‘India needs regulation but a mountain of regulation is not necessarily better because it becomes almost impossible to enforce’

In this Walk The Talk on NDTV 24x7,Huguette Labelle,Chair,Board of Directors of Transparency International,talks to The Indian Express Editor-in-Chief Shekhar Gupta on how India can fight corruption and improve its rankings on its Corruption Perceptions Index

Written by Shekhar Gupta | Published: March 13, 2012 2:26 am

In this Walk The Talk on NDTV 24×7,Huguette Labelle,Chair,Board of Directors of Transparency International,talks to The Indian Express Editor-in-Chief Shekhar Gupta on how India can fight corruption and improve its rankings on its Corruption Perceptions Index

I am on the outskirts of Davos,Switzerland,walking on a frozen lake and my guest today is a brilliant woman who fights corruption and who tells countries how to fix this one problem that has got millions and millions,in fact,billions of people angry around the world—Chair of the Board of Transparency International,Huguette Labelle. In rankings done by Transparency International,we (India) do about as badly as we do in cricket these days—3.1 out of 10.

There is quite a lot of room for improvement. And yet,India is such an important country,and increasingly so as an emerging country,that it has got to show the world what it can do.

But have you been disappointed by the way India has addressed corruption or are you encouraged by the way India has woken up?

I think that in the last couple of years India has done a number of things. Although it needs regulation and enforcement of regulation to protect people and to have a level playing field for industry,a mountain of regulation is not necessarily better,because then it becomes almost impossible to enforce. I think a lot of work has been done in this regard under the current administration. There is a lot of room now to do really significant governance reviews,improvement and make sure that the citizens are free of having to pay bribes in order to gain access to essential services.

What do you see as too much regulation?

Let me give you an example. If in order to build a simple structure you need several dozen permits,each time it opens the door for the possibility of asking for a bribe or of offering a bribe.

Right. But have you taken a look at some of the draft legislation that have been prepared in India?

Certainly. In the last year,the legislation that has been in front of Parliament now for quite a while on the ombudsman.

What we call the Lokpal Bill.

Yes. The need for legislation is very important. So let’s hope that Parliament will come to some conclusion on that because an ombudsman position and a strong one is important. Of course,it is not the only thing that will create transparency and full integrity in the government—to have that you need governance reviews and reforms in the way government programmes are administered—but at the same time you need to ensure that when something goes wrong,because it will,there is an office that can deal with it. And it has to be an office that is not just situated in Delhi but has people across the country so that the people even in remote communities have a chance to turn to this agency if they have been asked for a bribe in order to get a licence,which they should not have to pay,or to gain access to school or health services.

Since Transparency International studies the whole world,give me examples of countries where change has worked.

Let me use Chile as an example,which is a country rich in natural resources. In the last decade or less,this country has done tremendous work in improving their governance in making the fight against corruption very central to what they do. When you look at Chile today,of course like all countries,there is always room for improvement,but they have gone a long way in a very short period of time which demonstrates that it can be done if there is political will and a sustained agenda.

What about an example of a country which may have done very badly over time?

When you look at failed states,whether you think of Sudan,Somalia or even the Republic of Congo,which is so rich in natural resources and yet a country with internal conflicts and violence,corruption is not the only issue but it is a common denominator.

Have you had countries decline on the corruption index?

Let me use one example because this country was at the top—Finland. Finland has been our best country on the Corruption Perception Index (CPI) for a number of years now. But they had a major scandal a few years ago,which of course they dealt with properly but that really reminded the people of that country and those working with it that you are not infallible and that you have got to keep close to the situation and make sure that you are constantly vigilant. Of course,justice did its course and Finland has done better. I can also use Canada as an example. A number of years ago,Canada was No. 6 on the CPI and there was a scandal and they sort of fell to No. 14 but then they handled the scandal with a commission of inquiry and now they are back up on the list.

But Chile,I think,is a very good example because it is not a small country.

Large countries have greater challenges to make changes that are pervasive. But if we look at a country,what we have found is that if the government at the national level,even in a decentralised country,is able to publish what it pays to its employees all the way to the local government and institutions,be it in health or education,then the transparency that comes about is that the budget given to the school is on the school door and the budget for health is on the door of the clinic. And suddenly,where there were no doctors available,they suddenly appear,because the people are saying,‘Hey,there is money that has been assigned here to pay for doctors and teachers’.

So basically,the government needs to bring in transparency and that will minimise corruption.

Absolutely. It is a very strong deterrent and it empowers the people because they have the information to hold their local government accountable.

So what is a bigger deterrent—governance reform or very strong punitive structure?

I think you need both. You need strong reforms in government so that you are able to eliminate close to 100 per cent of bribery that takes place in poor administration. But at the same time,there will always be rogue people in our administrations and that’s where you need the equivalent of an anti-corruption commission or an ombudsman so that the people have the chance to go to an authority if there is extortion or if they are being asked to pay a bribe to put their child in school or to go get their child vaccinated.

Can you give me examples of countries where the ombudsman system has worked very well?

I think it has worked in a number of countries,especially in central and eastern Europe,where,after the fall of the Soviet Union,the discovery of how much corruption there was in the administrations accelerated countries into giving themselves some strong institutions and they are doing much better than they ever have had before.

Do you have any examples where they haven’t worked? Or where they may have gone wrong?

I don’t think I can give you examples of what has gone wrong in terms of a specific issue like the ombudsman,but I think that what happens very often is that a government comes into power with a strong mandate that they have given themselves to fight corruption and then when they arrive in power, nothing happens. Or it happens,and they do carry out a number of major initiatives over the first year or so,but then because corruption is so systemic that after a year or two,they stop implementing the agenda that they had given themselves. And that’s when people get very unhappy and they begin to mistrust their government. The confidence in the government goes down. So I think governments do that at their own peril.

Reading your literature,I was struck by something you say. You say corruption thrives where temptation exists with permissiveness. Explain that please.

Corruption thrives when there is opacity and where people hide things. And you can cure it with greater transparency.

And what creates permissiveness,besides opacity?

If the people in a government department see that their leaders live in tremendous opulence,they begin to say,‘Okay,if it is right for them…’

…It’s right for me.

Exactly. And that’s where integrity at the top is needed. So that we have leaders who are clean and demonstrate that they are clean every day and expect the people under them to be the same. Then that permissiveness begins to disappear.

Have you followed the work that Anna Hazare and his team have done in India? What do you think?

I think what has happened is that it has helped to mobilise people to say no to impunity and say we don’t want to tolerate corruption anymore and we need greater transparency. And that in itself has been very useful. But one needs to go beyond just the ombudsman legislation,which is important in itself,to broaden the agenda because you need a number of reforms in any country to make sure that you have a strong base for the future to prevent corruption.

Did you also follow the strong anti-politician flavour that this movement acquired in India? Are you in agreement with that?

I think politicians have to be able to demonstrate to their people that they are there to manage the public good on behalf of the people,that the resources of the country are the resources of the people. And I think that when people can see that and when candidates for election make promises that they follow up on,then at least you will not have a build-up of mistrust.

The movement seems to have flagged a little bit,particularly after the last round of rallies when crowds did not come. And now it seems to be going into interesting directions. For example,they are saying that Parliament has failed and they are saying that the people are above Parliament and that legislation should be done through referendum. Your response to that.

We have not yet found a perfect system around the world for managing the public good and the one we have in terms of democracy,as they now exist in countries like India,is still the best that we have found. But it is important for people to vote because you cannot complain if you do not vote. You have to be a part of the decision of who will represent you. Some countries don’t have a high percentage of the population that votes. In this case,people in government and parliaments have to find a way of ensuring that there is participative democracy. At the same time,we have to find a way to involve people so that there is no divide between people and their leaders.

When you talked of temptation and permissiveness,the area which it applies to most of all is the area of mineral resources or natural resources or state-controlled resources like extractive industries. Do you think the onus rests on the shoulders of corporations as well because there is also an anti-corporate mood right now which may not be a sustainable thing?

The private sector can be a force for good or bad. In some countries,extractive and natural industries may account for 50 per cent of the country’s revenues. So we are telling the private sector,you must disclose what you pay to governments. No more secrets there.

Is anybody listening to you?

There is an advisory group of the World Economic Forum working on that. It is developing what we hope is a much better framework. What we are saying is,first of all when you start negotiating with a national government,don’t let it be a big secret. Involve the local community and civil society so that people know what is happening. But once you have got this agreement,then you have got to make sure that you publish what you pay in terms of taxes,royalty and in concession fees to each government and preferably each project.

Are any companies doing that?

Rio Tinto. Statoil,a state-run company from Norway is also doing it. One of our (Candian) companies,Nexen,which is into oil and gas,is doing pretty good in that respect as well. But what you need is for all companies to do that and you also need companies to publish who their equity holders are because it could become a new way of hiding looted and stolen money by leaders.

Sweat equity by another name,which means I won’t pay you money but I will give you so many shares in the name of a trust that you set up.

Absolutely. So (the private sector) has to ensure that they have means of working with the local community as well as the national government,so that if things start to go wrong,they can redress them together because otherwise,the local community very often feels that they see the resources coming out of the soil along with some of the problems it creates without any returns.

I believe South Africa is doing well. I remember a conversation with former president F W de Klerk on how he fixed it. They have done it very imaginatively.

I think we are starting to see leaders of industry doing this. We are saying that industry must publish what they pay and governments must publish what they receive because then people can match the two figures and see whether things are under control or not.

So how can India get itself to move up from 3.1? What is a realistic target that we can give ourselves—a year,two years or five years from now?

By looking at where the vulnerable areas for bribery are so that people who do business from within India and outside of India are able to see a difference.

We have heard from the PM of Georgia on how he sacked all 18,000 traffic cops in his country one morning and the traffic ran better and how when the cops came out to protest, they received no support.

Some people say very often that in the public sector,the salaries are very low,below what people can live on properly. At the same time,as long as those individuals prevent the full revenues from coming into the coffers of the national government,they will never be paid properly. I have seen countries where they decided that,okay,our police is corrupt,we are going to pay them four times what we pay them now and a few weeks later,they realise there were no police on the streets. What happened? They didn’t have to come to work anymore because they were being paid well. They realised you need to do much more than just pay people more. You need to have strong management,you need to have good training and deterrents as well.

Stuff that you do with Transparency International. It could be making you unpopular with many governments and establishments. What is the nastiest thing somebody has said to you?

I get two kinds of telephone calls when we publish the CPI. One of them could be from a deputy prime minister saying I am calling on behalf of my president or prime minister and your methodology must be wrong because we cannot be so bad. But we also get the other calls,those who call at that same level of authority and say,‘This is a wake-up call. We know we have got a problem,can you help us fix it’?

Have heads of state come to you and said you helped us make a difference?

Yes. For example,Togo,last year,was one of those countries where the head of government said we obviously need to do something more than what we are doing now. Can you help us? He sent a delegation of his chief auditor,senior justice of the supreme court,some of his comptrollers and so on. A group of about 10 people who stayed in Berlin at our head office for more than a week,working and trying to see what are the tools that we have that they could use.

What worries me most of all about what your literature says is on the issue of stickiness of corruption,that corrupt nations tend to stay corrupt and clean ones tend to remain clean. Is it pessimistic for countries which have problems?

No. You don’t see dramatic changes from year to year.

You have to be patient.

Exactly. It takes time. But there are examples like Chile and others who have made tremendous strides to improve their situation.

Do you see the Anna Hazare movement as a positive or a disruptive thing?

I think that what’s happened is the waking up of people and mobilising them. They are saying we want to see change,so that in itself can be a contributing factor.

Transcribed by Aashish Saxena

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