Public Policies on Transparency

Public Policies on Transparency Néstor BARAGLI Abstract Baragli offers a detailed definition of the expression ‘transparency policies’, analyzing each of the closely-related terms that comprise the concept, such as ‘accountability’, ‘governability’ and ‘responsibility’. Baragli links the concept to the branches of government relating to civil society and the private sector. The article offers an historical overview of the most important documents signed by the international community that underlay the strategies to fight corruption adopted by international organizations. Finally, Baragli highlights the work, effort and dedication of the non-governmental organization Transparency International in bringing the issue of corruption and policies for its prevention to the world stage.

Resumen El autor define la expresión “políticas de transparencia” detalladamente, analizando cada uno de los términos que conforman la expresión y que están estrechamente relacionados como “rendición de cuentas”, “gobernabilidad” y “responsabilidad”. Así pues, vincula el concepto de modo cardinal a los poderes del Estado con la sociedad civil y con el sector privado. Hace un recuento de historia política sobre los documentos más importantes que dan origen a las estrategias de lucha contra la corrupción adoptados por los organismos internacionales y suscritos por la comunidad internacional. Finalmente, destaca el trabajo, esfuerzo y dedicación de la organización no gubernamental Transparencia Internacional instalando el tema de la corrupción y sus políticas preventivas en la agenda pública mundial.

Comparative Media Law Journal Number 5, January-June 2005, pp. 47-67

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1. Definition As occurs with so many other terms in the social sciences, it can be difficult to synthetically define the phrase ‘transparency policies’ without at the same time linking it to other intimately related expressions. The first of these concepts is ‘governance’. The United Nations defines governance as the exercise of political, economic and administrative authority in the management of a country’s affairs at all levels. Governance comprises the complex mechanisms, processes and institutions through which citizens and groups articulate their interests, mediate their differences and exercise their legal rights and obligations.1

The World Bank Institute, for its part, has understood this term as ‘the traditions and institutions by which authority in a country is exercised for the common good’. This includes the following components and subcomponents (Kaufmann, Kraay and Zoido, 1999): 1. The process by which those in authority are selected, monitored and replaced (accountability, political stability and the absence of violence); 2. The capacity of the government to effectively manage its resources and implement sound policies (a government’s effectiveness, regulatory aspects);

1 Governance for Sustainable Human Development. A UNDP Policy Paper. In María González Assisi ‘Curso de empoderamiento comunitario e inclusión social’, presented by the World Bank Institute from October 29 to November 26, 2002. Module 4: Citizen Participation in National Governance.

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3. The respect of citizens and the state for the institutions that govern economic and social interactions among them (rule of law, control of corruption).2 The second of the related concepts is ‘accountability’. The scope of the term implies ‘the fiduciary responsibility to complete the assigned tasks and to provide a precise and opportune balance of such activities’.3 As a final consideration prior to offering a possible definition of this term, it is revealing to refer to the literal meaning of the word transparency, namely, a body that allows objects to be seen through it or that allows light to pass through it. This meaning brings us to its metaphorical significance, light is the opposite of darkness, and therefore, transparency is the opposite of corruption, which by its very nature can only take place in the shadows. It is this relationship of opposites that has frequently meant that the terms ‘transparency policies’ and ‘corruption prevention policies’ are used synonymously. Transparency policies can thus be understood as a series of strategies and practices, based essentially on a broad opening up and availability of information that contributes to governance and accountability in an organization. These policies seek to place most of the existing information (programs and projects, the decision-making process, budgets, costs, human resources and materials, internal procedures,

2 González de Asís, Idem. 3 La hora de la transparencia en América Latina – El manual de anticorrupción

en la función pública, prepared by Transparency International - Latin America and the Caribbean. Transparency International, Berlín, Germany, 1996 / Transparencia Internacional Latinoamérica y el Caribe, Quito, Ecuador, 1996 / Konrad Adenauer Stiftung, A.C. CIEDLA, Germany, 1997 / Ediciones Granica and Centro Interdisciplinario de Estudios sobre el Desarrollo Latinoamericano - CIEDLA, Buenos Aires, 1998, p. 27.

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results obtained, etc.) in the public domain, facilitating the means for its verification, evaluation and monitoring. In its broader sense, the term ‘public transparency policies’ tends to be used, as was mentioned above, interchangeably with the phrase corruption prevention policies in a specific social or political environment. In this context, the concept provides a cardinal link to the branches of government and their relation to civil society and the private sector, in that the development of complete and transparently efficient public policies cannot be conceived without the participation, communication, deliberation, interaction, supervision and control of such forces. At the same time, there are authors who note a difference between passive transparency (being able to access information) and active transparency (the duty of whoever places the information or whoever leads an organization to function proactively, communicating and explaining all the important aspects of his or her activities). 2I. Background In 1944, when little time remained before the Second World War came to an end and the allied powers were already the guaranteed winners, between July 1- 22, the United Nations Monetary and Financial Conference was held in Bretton Woods, New Hampshire. With a large part of the world economy desolated after the large-scale international conflagration, the key objectives of this conference were to create new game rules for organizing trade among nations, to economically reconstruct the European continent, and to promote the growth of the developing countries. To meet these goals, the International Monetary Fund and the World Bank were created and, from that

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point in time until the present, the basic principles of Bretton Woods in large part regulate the world economic order. Despite the existence of this international system, during the years subsequent to the above-mentioned conference and for a long period of time corruption was not a priority on the list of problems that the states had to resolve. Corruption as a “scourge” (it is currently commonplace to use both terms interchangeably, both in journalistic language as well as in political and academic jargon) did not really enter the international public agenda until well into the twentieth century. The growth in financial operations and transnational trade, together with the development of what is known as ‘globalization’ logically led to the internationalization of corruption, with multinational companies paying bribes to officials of developing countries, and the corresponding adaptation of criminal organizations to such a reality, with the latter being structured as large corporations for illegal purposes. Furthermore, the enormous technological advances of the past few decades have led to an exponential increase in foreign currency transfers through electronic channels (according to UN data, between 1970 and 1990, international monetary flows increased by 3,200 per cent) as well as the growth of offshore banks located in the so-called ‘tax havens’ that maintain strict currency reserve policies, avoid taxes and have little supervision. Under these conditions, control becomes increasingly difficult and the possibility of crimes being committed multiplies. In this framework, since the beginning of the 1970s a series of major developments have been occurring at dizzying speed that represent landmarks in the history of the fight against corruption — some of which will be subsequently mentioned in this article — and which lead us to the present,

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a period that is rich in norms, policies and literature on the subject. One of the most important antecedents in the field was the adoption in 1977 of the Foreign Corrupt Practices Act (FCPA) in the United States. This legislation prohibits —with rigorous financial and penal sanctions — any company (including its representatives, executives, and shareholders) registered in the United States from promoting or offering payments, promises, or authorizations of payments, gifts, promises or authorizations to deliver any item of value to foreign public officials, political parties, party leaders or candidates for public office, with the aim of obtaining an economic benefit as a result of these actions. This norm, which for the first time involved the private sector in strategies to fight corruption, was finally concretized on a world level with the adoption of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in 1997 in the framework of the Organization for Economic Co-operation and Development (OECD). This international legal instrument that establishes the illegality of paying bribes to obtain international contracts, provides the global market with transparency and evens out the rules of the game for all its participants. It helps to prevent honest companies from being placed at a disadvantage or losing business as a result of the connivance between corrupt officials and businessmen. One year earlier, the OECD had issued a recommendation to prohibit the payment of bribes by companies from being deducted for tax purposes, a situation common until then in many industrialized countries. Also since the 1980s, international conferences have regularly been held in which participants exchange experiences, analyze practices and policies, and debate ideas concerning transparency and the fight against corruption.

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One of the most important world forums is the International Anti-Corruption Conference (IACC), which has been held since 1983. After the first Conference, held in Washington, DC, these events have been organized bi-annually in different cities around the world. Participants —who hail from different sectors of society and who in one way or another are connected with policies to prevent and fight corruption — meet in these conferences to reaffirm commitments, offer contributions and learn from the experiences of others in the development of transparency policies. Since 1999, these conferences have been complemented by the Global Forum on Fighting Corruption, in which the participants are mainly representatives of governments. At the beginning of the 1990s, when the world was barely beginning to consider the concept of corruption as an obstacle to development, German lawyer Peter Eigen, after having worked for more than 25 years for the World Bank in Africa and Latin America, understood the close link tying corruption to poverty, as well as the responsibility of the industrialized countries and their companies for corrupt practices in international trade. Based on this conviction, in 1993, Eigen founded the non-governmental organization Transparency International (TI), which today has countless national chapters scattered throughout the entire world and has made a concerted effort to place the issue of corruption and preventive policies to combat it on the world public agenda. In terms of international organizations, in 1990, the UN Secretariat prepared a manual entitled ‘International Co-operation for Crime Prevention and Criminal Justice in the Context of Development: Realities and Perspectives of International Co-operation — Practical Measures against Corruption’,4 the second part of which establishes ‘administra4 Manual prepared by the United Nations for the 8th UN Congress on the Prevention of Crime and Treatment of Offenders - May 29, 1990 (United Nations, A / CONF. 144 / 8, May 29, 1990).

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tive and regulatory mechanisms for the prevention of corrupt practices and the abuse of power’, recommending a series of procedures to combat corruption. Also in the United Nations, in 1999, the UN’s Center for International Crime Prevention launched the Global Program against Corruption, with the aim of offering technical support to governments in relation to control of corruption and their transparency policies. With this in mind, it has published a Manual on Anti-Corruption Policy as well as the United Nations Anti-Corruption Tool Kit, designed to serve as support aids for officials, non-governmental organizations, the private sector and the general population. As for the World Bank, in September 1996 its president, James D. Wolfensohn, took a momentous step for this financial institution in publicly committing it ‘to fight against the cancer of corruption.’ In September 1997, its Board of Executive Directors signed up to an anticorruption strategy based on four planks:5 1. Preventing fraud and corruption in Bank financed projects and programs. 2. Helping countries that request assistance in combating corruption. 3. Mainstreaming a concern for corruption directly into country analysis and lending decisions. 4. Contributing to international efforts to fight corruption. In the Western Hemisphere, since the 1990s, important progress has been registered in terms of anti-corruption policies in both the Organization of American States (OAS) as well as in the Summits of Heads of State and Government. 5 ‘Asistencia a los países en la lucha contra la corrupción. El papel del Banco Mundial,’ World Bank, Poverty Reduction and Economic Management Network, September 1997 (Spanish edition: October 1999).

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In 1992, in the Resolution ‘Corrupt Practices in International Trade,’6 the OAS noted that ‘corrupt practices can thwart the process of integral development by diverting resources needed to improve the peoples’ economic and social conditions’. In 1994, in the Belém Do Pará Declaration7 adopted in the Brazilian city of the same name, the foreign ministers and heads of the delegations of OAS member states called for ‘measures to be studied, consistent with each country’s legal system, aimed at fighting corruption and improving efficiency in the running of public affairs, as well as promoting transparency and integrity in the management of public funds’. One of the most important antecedents in the region was the First Summit of the Americas that took place in Miami in December 1994. In this meeting, the heads of state and government declared that ‘all aspects of public administration in a democracy must be transparent and open to public scrutiny’. Another of the most significant developments in the continental fight against corruption was the Inter-American Convention against Corruption — adopted by the OAS on March 29, 1996, at the specialized conference held for such purposes in Caracas, Venezuela — from which came a document containing a number of different preventive measures. In 1997 the General Assembly of the OAS meeting in the city of Lima, Peru, adopted the Inter-American Program for Co-operation in the Fight Against Corruption through Resolution AG/RES 1477 (XXVII–O/97). The first conference of the member states of the Inter-American Convention against Corruption on follow-up mechanisms for its imple6 AG/RES. 1159 (XXII-0-92). 7 AG/DEC. 6 (XXIV-0/94).

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mentation took place in Buenos Aires from May 2–4, 2001. This conference drafted what was known as the ‘Document of Buenos Aires’ (approved on June 4 of the same year during the 31st ordinary period of sessions of the General Assembly of the OAS in San José, Costa Rica) that establishes the foundations of the above-mentioned mechanism. In the European continent, an important reference point in the fight against corruption was what was known as the ‘Nolan Report’. This document — named after the head of the British parliamentary committee that drafted the text in 1995 at the request of the then prime minister — referred to ‘the standards of behavior in public life’, established a series of principles governing the conduct of public officials and promoted its formalization through its incorporation in codes of conduct. Meanwhile, in 1997, the Council of Europe adopted the 20 principles in the fight against corruption, establishing the Group of States Against Corruption (GRECO) in May 1999. One of the main motivations behind the idea of promoting public transparency policies as a crucial instrument in the fight against corruption was the recognition, from the academic, political, and empirical point of view, that exclusively punitive strategies are not effective in achieving durable successes in this field, especially in countries in which the phenomenon takes on systemic characteristics. In the words of the United Nations, ...virtually all practitioners involved in anti-corruption efforts would concede that no matter how draconian or rigorously enforced the penal measures may be, no society can realistically punish more than a small proportion of the officials who abuse their positions. If the level of integrity in government is to be improved, it will be by managerial, administrative, regulatory and reporting mechanisms... penal sanctions can help to achieve

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honesty in government only in a well-administered and well-motivated organization.8

At the present time — and in recognition of the work carried out by the Hong Kong Independent Commission against Corruption (ICAC), created in 1973, as one of the first pioneers in this regard- it is common that state offices for the fight against corruption throughout the world not only have divisions specializing in penal sanctions, but also departments dedicated to analyzing, designing, proposing implementing and publicizing transparency policies. 3. Contents The description of the content of the expression public policies on transparency should necessarily refer to the concepts developed by the different documents and norms that have given it form, a summary of which will be provided in the following section. A. UN: Manual on Practical Measures against Corruption The United Nations was one of the first international organizations that recommended a series of public policies on transparency through what was known as the ‘Manual on Practical Measures against Corruption’. Since the beginning of the 1990s, this manual has been improved, and one of the latest versions incorporates the following elements as instruments and strategies for fighting against corruption: 8 ‘Crime Prevention and Criminal Justice in the Context of Development: Realities and Perspectives of International Co-operation. Practical Measures against Corruption’, manual prepared by the Secretariat of the United Nations for the Eighth United Nations Congress on the Prevention of Crime and the Treatment of Offenders (United Nations, A / CONF. 144 / 8, May 29,1990).

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1. Strengthening and institutional construction (anti-corruption agencies; ombudsmen; strengthening the judicial branch of government and accountability; codes of behavior; national integrity committees or anti-corruption commissions; national integrity conferences and events for developing action plans; strengthening local governments); 2. Prevention (financial declarations detailing the assets and liabilities of public officials; creation of a global agency monitoring the transparency of public sector contracts for international commercial transactions; islands of integrity and integrity pacts; information coordination groups; anti-corruption co-operation in the private sector, reducing the complexity of procedures and discretional criteria); 3. Promoting awareness (access to information; mobilization of civil society through public education and consciousness-raising campaigns; anti-corruption action campaigns; press training and investigative journalism). B. Transparency International (TI): Source Book: This book, published for the first time in 1996 — and which has already been translated into more than 20 languages, adapted to regional contexts through special editions and periodically updated- is, in the words of Peter Eigen, ‘a methodical “drawing together" of the various strands and actors that collectively comprise a nation’s integrity system’. This concept of national integrity systems is one of the major contributions that this world organization has made in the effort to explain what type of activities and measures constitute a complete and efficient series of transparency policies.

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An integrity system, according to TI, provides a practical framework of checks and balances for averting the damage which corruption causes to the public interest, and for fostering an environment in which the quality of official decision-making is heightened. Therefore, the aim is not complete rectitude or a one-time cure or remedy, but an increase in the honesty or integrity of government as a whole, to focus on why and where corruption flourishes and to develop tailor made systems and procedures to prevent and contain it.

Transparency International defines a national integrity system as ‘the series of elements that make it possible for the different components of the state and civil society to be organized and act with transparency, efficiency and effectiveness’.9 The national integrity systems are characterized by an interdisciplinary focus that combines different political, economic, legal, sociological, and administrative elements. Given the complexity of the phenomenon of corruption, it is necessary to prepare an integral strategy to fight against it through the following actions: —Implement administrative reforms to reduce conflicts of interest in government as much as possible and to control acts of corruption within the public administration. It is necessary to have an efficient public administrative structure oriented toward attaining clear and transparent objectives; —Effectively apply administrative law as a common element in any integrity system and accountability in decision-making; 9 This and the following reference in relation to the nacional integrity systems are taken from ‘La Hora de la Transparencia en América Latina - el Manual de Anticorrupción en la Función Pública’, op. cit. note 3, pp. 56-58.

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—Establish appropriate mechanisms that offer public officials and individual citizens the means to denounce alleged acts of corruption and to assure independent control of systems and procedures; —Support for an independent judiciary, so that its procedures and rulings represent an effective barrier against corruption. A political leadership is necessary that extols the values of public and private ethics and backs their application; —Strengthen the auditing agencies, the ESF, with the aim that they can guarantee the integrity and proper handling of public funds. —Create ‘independent’ offices with enough resources and authority so that they can fight against corruption; —Develop an open, competitive and transparent system of acquisitions. The existence of a market economy governed by clear rules that are respected and abided by can decisively assist such efforts in this regard; —Support the development of Codes of Ethics and Procedures on the part of the private sector and promote the role of dissuasive legal measures against corrupt practices. It is necessary to establish a series of laws, regulations and codes of behavior in accordance with the existing social realities; —Back the development of mechanisms that promote accountability and transparency in the democratic processes, such as the monitoring of elections, control over political party campaign spending and the allocation of government resources to such effects, among others; —Strengthen and orient civil society so that it acts against corruption and supports the democratic process. It is necessary to have a society whose social, economic and political values — ‘the habits of the heart’ men60

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tioned by Alexis de Tocqueville in Democracy in America — support honesty; —Guarantee the existence of a free and alert press that exercises the functions of a public advocate; —Promote international co-operation in the fight against corruption. Another important contribution from TI to the design of transparency policies is the development of what are known as ‘integrity pacts’ and ‘islands of integrity’.10 Integrity pacts are voluntary agreements, subscribed to among all the participants that directly intervene in a process of obtaining or contracting public resources. The aim is to strengthen transparency, fairness, honesty and the sustainability of the contractual modality chosen. The process of implementation of each integrity pact involves an invitation to participate in a voluntary change in culture. It seeks to bring specific groups in society together to accept common regulatory systems, tied to a régime of rewards and sanctions above those established in the national legal framework, providing the latter with value added. The island of integrity is a tool that seeks to isolate or protect a process, or a series of interrelated organizational processes, from possible risks of corruption. As the result of a participatory exercise with all the internal and external participants involved in the process that has been selected, the outlook of potential risks of corruption is identified and ethical and procedural measures are collectively designed to lead to changes on different levels, thus promoting honesty. The objective of the islands of integrity is centered on helping to strengthen an ethical culture in the public sector 10 These definitions were taken from the organization Transparency for Colombia (Colombian chapter of TI).

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through designing and applying measures that protect specific organizational processes from risks of corruption. Transparency International has also elaborated a ‘Corruption Fighters’ Tool Kit’ that compiles information on good practice involving transparency policies developed by civil society worldwide. C. Organization of the American States: Inter-American Convention Against Corruption (1996): This international instrument recommends in its Article III, entitled ‘Preventive Measures’ that its signatory member countries consider the applicability of measures aimed at creating, maintaining and strengthening: 1. Standards of conduct for the correct, honorable and proper fulfillment of public functions. These standards shall be intended to prevent conflicts of interest and mandate the proper conservation and use of resources entrusted to government officials in the performance of their functions. These standards shall also establish measures and systems requiring government officials to report to appropriate authorities acts of corruption in the performance of public functions. Such measures should help preserve the public’s confidence in the integrity of public servants and government processes; 2. Mechanisms to enforce those standards of conduct; 3. Instruction to government personnel to ensure proper understanding of their responsibilities and the ethical rules governing their activities; 4. Systems for registering the income, assets and liabilities of persons who perform public functions in certain

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posts as specified by law and, where appropriate, for making such registrations public; 5. Systems of government hiring and procurement of goods and services that assure the openness, equity, and efficiency of such systems; 6. Government revenue collection and control systems that deter corruption; 7. Laws that deny favorable tax treatment for any individual or corporation for expenditures made in violation of the anticorruption laws of the states parties; 8. Systems for protecting public servants and private citizens who, in good faith, report acts of corruption, including protection of their identities, in accordance with their constitutions and the basic principles of their domestic legal systems; 9. Oversight bodies with a view to implementing modern mechanisms for preventing, detecting, punishing and eradicating corrupt acts; 10. Deterrents to the bribery of domestic and foreign government officials, such as mechanisms to ensure that publicly held companies and other types of associations maintain books and records which, in reasonable detail, accurately reflect the acquisition and disposition of assets, and have sufficient internal accounting controls to enable their officers to detect corrupt acts; 11. Mechanisms to encourage participation by civil society and non-governmental organizations in efforts to prevent corruption; 12. The study of further preventive measures that take into account the relationship between equitable compensation and probity in public service.

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D. UN: United Nations Convention Against Corruption (2003) This Convention, signed in the city of Mérida, Mexico, in December 2003, enumerates a list of preventive measures in its Chapter II — some of which are outlined below — which are prescribed for its signatory member states: Preventive anti-corruption practices and policies (Article 5): —In accordance with the fundamental principles of its legal system, to develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability; —Periodically evaluate relevant legal instruments and administrative measures with a view to determining their adequacy to prevent and fight corruption; —Collaborate with each other and with relevant international and regional organizations in promoting and developing preventive policies. This collaboration may include participation in international programs and projects aimed at the prevention of corruption. Preventive anti-corruption body or bodies (Article 6): —Ensure the existence of independent organs for controlling, publicizing and applying preventive measures against corruption.

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Public sector (Article 7): —Adopt transparent systems for the recruitment, hiring, retention, promotion and retirement of public officials; —Establish adequate procedures for the selection and training of individuals for public positions considered especially vulnerable to corruption and the rotation, where appropriate, of such individuals to other positions; —Promote adequate remuneration and equitable pay scales, taking into account the level of economic development of the state party; —Adopt systems that promote transparency and prevent conflicts of interest. Codes of conduct for public officials (Article 8): —Establish measures and systems requiring public officials to make declarations to appropriate authorities regarding their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials; —Adopt disciplinary or other measures against any public officials who violate those standards. Public procurement and management of public finances (Article 9): —Adopt the necessary measures to establish appropriate systems of procurement, based on transparency, com-

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petition and objective criteria in decision-making that are effective in preventing corruption; —Adopt appropriate measures to promote transparency and accountability in the management of public finances. Public information (Article 10): —Adopt such measures as may be necessary to enhance transparency in the public administration, including with regard to its organization, functioning and decision making. Participation of society (Article 13): —Adopt appropriate measures to promote the active participation of individuals and groups outside the public sector in the prevention of and the fight against corruption through measures such as enhancing the transparency of and promoting the contribution of the public to decision making processes; ensuring that the public has effective access to information; undertaking public information activities as well as public education, etc. 4. Additional Bibliography KLITGAARD, Robert, Controlando la corrupción, Buenos Aires, Editorial Sudamericana, 1994. REISMAN, W. Michael, ¿Remedios contra la corrupción? Cohecho, cruzadas y reformas, Mexico City, Fondo de Cultura Económica, 1981.

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ROSE-ACKERMAN, Susan, La corrupción y los gobiernos. Causas, consecuencias y reforma, Buenos Aires, Siglo Veintiuno de Argentina Editores, 2001.

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