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Zoellick to members of ICHA: "We need to stand by one another. We need to succeed."

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World Bank President Robert Zoellick opens the second meeting of ICHA.


Introduction

It’s a great pleasure to welcome you back to the World Bank for this second meeting of the International Corruption Hunters Alliance.

This group first began to come together three years ago in Botswana.  At that time, it was made up of only a handful of like-minded corruption fighters.

We’ve come a long way since then.  As I look around this room today, I see that there is strength in numbers.

This alliance now has around 250 members, representing six regions across the globe as well as international development organizations, multilateral development banks, and international enforcement entities.  I’m particularly pleased that so many chiefs of law enforcement bodies and heads of international anti-corruption agencies are with us today. 

So I’d like to thank all of you for your commitment and dedication to rooting out corruption. 

I’d also like to thank the governments of Australia and Denmark, who have recognized the potential of this initiative and provided generous support to help sustain it.  I hope other governments will be motivated by the outcomes of this year's meeting to lend their support as well.


I especially want to thank Leonard McCarthy. 

When I asked Leonard to head up of the World Bank Group’s Vice Presidency for Institutional Integrity, we were seeking to get beyond some difficult days. 

I knew we needed a leader who was recognized globally for his integrity, independence, and effectiveness in fighting corruption and strengthening good governance. 

I also hoped for someone who could speak from the developing world’s perspective; who recognizes that stealing from the poor is an outrage; that undermining the public trust in new governments, often in fragile situations, is a terrible breach of duty; who could speak in plain language from the heart about the importance of honesty, fair dealing, taking responsibility…and attacking corruption, crime, and cartels. 

Leonard has been a true leader – protecting the Bank’s assets; holding people, businesses, and governments responsible if they steal or cheat; and driving efforts like this one, which make our network of partners stronger and more effective.  It has been a privilege to work with Leonard, and I want to take this opportunity to thank him publicly.  


Making Good On Our Promises


At the inaugural meeting of this Alliance, in December 2010, you agreed on priority actions.  I’m pleased to say we’ve made good on our promises. 

First, we pledged to step up criminal action against corrupt officials – and we achieved significant results:

  • Indonesia’s anti-corruption commission, the KPK, secured jail terms against thirty-nine people; seized one billion rupiahs of bribe money in a sting operation; and is now using a new National Integrity Index to track the performance of government officials.  Working with Interpol, the KPK successfully extradited two corrupt fugitives, both of whom have been tried and sentenced.
  • The UK’s Serious Fraud Office efforts led to a court order for Macmillan Publishers to pay more than £11 million for its unlawful conduct in a World Bank education project in South Sudan.
  • And a prosecution by Norwegian authorities led to the bribery conviction of three individuals connected to a World Bank-financed project in Tanzania.

Second, the Alliance pledged to improve the quality, amount, and speed of our information sharing.

Our Integrity Vice Presidency, INT, is formalizing information sharing through parallel investigations and memoranda of understanding with national authorities.  We’ve seen how these steps give national law enforcement authorities the power and legitimacy to share critical information with the Bank. 

For example, INT is currently working with several European prosecuting offices on a corruption investigation that has touched a number of countries around the world.  Through close coordination, exchange of information, and trust, these joint efforts have led to arrests and seizure of ill-gotten gains.  In a separate case, a national authority conducted an investigation based on our referral, leading to arrests that will be critical in helping the World Bank address a major infrastructure project.

Third, in 2010 the Alliance determined to figure out how best to share restitution payments and fines with countries that have been the victims of corruption.  The World Bank estimates that $20 to $40 billion is stolen every year from developing countries.

Soon after I arrived at the World Bank Group, we created the Stolen Asset Recovery initiative, or StAR – a partnership between the World Bank Group and the UN Office on Drugs and Crime, that supports international efforts to end safe havens for corrupt funds. 

In 2009, StAR provided instrumental support to the governments of Haiti and Switzerland, leading the Swiss to order  $6 million in assets – allegedly plundered by former Haitian President Jean-Claude Duvalier and his associates —to be returned to Haiti.

This year, StAR helped Tunisia secure the return of two jets that had been hidden in Europe, worth an estimated $30 million.  These are important first steps, as well as a demonstration of international commitment and cooperation toward asset recovery. 

One of the studies StAR released this year asked investigators in a number of different jurisdictions why the intermediaries who provide the front for shell companies are so rarely prosecuted.  The answer was that no one could prove these intermediaries’ involvement, and investigators were under no obligation to conduct proper due diligence on their clients.  StAR’s research and training work in Afghanistan, Bolivia, Colombia, and Egypt aims to mitigate this willful blindness on the part of the financial service providers.

Greater training on asset recovery – to share expertise and hone operational skills – would help secure even more results.  That’s why, at the end of the week, 100 of you will have the opportunity to learn more about evidence gathering, mutual legal assistance, and asset recovery from a program StAR is co-hosting with George Washington University.

Innovation: Using Technology to Get Ahead


We need to keep up the progress in these priority areas.   But we need to go further, too. 

So today I want to focus on how we can be more creative and innovative in the global fight against fraud and corruption.

Technology enables us to gather, analyze, and share information at a rapid pace. 

The more information we can make available to the general public about how funds are spent – whether it’s public funds managed by governments or transactions involving World Bank money – the more we ease the burden on corruption hunters.  Citizens are the best people to hold governments and institutions accountable.  This is the first step in reducing opportunities to engage in or be tempted by corruption.

The World Bank Group is already sharing information through our Open Data initiative, which makes thousands of datasets freely available to anyone with an Internet connection.  Based on the success of this initiative, we have supported similar programs in Kenya, Moldova, Mongolia, and other countries.  The message to our clients is clear: We are open about what we do and what we know.  You can do the same.

But we also know that today we’re only touching the tip of the technological iceberg.  After sharing information, the second step is to start using it in interactive and innovative ways to outsmart corruption and criminality. 

At the tech expo in the Bank’s atrium, you will see the World Bank’s new Integrity App, which will facilitate reporting on fraud and corruption.

A large number of our investigations are driven by information we receive from observant individuals working on Bank-funded projects.  Citizen involvement can be powerful – if we empower people.  They know when something isn’t right.  This app will give them instant access to project information, so they can easily send information and photos to INT.  It will help speed up and broaden the reach of the complaints handling process. 

Interpol has approached the World Bank about another innovative use of technology: an international drive to get key countries to produce national electronic ID cards for migrant workers, whose vulnerable status often makes them easy prey for organized crime.  These ID cards will be globally verifiable by Interpol and can be used for the receipt and transfer of electronic remittances.  This excellent idea will give migrant workers greater security at the same time it helps law enforcement agencies crack down on human trafficking, money laundering, and other forms of smuggling.

Innovation: Understanding Corruption

Technology can help us move faster and with greater accuracy to detect and catch fraud and corruption.  But we need to learn more about the cancer of corruption.

This April, government ministers, private sector executives, and World Bank experts met for a frank analysis of corruption in infrastructure projects.  One of the executives from a private bank suggested that governments could reduce the incidence of corruption by conferring more prestige upon the work of public procurement officials.  Tougher qualifications would attract better candidates.  Higher salaries would reduce the likelihood officials will solicit bribes and that they will be tempted.

“Knowing thy enemy” is good advice.  Harvard professor Matthew Stephenson has examined the psychology of corruption, and found that the probability that punishment will be imposed in a timely fashion is more important than the severity of punishment. 

Criminal organizations are attracted to places where formal controls from the criminal justice system don’t operate; where informal controls from neighbors or citizens aren’t working; where institutions are weak.  In Guatemala, for example, only 3.5 percent of murder cases end up in a trial.  That sends a clear message to the criminals. 

How can we do better?

Strong legal frameworks are fundamental – and in the past year we’ve seen the enactment of two powerful new anti-corruption laws: 

Canada is now able to seize, freeze, or sequester the assets of officials or former officials of foreign states, as well as their family members, where these assets had been inappropriately obtained or misappropriated from the foreign state. 

In China, it’s now a crime to pay bribes to foreign government officials and officials of international public organizations. The law covers Chinese citizens and legal entities organized under Chinese law, including foreign invested enterprises established in China that engage in bribery anywhere in the world.

Strong institutions are also important – because recovered funds can’t be repatriated to countries where institutions fail to manage them properly. Where the proper mechanisms exist to manage such funds, we need to take advantage of them.  Where they don’t exist, we need to create them. 

We also should be innovative in how we pursue investigations of corrupt or fraudulent behavior.  It must be crystal clear that corrupt behavior has real costs and consequences. 

The Bank Group has had success in using negotiated resolutions or settlements.  Firms that enter into settlements don’t escape punishment – in fact, in almost every settlement, the firm has been debarred and subjected to cross debarment. In every settlement – as for any case resolved by our Sanctions Board – the nature of the charges and the sanction applied is made public and the findings are shared with relevant government authorities so they may take action under their national legislations.

Settlements have, however, proven to be an invaluable tool – not only for resolving cases quickly, but also providing a way for firms to acknowledge their misconduct and clean up or build their own internal integrity programs. 

In 2010, for example, the engineering firm Lotti acknowledged its misconduct in a World Bank-financed water project in Indonesia.  As part of its agreement with the Bank, Lotti repaid $350,000 to the Indonesian government as restitution for fraudulent invoicing. 

As another example, Siemens AG has completely reworked its approach to integrity due diligence in response to investigations by, and settlements with, the World Bank Group, as well as the US Department of Justice and German authorities.

Our investigations and debarments have bite.

Since mid-2007, the Bank Group has sanctioned 167 entities while closing more than 600 cases.  Private banks and firms are factoring our debarment decisions into their own due diligence.  Leonard recently related to me a conversation with the General Counsel of a major Canadian mining firm, who told him: If the World Bank says it’s OK to work with a company, then we say it’s OK too.  Private companies will sometimes call INT looking for guidance about the firms that appear on the World Bank’s debarment list.

By reaching out and working with national authorities on investigations, audit, and risk management efforts, the Bank is also helping strengthen in-country capacity and systems. 

For example, the World Bank recently conducted a health sector review with the Global Fund to Fight AIDS, Tuberculosis, and Malaria and USAID, and found that Nigeria had nearly $300,000 worth of fraudulent expenses.  As a result, Nigeria removed the implicated officials and its Ministry of Finance then used the Bank’s methodology and findings to inform its own review which found almost $1 million in fraudulent expenses. 

Yet there’s so much more that needs to be done to promote and support financial integrity.

A 2011 study from the UK’s Financial Services Authority illustrates some of the challenges.  The study describes how British banks are faring in managing money laundering risk in high-risk situations.  The report notes that some banks were unwilling to turn away very profitable business, even if there was a high level of risk that they would be handling the proceeds of crime.  Over half the banks surveyed failed to apply meaningful enhanced due diligence.  Around a third failed to put in place mechanisms to identify customers who might be more susceptible to corruption.

We need to insist on greater integrity in financial institutions. 

Last year, enforcement authorities from around the globe came together to endorse a World Bank-sponsored Declaration of Principles.  The declaration emphasized the need for investigative and enforcement institutions to work together to better assess and track money flows in and out of key jurisdictions, and report on suspicious transactions – exactly the kind of action we need to reduce dangers in high-risk environments. 

We need to use the International Corruption Hunters Alliance to give these ideas more bite and make the most of our collective influence.
Each of you has the power to effect change in your own country.   The Alliance can give you the technical resources and moral support to keep up the hard fight.   

Looking Ahead

The aim of this Alliance was – above all else – to be useful: to provide effective tools and information so all of us can successfully prevent and attack corruption.

So I’d like to suggest three ideas for your meetings this week that can help support the work that you do every day.

First: We could develop a compendium of resources, examples of cases, draft laws, and regulations that support integrity in financial centers; this project could serve as a useful informational resource for all members of the Alliance.

Second: Coming out of the discussions in the 2010 meeting, we came up with a list of criteria for measuring the effectiveness of anti-corruption authorities – such as turn-around time for investigations, successful outcomes, and level of autonomy.  We need to make this more concrete.  We suggest developing a set of recommendations for how members could use these standards to improve anti-corruption efforts – to speed up investigations, prosecute them successfully, and operate without being influenced by political concerns.

Third: we recommend developing a practitioner’s toolkit for using evidence to show the impact of corruption on the intended beneficiaries of public services.  A toolkit would support prosecutions and policy work by suggesting how to use this kind of evidence in trials, support mutual legal assistance requests, drive policy change domestically, and build political and public support.

Over the next few days, I hope that you will come up with other ideas on how we can support one another. 

Many of the people in this room have great courage.  They run risks.  We need to stand by one another.  We need to succeed. 

I want to thank you again for your fortitude and your commitment, and for joining us as part of this important network.  My hat is off to you all.  And I look forward to hearing the results of your discussions. 

Thank you.

(As prepared for delivery)




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