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Corruption: not Top Secret, or extensive

 

 

Today, headlines around the country loudly declared "Australia's foreign aid program hit by massive fraud", as News Ltd reporter Steve Lewis drew attention to the 175 cases of fraud currently under investigation by Australia’s foreign aid agency AusAID.

This media investigation drew attention to the very real problem of corruption in many countries that receive funding as part of Australia’s overseas aid program. However, the piece quickly dismissed the fact that AusAID has detected these incidences of corruption and is currently investigating them - a tribute to the robust fraud detection systems that they currently have in place. 

The director of AusAID Peter Baxter notes that, “To claim that the AusAid program is riddled with fraud or that the vast majority of the aid program doesn’t actually reach its target is factually incorrect. We work in some of the most difficult environments on the planet, including in countries where corruption is endemic and of course there is a correlation between countries that have problem with corruption and poor government and poverty. Investigating fraud in those environments is difficult but we do that.”

While  today’s article rightly noted that corruption is a real issue in delivering our foreign aid, it failed to highlight three important points: 

1. AusAID has effective systems in place

AusAID has checks and balances in place to prevent, detect and investigate fraudulent behaviour. These mechanisms include the recent creation of the roles of Chief Auditor and the Director of Fraud Control within the department; risk and fraud management plans at overseas posts; transparent public tendering; promotion of the United Nations Convention Against Corruption, and sponsorship of the Extractive Industries Transparency Initiative(EITI). 

It is because of these checks and balances that we know of the aforementioned cases of fraud. 

2. The reported incidence of fraud is less than 0.1% of the entire budget 
 
Lewis alleges that the cases of fraud under investigation demonstrate that Australia’s aid program is wrought with corruption. In actual fact, of the $20 billion allocated to foreign aid since 2004-05, there are estimated to be potential losses of $3.4 million.  This represents only 0.017 per cent of the budget.

When compared with Australia’s Centrelink program, which has an anti-fraud success rate of 96.5 per cent (considered a successful result against their target of 95 per cent), Australia’s foreign aid program is 206 times less fraudulent.

3. Corruption is real. We need to fight it, not run from it

In the fight against extreme poverty, corruption is a significant issue. But it's important to ground our analysis in the reality that if we want to reduce its impacts on our developing neighbours, we need to continue to support foreign aid.
 
This isn’t to say that we shouldn’t monitor the spending of aid very closely, nor that we shouldn’t  continue to urge the government to improve the effectiveness of its aid program, in fact, aid effectiveness is crucial to tackling corruption - because it allows us to maximise our impact tackling the systemic issues that exacerbate issues related to corruption.
 
But we shouldn't use corruption as an excuse to reduce our efforts to provide opportunities to the poorest people on our planet.

 

Robbery and Africa's Missing Millions

 

Last week I was robbed. Out for a drink on a Wednesday night with my friend I ended up going home that evening £2000 poorer. With my backpack stolen I lost my laptop, ipod, jacket and a number of other accessories.

It’s not something I’d like to occur regularly however it made me realise a few things.

First, I went straight to the police station. I made a report, listed the items stolen and received a case number. My details were even referred to a ‘victims of crime’ charity support group. Second, I sent off my insurance claim. Fortunately, I had backed up my all my work and now it’s a matter of waiting to hear from them.

Here’s what I learnt:

  1. Always watch your bag.
  2. I’m fortunate it happened here.

Living in the UK when such an event takes place we are able to call on the resources of others. We have options and opportunities that enable us to solve our problems. We’re empowered citizens.

Having my personal items stolen I felt, beyond loss, frustration. My laptop is my mobility. Technologically, socially and professionally I use it everyday to skype, work and relax. With it gone, I felt incapacitated - that I couldn’t achieve what I would like to. In short, it’s simply an inconvenience to try and work without it.

But that is all it is. An inconvenience - nothing more. I’m insured. I will be duly compensated. Ultimately, I have agency – the opportunity and ability to change my situation.

My experience cannot compare with those who live in extreme poverty. What is to me an inconvenience e is unfortunately the reality for many. It should not and it need not be like this.

When it comes to grand theft, robbery and corruption the citizens of developing countries suffer immensely. The previous evening the Africa All Parliamentary Group along with the Royal African Society hosted Dev Kar, a lead economist at Global Financial Integrity, who presented the findings of his report on Africa’s Missing Millions.

The figures detailed were astonishing.

Kar calculated that between 1970 and 2008 Africa had lost $854 billion in illicit financial flows. That was the conservative estimate. The most generous estimate put the figure at $1.8 trillion. To put that in perspective, Africa has a population of 1 billion. This means that every single citizen in Africa has effectively lost between $854-1,800 dollars. In other words, they’ve all been robbed of their own laptop.

How does this happen?
Through the flow of money that is illegally earned, transferred or utilised. In short, illicit money. As we blogged recently, Hosni Mubarak is a textbook example. As leader of Egypt for over 30 years he abused his office to privately benefit at the expense of his people. Using his position Mubarak built a personal fortune estimated to be in the region of $70 billion.

But here’s the catch. It’s not just corrupt governments that are privately benefiting from this outflow of money. Kar’s report concluded that total outflows from government officials in the form of bribery and theft represented only 3 percent of the global total.

Rather, the main culprits are large Western, yes Western, multinational companies. Through the proceeds of tax evasion, mainly through commercial trade mispricing, Western companies contribute a staggering 60-65 percent of the global total of illicit financial flows .

How is this possible?
To quote:

This massive flow of illicit money out of Africa is facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing and money laundering techniques.

In other words: our financial systems.

And who suffers the most from this? Once more, straight from the report:

It has its greatest impact on those at the bottom of income scales in their countries, removing resources that could otherwise be used for poverty alleviation and economic growth.

What the report academically refers to as those at the ‘bottom of income scales’ = the poor.

This problem is huge. It’s bigger than aid. Dev Kar estimated that for every one dollar given in aid to Africa, three returns under the table. And across all developing countries, it’s even worse. For every one dollar of aid, ten escapes.

Basically, if we’re serious about ending extreme poverty, we need to tackle this.

In the face of it all, what we can do?

For too long innocent citizens of developing countries have been robbed. This must change. And we have a critical role to play. Unlike us, they don’t have an effective recourse to effectively complain to. Theydon’t have a police station and an insurance company to lean on. This is where we can step in.

First, to understand how this system operates and who benefits we need to get educated.

Read.

A great place to start is Nicholas Shaxson’s just published book ‘Treasure Islands: Tax Havens and the Men who stole the World’. His book details the murky and little known world of tax havens and the central role they play in the global economy and importantly, in keeping people poor.

The good: it reads like a thriller. The bad: it’s all true.

Talk.
Share the book with your friends. Have conversations.

Get active.
The answer is simple and the solutions are straightforward. Unfortunately, getting there will be one long, hard fight. But we’re committed to this. The Global Poverty Project will be campaigning on this as it is the key to solving extreme poverty and if like us you feel outraged join our movement and add your voice to the chorus of those calling for change.

Common Cause?

 

How important are values to the fight against extreme poverty?

The answer seems pretty straight-forward - they're very important. They're what motivates us to action, they're the basis on which we justify our actions.

Ideas of empathy, justice, community and compassion are central to the way that people involved in the movement see themselves.

But, all too often, they're not the things we talk about. Instead, we focus our public engagement on efficiency of fundraising, on cost-effective interventions, on what's in it for the donor, the campaigner or the volunteer. And now there's a growing evidence base to suggest that focused on self-interest isn't just off-message, it's leading people to care and do less.

Yesterday I gathered with one hundred other campaigners, fundraisers and project managers from charities across the UK to talk about WWF's recent report, Common Cause.

In it, an argument is made for non-profits to be clearer, more transparent, and more focused on the intrinsic reasons for community action, and for them to focus less on self-interest. You can read the report for yourself, but in short it suggests that when we appeal to status, to self-promotion, money or personal gain, people get turned off. And, when we appeal to things that are about self-improvement and self-transcendance - like giving, benevolence, family and fairness, then people give and do more.

For those of us whose focus is on getting more people involved in more effective ways in fighting poverty, this leads us to some big questions:

  • If you don't appeal to 'me,' then how do you even get people's attention for these issues?
  • Is there a problem with the way we talk to people about volunteering?
  • How can charities engage with celebrities without making it all about status?
  • Does the messaging that goes out with fundraising - about £X buying a goat, and 90% of money going to programs - do more harm than good?
  • Are campaign actions that start and end with a single click actually going to engage people in our values, or is it just another transaction?
  • How do we promote Fairtrade and ethical purchase if not through the language of money?

I left pondering these questions and more. Next week BOND will release a report on just these issues for the aid and development sector, and in the coming months we at the Global Poverty Project will continue to challenge, poke and prod at how we can all find the most inclusive, most effective and most appropriate ways of mobilising people to take action against extreme poverty.

Education for All?

 

“Education is the most powerful weapon which you can use to change the world.”
– Nelson Mandela

At the beginning of March, UNESCO released its 2011 Education for All (EFA) Global Monitoring Report to evaluate the current climate of global education. The report reveals that despite some individual country gains, we are still way off track to reaching universal primary education by 2015.

Although the number of out-of-school children in 2008 reduced to 67 million, down from 72 million the previous year, we still have a long way to go in just 4 years if we want to meet the second millennium development goal of universal primary education.

This short video and the report describe how one of the biggest barriers currently keeping 42% of those children out of school is violent conflict. The video focuses on the struggles of the education systems in Colombia, Jordan, and the Congo, describing how displacement, violence, and intimidation keep many children out of the classroom.

Twelve years is the average duration of violent conflict episodes in low-income countries, forcing some children to miss their entire primary education and many to have only sporadic schooling.

It’s easy to think there’s nothing we can do to support education in conflict-affected regions, but the EFA report proves that there are many things we can do, and that we should start immediately.

Aid for Education
Education currently only accounts for 2% of all humanitarian aid. That leaves twenty-one developing countries spending more on arms than on primary schools, which is unacceptable if we claim to value education.

According to the EFA Highlights of the report, it would take just six days of military spending by rich countries to close the USD$16 billion Education for All external financing gap. Despite claims by OECD countries that achieving universal primary education by 2015 is a major priority, just 38% of aid requests for education are met, which is around half the average for all sectors.

Speak up for Education
We need to get more good aid into the education sector in conflict-affected countries if we want to help the 28 million children currently out of school to obtain the education they so desperately desire.

You can join people like the Global Campaign for Education to help put pressure on governments to keep their promise to support education for all.

We’ve already had some major wins, seeing 52 million children enrolled in primary school from 1999 to 2008, but we need to pick up the pace if we want to reach the remaining 67 million by 2015.

Posted by Ashli Alberty in Education for column Issue Analysis on Mar 21st 2011, 16:28

Oil, Transparency and Accountability

 

Over the last few weeks’ dramatic revolutionary movements have risen up across Northern Africa challenging and overthrowing their dictatorial leaders. First in Tunisia, Egypt and now taking place in Libya and Bahrain, citizens have turned to the streets demanding an end to the corruption, mismanagement and poor living standards in their country.

Critical in this process are the wider political and economic reforms that will improve transparency and accountability. For too long, leaders within these and many other countries have been able to use the wealth generated by natural resources as a private piggy bank instead of investing in the development of their country.

As we wrote recently, a quarter of Egyptians continue to live in poverty while their ex-leader, Hosni Mubarak amassed a personal fortune estimated at $70 billion. And it’s the same story in Libya with it being estimated that one third of the population continue to live in poverty.

It doesn’t have to be like this.

We can play a significant role in increasing the information available to citizens in countries rich in natural resources empowering them to hold their governments to account.

This year real momentum is building around a push towards greater transparency standards for oil, gas and mining companies. In fact, last year the US passed landmark new legislation requiring that all companies involved in extractive activities had to publish what they pay in taxes, fees and royalties to governments for the right to operate in their territory.
Now it’s time for the UK and Europe to do the same.

Indeed, just last week, Transparency International released its latest report rating 44 oil and gas companies on their levels of transparency representing 60 per cent of global oil and gas production. The report evaluated the companies in three areas:

  • Reporting on anti-corruption programmes
  • Organisational disclosure
  • Country-level disclosure

By disclosing data in these three fields, the information released makes it harder for corrupt leaders and officials to steal the profits enabling citizens to hold their governments to account.
The good news is in the three years since their last report transparency standards have improved significantly with only 8 of the 44 companies scored zero for reporting on anti-corruption programmes. This is down from 21 of 42 in 2008.

However whilst, standards of disclosure are getting better there is still much to be done. Huguette Labelle, Chair of TI said;
“It is good news that transparency is improving, but too few companies publish what they pay governments in each country where they operate. Two thirds of the world’s poor live in resource rich countries. They have a right to know how much money their governments get from companies to exploit these resources.’

And here’s where we can play a part.

The report pointed out that EU oil and gas companies have a poor track record of transparency and accountability in their operations in Egypt and Libya. Of the 8 companies included none reveal the payments they make to these countries. By revealing their payments the information released makes it easier to prevent the misappropriation of these funds.

That’s why we’re supporting Anas Sarwar’s 10 Min Rule Bill and pushing for a law to be passed in the UK requiring oil, gas and mining companies to publish what they pay.

As we wrote at the time, Anas Sarwar has recently spoken at length in the House of Commons about the need for greater transparency for oil and gas companies and the potential this has for helping citizens in resource rich countries demand better services from their governments and lift themselves out of poverty.

If you’d like to get involved and learn more about this issue sign up to our movement for Justice.