On Monday, June 17, the World Bank hosted a panel discussion on demand-side corruption with Mark Pieth, Chairman of the Organization for Economic Co-operation and Development (OECD) Working Group on Bribery and Nicola Bonucci, the OECD’s Director for Legal Affairs. The panel was moderated by Pascale Dubois, the Sanctions Evaluation and Suspension Officer (EO) for the World Bank.
In introducing demand-side corruption Pieth said that it was an area of anti-bribery that has largely been ignored until recently. Yet “solicitation of bribes or extortion are an everyday reality in many parts of the world,” Pieth remarked. One solution to this problem is a joint initiative by the OECD and the Basel Institute of Governance called “the High Level Reporting Mechanism” (HLRM).
The initiative is currently taking the form of a proposal for countries to institute a kind of national ombudsman who would have authority to act on allegations of improper demands by government officials for bribes. “The idea is to build a second channel next to law enforcement that would inform the government that ‘something is wrong,’” said Pieth. The concept is based on collective action principles, whereby both the private sector and government, working together, would address allegations of solicitation of bribes. Pieth remarked that the program was not meant to replace traditional law enforcement roles, but was rather meant to be a type of preventative tool of last resort for companies facing bribery demands.
There are already two pilot programs for the plan being introduced in Colombia and Ukraine. In an address by the President of Colombia, Juan Manuel Santos, last April, the President introduced Colombia’s High-Level Whistleblowing Mechanism, remarking that the program would work as “a preventive mechanism that could issue early warnings in public procurement procedures” and would be aimed at “gain[ing] in transparency without sacrificing efficiency.”
Although these pilot programs show promise for creatively tackling the issue of demand-side corruption, Pieth admitted that many practical questions remained when trying to implement such a mechanism. In Ukraine, for example, he said that stakeholders were still trying to figure out whether to make the ombudsman public or private, how to fund the mechanism, and whether it could be applicable to all issues in procurement, such as unfair business practices. Still, he was hopeful that the mechanism, when ultimately in place, would be a major step in addressing demand-side corruption problems in that country as well.
A few days earlier, at the G8 Plenary Session, World Bank Managing Director Caroline Anstey gave closing remarks on what efforts the Bank is taking to encourage transparency. Anstey told listeners that the Bank supported implementation of the Extractive Industries Transparency Initiative (EITI) standards, paying particular attention to beneficial ownership information. “Transparency around beneficial ownership is crucial to halting illicit financial flows, promoting anti-corruption, recovering stolen assets, and combating terrorism financing, tax evasion and other financial crimes,” she said. Anstey also announced that the World Bank was launching an “Open Contracting Partnership” to increase disclosure and participation in public contracting as well as an “Open and Collaborative Private Sector Initiative” to leverage corporate data and to incentivize governments to increase transparency of their corporate registries. Anstey also stated that, starting on July 1, 2013, the Bank would begin publishing all contract awards of World Bank Group-executed contracts above $250,000. Her full remarks can be found here.