-term interventions. With regards to stand alone anti-corruption programming, we broadly agree, but note that this must be in addition to mainstreaming anti-corruption objectives and activities in other work, and that anti-corruption programming must take an approach that looks for both systemic solutions and short-term fixes.

17. Recommendation 3: We have strong reservations about Recommendation 3. We strongly agree that corruption negatively impacts the poor, and have been one of the prime producers of research to evidence this. However, as noted above, we do not believe the primary or sole solution is to target the poor directly. While such work is important, and in some regions more work in this area might be beneficial to address and alleviate local corruption, ultimately working on the systemic and underlying root causes of corruption are at least as important to enable sustainable development.

18. Recommendation 4: We partially agree with this recommendation. The report rightly highlights the absence of data by which corruption and the impact of anti-corruption interventions can be measured. However, targeted stakeholder feedback is only one way of addressing this, and the wider issue is the need for more and better data, and not just stakeholder feedback. We also note that this is true not just in

developing countries but also in the UK and elsewhere. The UK Government has little understanding of the prevalence, scale and type of corruption in the UK, in part because it has a poor record of capturing data in this area and no known strategy to do so. Finally while it is important to gather feedback from direct beneficiaries where such direct beneficiaries are clearly identified, it should be noted that the intended beneficiaries are not always directly the poor. In many cases, when working on systemic issues, the beneficiaries of DFID’s work can be public, private, and non-state institutions.

19. Recommendation 5: We agree with the recommendation that DFID’s in-house expertise should be better resourced and developed, but note that any such centre of excellence should work and coordinate closely with existing bodies already looking at such issues, such as the U4 and other donors that are prioritising corruption.

Further comments

20. Corruption is a global problem needing global responses, including in the UK. While the UK’s Bribery Act is a good law that helps the UK to comply with its international obligations, the UK Government has a mixed record with regard to corruption within the UK itself. For example recently, the Government has reduced the Serious Fraud Office’s funding and is now talking about abolishing it. Meanwhile, rich foreign officials with no visible means of income other than their salaries can buy expensive properties in London and educate their children through the UK’s private schools and universities. The UK needs to address the illicit movement of funds and that strip developing countries of their wealth. Tackling corruption globally does not only need a strong DFID, but needs commitment and efforts from the UK government across the board. Equally, such strong commitments ‘at home’ would ensure credibility for the UK when speaking on the international stage.

Contact details for this submission: Dr Robert Barrington Executive Director Transparency International UK robert.barrington@transparency.org.uk tel: 0207 922 7906 www.transparency.org.uk