Doublethink, Russian Style

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Photo credit: Co Creatr, Flickr

Picture the following scenario: A top Russian manager advocates for equal opportunities and, when hiring new employees, insists upon relying only on their professional competences. In this way, he has given chances to a formerly drug-addicted young man and a young woman with dwarfism. The same manager does not extend the same opportunities to homosexual job seekers, however. A high-ranking state official criticizes his son’s professors at a Russian public university for asking him to purchase some sports equipment for the university gym in exchange for a grade for sports lessons his son had missed. The same state official, however, welcomes a full renovation of his office paid for by a company, calling it ‘a nice gesture’[1] between ‘very good friends’. He might consider granting this company some small favors that are within his power.

Why does this happen? Why do people have double standards? Alena Ledeneva calls it ambivalence – or ‘doublethink’, after George Orwell’s novel ‘1984’ – and traces it back to Soviet ideology. In the Soviet era, people easily switched from what was permissible for Jove (= Party leaders) and what was not permissible for an ox (= ordinary Russian citizens), from what was sanctioned in society and what was welcomed between close friends. This ambivalence is one of the major findings in the survey conducted in the context of WP4, ‘The Ethnographic Study of Corruption Practices’ (ANTICORRP), in several regions in Russia. The results showed that there might be many in-between options: institutions might be bad and good at the same time and gifts might be both helpful and unhelpful.

As Davide Torsello argues, one of the most appreciated gifts in many East European countries is a “premium chocolate box” – with or without some hidden cash. This also happens in Russia. Many patients believe that small gifts might be helpful in order to obtain good medical treatment. Many Russians consider this to be the norm, ‘a sign of gratitude’ for their doctor’s patience. Small gifts can ‘compensate for low salaries’, especially the salaries of doctors working for public health institutions, according to a majority of the respondents.

A ‘premium chocolate box’ does not, however, guarantee good medical treatment. It might depend on various factors, such as whether or not this doctor is a professional in his field. ‘What if a doctor is an incompetent idiot and the gifts will be useless?’ Is a “premium chocolate box” really necessary, or can the problem be solved without any gifts? Is a “premium chocolate box” enough to solve a problem if medical expertise is sought, for example, by young recruiters not willing to serve in the Russian army or applicants for a new driver’s license? In the first case, some sicknesses might be likely ‘found’; in the second case, some sicknesses might be ‘ignored’. Is there a proper way to give a “premium chocolate box”? ‘Some [patients] give gifts in such a humiliating way that it only ruins [the doctors’] attitude toward them’.

What actually happens with a “premium chocolate box”? One interviewed doctor explained that he usually shares the sweets with his team at their daily tea break. Sometimes he even insists that any banknotes should be given to one of his nurses, a single mother, ‘who does not have even enough money for firewood’. In any case, most of the “premium chocolate boxes” are worked off fairly. One respondent recalled: ‘My daughter was hospitalized with a serious diagnosis. We paid 30,000 RUB [~750 EUR] to a department head, and he personally visited my daughter every day, bought and acquired medicines for her, accompanied her to her examinations. Others were not treated like that’. The last point is crucial: ‘And if you have nothing to pay with?’ What if patients cannot afford to buy a “premium chocolate box”?

In analyzing another sector – the Russian education sector – Efim Galitskii and Mark Levin found a similar environment: Many of the parents who are not involved in informal payment schemes on behalf of their children either cannot afford it (= cannot buy a “premium chocolate box”) and/or do not know how to do it (= how to ‘create’ and give a “premium chocolate box”).

The next phase of research will examine this phenomenon of ambivalence in different sectors and its systematization, following the work started recently by Alena Ledeneva. What is a “premium chocolate box”? What can it help achieve, and in what situations is it effective? How can the practice be justified by givers, receivers and outsiders? Receiving a gift of chocolates from a Russian does not always have a hidden meaning or obligation, however. The survey showed that gifts are a significant part of the culture, while reciprocating received gifts is a less important custom for Russians.

Dr. Elena Denisova-Schmidt is currently a FP7 Visiting Fellow at the UCL School of Slavonic & East European Studies. Her work concerns corruption and informal practices in Russia and Ukraine, focusing on the educational sector and the business environment.

 

[1] Citations in the text refer to interviews conducted as part of a survey on corruption in Russia between July – November 2013 (N=115).

Anti-Corruption Revolutions: When Civil Society Steps In.

by Lucía Ixtacuy, Julián Prieto, Mónica Wills

Over the last decade, the world has witnessed several citizen uprisings with protestors coming from diverse cultural and religious backgrounds who increasingly raise their voices in a discourse that pleads for a responsive and accountable government that will act in lawful and transparent ways. As never before, common citizens from countries such as the Philippines, India, Bulgaria, Brazil and Egypt, among others, acknowledge corruption as damaging for their societies, and loudly demand an effective solution. This swell of citizen activism was the underlying motivation behind our research on so-called Anti-Corruption Revolutions – mass manifestations that reveal generalized discontent with the performance of government.

IAC-Protesters-in-Pune
Photo credit: Nizardp

Through a mixed methodology that combines quantitative and qualitative research tools, we explore the question of whether an empowered civil society with access to public information, can make a difference in the fight against corruption. We prove that the availability of channels of accessing information has a positive effect on control of corruption, provided that civil society is engaged and able to actively participate in matters of public concern.

In the first stage of our research, we tested the existence of the joint effect of access to information and measurements of the strength of civil society on corruption through a cross-sectional econometric model in a sample of 125 countries. Besides finding supporting evidence for this main hypothesis, the results also showed that an increase in the perception of corruption over a period of time can have the effect of reducing levels of corruption in the following periods. In other words, we were able to show that perception not only follows a different dynamic than actual corruption indicators, but also that increases in corruption perception levels are not necessarily a sign of poor governance. A positive change in corruption perception can surge as a response to information becoming available, which in turn incentivizes civil society to consequently exert and demand control, leading to higher levels of control of corruption thereafter.

Why India?

In the second stage of our research, an interpretative framework was built through a case study, in order to explore connections within our quantitative results.

In the context of anti-corruption revolutions, India is particularly interesting given that relevant legislation, several civil society organizations, and a political party with anti-corruption as main agenda – the Aam Aadmi Party (AAP), blossomed as a result of the consolidation of the citizen anti-corruption movement. The nationwide mobilization against corruption that took place in 2011 influenced for instance, the design and scope of the Jan Lokpal Bill (Ombudsman Bill) put in place in 2013. Mechanisms aimed at reducing information asymmetries, such as the Right to Information Act in 2005, have also been in place in the country for almost a decade and Anna Hazare, the main leader of the anti-corruption movement, is considered by many to be a modern-day Gandhi.

The in-country research followed a design similar to process tracing that aimed at exploring the effect of the interaction found in the quantitative analysis between reduction of information asymmetries and civil society empowerment on corruption[1]. We traveled to New Delhi to conduct fifteen semi-structured interviews in 10 days in with members of civil society organizations; independent journalist; members, volunteers and supporters of the AAP; and International Cooperation Agencies. Through our field work, we were able to identify the contextual factors that prompted the rise of the movement, the factors that determined its escalation, and the challenges and outputs of the movement, as outlined in the main research document.

Since anti-corruption reform was a central issue on the Indian political agenda during the time when we were conducting our research, we were able to find a strong support network of stakeholders that were both willing and interested in taking part in our research. The anti-corruption movement had also been given significant visibility in both social and traditional media making it, therefore, a well-known crosscutting subject to all the interviewed actors. The timely proximity of the fieldwork to the national elections that took place last March also meant that there was a clear window of opportunity for exploring the topic, and especially for understanding the particularities that made the Indian case stand out. Nonetheless, the time and budget constrains we faced prevented us from being able to travel to rural areas around the city of Pune in India where we could have had the opportunity to meet with and interview Anna Hazare, as was we originally intended. In addition, the proximity of the fieldwork to the national elections, made it difficult for us to contact many AAP candidates who were campaigning at the time. On a positive note, the anticipation of how the AAP would perform in the national elections certainly created a buzz around the Indian electoral and anti-corruption politics.

Main findings

There are two main findings of the research. On the one hand, the effect of empowering civil society in the fight against corruption depends on the existence of information accessing channels – without information there is not much a strong civil society can do to fight corruption, and without a demanding and empowered civil society, information about corruption will not translate into change. In India, for instance, the Right to Information Act was an instrumental mechanism in corruption awareness-raising that was simultaneously a consequence and a cause of the empowerment of civil society.

On the other hand, the case study of the anti-corruption movement in India showed that for accountability and transparency to be truly effective in fighting corruption, they should be accompanied by a collectively organized civil society that demands actions against corruption and that is able to consolidate a movement with a unified discourse. Factors such as the leadership, narrative and targeted audiences were certainly identified as crucial in the consolidation and escalation of the India Against Corruption Movement.

Brief update on the case study

We finished our research in April 2014. What has happened in India since then?

In terms of control of corruption, the Corruption Perception Index (CPI) report published by Transparency International India in December 2014, states that India’s CPI score improved by increasing 2 points in 2014 from its 2013 score. Thus, India’s rank moved up to 85 in 2014 from 94 in 2013. The same report notes that such score possibly captured the anti-corruption mandate on which the new government was elected and reflects the possibility of some new reforms in this area, including the passing of all pending anti-corruption bills.

Regarding the AAP, the party did not win any seats during the parliamentary elections of 2014. Analysts consider that this was due to factors such as its inner antagonism and agitationist strategies, and the decrease of media and upper middle class support observed during the second semester of the current year. However, the party still exists and is active to the extent that the AAP is changing its electoral strategy in order to recover its voting base. Finally, another important update involves Mr. Arvin Kejriwal, the main AAP leader, whose engagement and achievements in the anti-corruption field has been widely recognized and who has been listed among the top 100 Global Thinkers (Foreign Policy Magazine 2013), the top 100 Most Influential People in the World (Time 2014), very recently too, he received the Asia’s Most Inspiring and Young Social Change Maker Award (World Brands Summit, December 6th, 2014).

Lucía Ixtacuy, Julián Prieto, Mónica Wills all graduated from the Hertie School of Governance MPP programme in 2014. A working paper version of their research has also been published by ERCAS: https://www.againstcorruption.eu/reports/anti-corruption-revolutions-civil-society-steps/

In the Spring of this year, they traveled to India to complete their field work for their master’s thesis, and a film was made about their project.

[1] Fieldwork was funded by the Hertie School of Governance in the framework of its 10th Anniversary Jubilee Program and was also supported by the DAAD. Lastly, the research benefited from the support of different international organizations, such as ERCAS, Transparency International and the German Agency for International Cooperation GIZ.

 

Waging Battle on The Anticorruption Frontline

ruslanThe demand for good governance is on the rise everywhere, from Kiev to Sao Paulo, Paris to New Delhi. But has any measurable progress been made recently? Do we know which countries are succeeding and why? Do anticorruption experts and policy makers understand public concerns about corruption?

The Anticorruption Frontline, the second volume of the FP7 ANTICORRP project policy report launched last week at the Hertie School of Governance in Berlin, finds less than encouraging answers to these questions: Despite increased effort to fight corruption worldwide, there remains little progress on the ground. Even in countries which have shown improvement, the use of public office for private gain remains an issue. Public opinion surveys tracking concerns about corruption are frequently misunderstood – by those being surveyed as well as those proposing anticorruption policy solutions.

New research by Prof. Alina Mungiu-Pippidi of the Hertie School of Governance shows that decreased confidence in the EU, especially in Western and Southern Europe, is linked closely to citizens’ perceptions of their national government’s ability to control corruption. This confidence has been eroded in the wake of the euro crisis, most markedly in countries with the worst growth performance. Central and Eastern Europe, however, remains the last bastion of trust in EU institutions, which is perceived largely as a counterweight to untrustworthy national institutions.

Two European case studies from The Anticorruption Frontline illustrate that EU funding regulations and anti-corruption legislation alone are no panacea for the rampant favoritism inherent in extant particularistic systems. Despite an improved Bulgarian anticorruption rating according to most accepted measures, findings from the Center for the Study of Democracy on Bulgarian governance show that the avoidance of market competition in areas such as public procurement remains the rule rather than the exception. In another chapter, Mihaly Fazekas’ unique data mining method on the awarding of EU structural funding uncovers systemic corruption in Czech, Slovak, and Hungarian public contracting methods.

Such preferential treatment – and its inherent abuse of power – is one of the most insidious forms of corruption facing the world today.  Further case studies from The Anticorruption Frontline include deeper analysis of Qatar and Rwanda, two countries singled out for their improvements on anticorruption measures, yet both of which still exhibit favoritism in public procurement, as well as a look into the corrupt bed of Ukraine‘s gas market, exposed in the wake of 2014’s uprising. As every case in the book makes clear, traditional measures of corruption often fail to measure the existence and subsequent impact of such exploitation of public trust for private gain.

The Anticorruption Frontline argues that further EU regulation is not the solution. As a multidimensional phenomenon, fighting corruption requires tailored policy approaches as well as sustained support in areas such as improving transparency and strengthening civil society. The answer instead may lie in a transition from EU co-financing of large public projects – where the risk of corruption is higher – to a more universal and non-discretionary allocation of EU funding, such as an Europe-wide unemployment benefit scheme.

The Anticorruption Frontline is available for purchase via Barbara Budrich Publishers.

EU Funds Curse? New evidence on the reciprocal impact between EU funds and corruption in CEE

Finding an accurate measure of corruption is a problem that has puzzled anti-corruption researchers for some years now. In the framework of the ANTICORRP project, researchers are currently trying to produce a new generation of indicators which allow comparisons across countries and time while being more concrete and specific than the first generation which are based on perception aggregates (for instance the Corruption Perception Index).

This new European paper takes an important step in that direction by using a technique known in audit studies as data mining. Under this method, researchers look for deviations from an ordinary, normal pattern to identify corrupt behaviour. In this paper, Fazekas et al.[i] use a newly created database of public procurement procedures in Central and Eastern European countries to reach three objectives:

    1. Create an instrument based on data mining to assess procurement risk which can be used to estimate across countries and time (to see, for instance, if reforms are working);
    2. Compare corruption risks of EU funded and national public procurement as well as estimate the value of EU funds allocated in a particularistic way; and
    3. Make recommendations on how to monitor EU funds more effectively.

Fazekas et al produced a series of studies [ii]  developing new corruption measures, of which “Are EU funds a corruption risk? The impact of EU funds on grand corruption in Central and Eastern Europe” is only the first to have major findings. These are as follows:

  • The authors prove that public market domination by certain companies or bids won by single bidders are significantly related to irregularities in the procurement process. They furthermore infer that an early sanction of such irregularities would be able to curb corruption. Using a database of over 120 000 public procurement procedures in the Czech Republic, Hungary, and Slovakia they look for anomalies on two sides of each procedure: 1) at entry, unusual processes (e.g. an exceptionally short bidding period) and 2) at exit, unusual outcomes (e.g. the winning bid had no competition, or the winning company frequently wins bids, both indicating favouritism). Using inferential statistics they manage to link the former to the latter.
  • Fazekas et al. use their analysis of procurement process anomalies to calculate a corruption risk index (CRI) which expresses the probability of particularistic allocation of public procurement contracts. Particularistic resource allocation implies that prior explicit rules of spending are bent in order to benefit a closed circle while excluding others. Comparing CRI of EU funded and similar nationally funded procurement contracts, they assess the effectiveness of EU institutions to curb corruption. They find that EU funds represent higher corruption risks in Czech Republic (3%) and Hungary (8%) than comparable national spending, while in Slovakia EU funds are less risky than national funds (13%). Although Slovakia has a much higher level of corruption than the two other countries to start with.
  • In order to better gauge corruption risks in EU funds, the authors calculate the expected value of public resources allocated in a particularistic way by combining the probability of particularism and the value of procurement spending. They estimate that throughout 2009-2012 particularistic resource allocation affected 0.94% of GDP in Czech Republic, 1.15% of GDP in Hungary, and 1.61% of GDP in Slovakia. In total, they argue that the funds affected by particularism may reach up to 1.2% of their combined GDP which is an impressive figure especially when compared to the total amount of EU funds allocated to these countries: 3.3% of their combined GDP.
  • Despite coming with theoretically better legal protection attached, EU funds proved a double liability for public procurement as presented in this paper. First, because as the first ANTICORRP policy report, “Controlling Corruption in Europe” already warned, EU funds stimulate discretionary public spending (as compared to more predictable rule based spending, for instance on pensions). Second, because they seem to be targeted more by rent seekers resulting in a higher risk of funds being captured by a ‘favourite’ company.

Estimated value  of national and EU funded public procurement disbursed in a particularistic way, by country, % of 2009-2012 total GDP

grandcorruption_cee_graph

Source: PPC

Note: In order to arrive at an approximate  total public procurement spending figure, spending values based on announcements in the National Public Procurement Bulletins were approximated to total public procurement spending estimated by the OECD based on the system of national accounts (OECD, 2013). As the total public procurement spending figures are upper bound estimations and the proportion of EU funding within public procurement spending not reported in the National Public Procurement Bulletin is unknown, figures in the graph may be overestimations. 

Given the high risks, what can the EU do to better protect its investment and ensure that funds are disbursed in a more competitive and transparent manner?  The ANTICORRP policy team offers the following recommendations:

  • Introduce an EU-wide, real-time monitoring mechanism of EU funds spending designed to detect systematic fraud and corruption in public procurement using data mining techniques.
  • Increase national civil society capability for monitoring governance and controlling corruption at both national and local levels especially with regard to EU funds.
  • Consider re-allocating EU funding from discretionary investment projects which typically constitute high corruption risk, towards non-discretionary spending such as education.


[i] Mihály Fazekas, Jana Chvalkovska, Jiri Skuhrovec, István Janos Tóth, and Lawrence Peter King, (2013), Are EU funds a corruption risk? The impact of EU funds on grand corruption in Central and Eastern Europe. Published as through the Corruption Research Centre Budapest as CRCB-WP/2013:03 and through the European Research Centre for Anti-Corruption and State-Building as WP No.39 

[ii] Key publications are: Fazekas, M., Tóth, I. J., & King, L. P. (2013). Anatomy of grand corruption: A composite corruption risk index based on objective data. CRCB-WP/2013:02, Budapest: Corruption Research Centre.

Fazekas, M., Tóth, I. J., & King, L. P. (2013c). Corruption manual for beginners: Inventory of elementary “corruption techniques” in public procurement using the case of Hungary. CRCB-WP/2013:01, Corruption Research Centre, Budapest.

Fazekas, Mihály, István János Tóth, and Lawrence Peter King. 2013c. “Hidden Depths.The Case of Hungary.” In Controlling Corruption in Europe vol. 1, ed. Alina Mungiu-Pippidi. Berlin: Barbara Budrich Publishers, 74–82. ERCAS WP 37.

 

Corruption and Development: New Insights from ANTICORRP Report

In a previous post, we have discussed part of the results displayed in a global corruption trends report prepared by the ERCAS team for project ANTICORRP. The same report has also explored data on the relationship between corruption and development, by looking at the trends of control of corruption and development indicators over time. The literature on causes and consequences of corruption suggests an ambiguous relationship between these two factors. If, on the one hand, economic development appears as a powerful predictor of corruption and may contribute to reducing corruption, on the other hand higher levels of corruption have been found to hinder economic development.

With these discussions as a background, the report first looks at the evolution of control of corruption, based on the indicator published by the World Bank as part of the Worldwide Governance Indicators, for the period 1996-2011, taking into account four income groups: low, lower-middle, upper-middle and high income. This analysis yields interesting results, showing that the average control of corruption score of all four income groups has decreased in the period considered, but appears to have decreased more strongly in the case of upper-middle and high income groups. At the same time, we see that the number of countries in the sample that belong to these two groups has steadily increased in the same time period, from 27 to 52 in the upper-middle category and from 40 to 56 in the high income category.

A more detailed analysis of the countries that have acceded to these groups in the past 15 years reveals that their joining the “club” of richer countries has likely contributed to pulling the control of corruption averages down in both groups, as these new-comers do not have the same high governance standards observed in other rich countries. This means that these countries are actually becoming richer faster than they are improving governance structures towards universalism and impartiality. Although this may be interpreted as evidence that relatively poor governance does not seem to completely hinder development, it is important to highlight that the majority of countries that moved up to the high income group already ranked in the top tercile of control of corruption in 1996, suggesting that, although there is still room for improvement in their governance structures, a certain level of pre-existing good institutions may have contributed to, or even been necessary for, their further economic development.

Additionally, an analysis of trends of per capita income by region shows that Western Europe and North America, the best-performing region in control of corruption, has grown at a faster pace despite having an already high average income, and at least until 2008, when the financial crisis started, this region managed to outpace average accumulated growth in Asia, Latin America, Middle East and North Africa and the Caribbean. This in turn suggests that some growth potential may be realised only in contexts with stronger control of corruption.

The report takes yet another perspective to examine the link between corruption and development, in that it assesses to what extent control of corruption outcomes in specific countries can be explained by their levels of development, measured by their Human Development Index (HDI). A linear regression analysis with the full sample of countries, in which control of corruption scores are predicted from the HDI values, presents development as a powerful predictor of control of corruption, explaining about half of the variation across the sample.

The residuals for each country are then calculated to show those that are doing better or worse that what their level of development would predict. For most regions, the best performers are also the countries that have the highest positive residuals, that is, whose control of corruption scores are higher than what one would expect based on their HDI. This is the case of Japan and Singapore in Asia, Estonia in Eastern Europe, Chile, Uruguay and Costa Rica in Latin America, Qatar and United Arab Emirates in the Middle East, and Cape Verde and Botswana in Sub-Saharan Africa. By comparing the magnitude of the residuals, we also see that the countries with the largest positive residuals, well above one point in the control of corruption five-point scale, include the world’s prime examples of good governance, such as Denmark, New Zealand and Sweden. In other words, there is a large portion of control of corruption outcomes in these countries that cannot be explained by development alone.

Trends report graph

(click on the graph to enlarge it)

 

This analysis represents an important foundation for the next stages of ANTICORRP’s Work Package 3, entitled “Corruption and governance improvement in global and continental perspectives”. Further research in this work package will seek to identify drivers of governance change in selected cases, and the countries with the largest positive residuals are the ones more likely to have achieved higher control of corruption through human agency and not only through a process of modernisation and development. A more detailed study of these cases shall then contribute to the project’s ultimate objective of shedding light onto what explains successful control of corruption in a society.

 

ANTICORRP Report Shows Regional Achievers in Control of Corruption

Assessments of corruption on a cross-national level have represented an important focus of research in the field of anti-corruption in recent years. With the aims of tackling the challenging task of quantifying corruption and improving comparability across countries, the development of cross-national corruption indicators has enabled the ranking of countries from the least to the most corrupt, and thereby has given civil society organisations and media an important tool to name and shame governments and exert some pressure for anti-corruption in the policy sphere as well. However, despite advances in estimating corruption levels in a country at a certain point in time, existing scholarship still knows little about how these levels may change over time, and what causes may be behind such movements. Seeking to make a contribution to this academic debate, a recent report prepared by the ERCAS team at the Hertie School of Governance as part of the ANTICORRP research project has examined global corruption trends in eight regions of the globe, pointing out best and worst performers and positive and negative developments in each of them.

Building upon one of the few consistent time-series of corruption indicators, namely the Control of Corruption indicator developed by the World Bank as part of the Worldwide Governance Indicators, the report first compares the average control of corruption score across the following regions: Asia and the Pacific, Eastern Europe and the Baltics, Former Soviet Union, Latin America, the Caribbean, Middle East and North Africa, Sub-Saharan Africa, and Western Europe, North America and Oceania. From this analysis, the latter emerges as the clear front-runner in control of corruption, followed by the Caribbean islands and Eastern European countries. At the other extreme, Sub-Saharan Africa and the Former Soviet Union present the lowest average scores among all eight regions. Considering a 15-year time span covered by the indicator, published for the first time in 1996, the assessment also shows that no single regional average has seen a significant statistical change during this period.

 

ANTICORRP trends report - global averages

 

Nevertheless, a closer look country by country shows that significant change, both positive and negative, has taken place in about one fourth of the sample covered in the analysis. Out of these, 21 countries present significant improvement in control of corruption, whereas 27 show significant deterioration. In some regions, some of the best performers have managed to improve control of corruption even further in the past 15 years. This includes, for instance, Japan in Asia, Uruguay in Latin America, and Estonia in Eastern Europe. Similarly, some countries that were already at the bottom in their respective regions continued to further deteriorate. This was the case of Libya, in the Middle East and North Africa region, and Greece, in Western Europe. But most interesting are the cases of countries that have managed to achieve not only a statistically significant improvement, but also one of relatively large magnitude. Rwanda, Georgia and Liberia, for instance, have had their scores in the control of corruption indicator increase well over one point in a five-point scale – the World Bank indicator ranges from -2.5 to 2.5. It is true that Georgia and Liberia ranked very low in 1996, but at the same time, these and other countries with a similar trajectory make a case for the possibility of considerable improvement in a relatively short time horizon, when it comes to substantively changing a country’s governance regime.

What explains such positive developments? Previous research conducted by ERCAS  suggests that it is difficult to pin down common causes for such diverse cases. In fact, improvements in control of corruption often seem to be not the fruit of a common path, but rather of country-specific dynamics where contextual conditions play an important role. For this reason, this global trends report goes beyond the comparison across countries at the global level and takes a regional approach to highlight regional positive outliers that are worth studying in order to shed more light on the historical and social changes that contribute to the achievement of good governance. The causes for such success stories will be the subject of future single-case studies in the scope of the ANTICORRP project.

 

Transparency in Public Procurement Boosts Anti-Corruption Monitoring in Slovakia

In the past years, initiatives to track, collect, and store public data have multiplied across the world. A global movement for open data has taken shape, boosting the demand for increased government transparency and raising awareness about the right of citizens to check on governments and hold them accountable on a regular basis. However, several questions can be raised about how effective transparency can be in promoting good governance, and under which conditions that may most likely take place. Following this line of inquiry, the Sunlight Foundation, an organisation that supports government openness and transparency, is developing a series of cases studies on success stories in the implementation of technology enabled transparency policies in several countries. The first case study, conducted on the public procurement sector in Slovakia, was released last August and presents important findings regarding the positive impact transparency reforms and some remaining challenges.

The case study was based on numerous interviews, questionnaires and surveys with transparency activists, journalists, scholars, the Slovakian Government Office of Public Procurement and the Slovakian Business Alliance. They were inquired about the extent of corruption in public procurement in the country and the impact of reforms that have been put in place since 2011. According to interviewees, before the reforms corruption was considered to be one of the main barriers to doing business in Slovakia, and schemes to restrict competition for tenders or manipulate results in the contract management phase were the most common types of fraud. However, in response to an update of the European Union (EU) Procurement Directives, and motivated by high profile public procurement scandals, e-procurement and reverse auction mechanisms were introduced to improve the contracting system and the publication of all public contracts on a centralised online platform became mandatory.

According to the study’s findings, the most notable effects of these reforms were strengthening the monitoring capacity of civil society and media. Before data on public contracts were made easily available, the only tool that transparency activists and journalists had to get a hold of such information was to submit requests based on the Freedom of Information legislation, which were not always granted and severely delayed monitoring activities. But more than just facilitating monitoring, increased transparency has dynamised the civil society and media oversight community, leading to a broadening of activities in this area and also to stronger organisational capacity. Additionally, interested citizens are now able to engage directly with this kind of data and assist media and NGOs in their work. Citizen engagement also contributes to strengthen public pressure when corruption is uncovered. Regarding the impact of increased transparency on the occurrence of corruption in public procurement, however, all interviewees agreed that it has not helped to reduce corruption significantly. They pointed out that weak enforcement and accountability mechanisms still allow officials and business people to act with impunity in this area.

The main challenges that still remain are linked to the need for improvement in the format in which data is made available, so that those engaged in social monitoring can access the data in a more effective and time-efficient manner. Until now, a lot of resources have been invested by NGOs to collect and process the data to present them in a more accessible format to the general public, and ideally this should be the starting point from the sources of data themselves. An improvement in this direction would lower entry barriers in the oversight process even further.

Overall, the Slovakian case supports the idea that transparency may be necessary, but not sufficient to fight corruption effectively. In the absence of strong institutional avenues for enforcement and accountability, transparency contributes to strengthen public pressure, but this is not always enough to guarantee that corrupt practices have consequences for those involved.

The series of case studies will continue with the publication of analyses of public procurement in the Philippines, at the national level, and in Tamil Nadu, India and Sydney, Australia, illustrating the implementation of transparency policies at the sub-national level.

(The picture featured above is from sunlightfoundation.com.)

 

First ANTICORRP Policy Report Assesses Control of Corruption in Europe

anticorrp_bookKicking off a series of annual policy-oriented publications originating from the European Seventh Framework Programme (FP7) research project ANTICORRP, the volume Controlling Corruption in Europe has been now released in partnership with Barbara Budrich Publishers. This first policy report covers the European continent divided in three areas, namely the European Union (EU), South-Eastern Europe and the former Soviet Union. Based on a compilation of analyses by researchers from several ANTICORRP consortium members, the report presents comparative data on all three regions, complemented by three case studies on EU member states: Romania as a “problem” case with regards to corruption and the application of EU funds, Hungary as an average country where the collected evidence shows more challenges than previously believed, and Estonia as a success story and a clear ‘achiever’ of good governance.

This publication also presents an important conceptual contribution of the ANTICORRP project to the academic debate on corruption, namely by focusing on the concept of control of corruption – in contrast to just corruption itself –, which is defined as “the capacity of a society to constrain corrupt behaviour in order to enforce the norm of individual integrity in public service and politics and to uphold a state which is free from the capture of particular interests and thus able to promote social welfare.” Moreover, it highlights ‘legal’ and ‘illegal’ aspects of corruption, showing that favouritism and preferential treatment in the allocation of public funds and in public services and law enforcement is also considered as corrupt by public opinion in European countries. This is revealed by evidence documented in a pan-European survey conducted by the Quality of Government Institute, at University of Gothenburg, which represents one of the biggest data collection efforts in the ANTICORRP project and is the largest governance survey in Europe to-date.

With regards to its methodology, the report seeks to evaluate corruption risk and quality of government at the national and regional levels through an assessment of corruption indicators that are sensitive to change and policy intervention, thus making a contribution to the documentation of innovative disaggregated measures of corruption as an alternative to established perception-based indicators. Additionally, solid empirical evidence of policy consequences of corruption is presented, showing how it bolsters deficits on behalf of discretionary spending and in detriment of universal spending in sectors such as public health and education, reduces tax collection, hurts market competition and further generates vulnerable employment and brain drain.

Drawing on the corruption risk assessment analysis introduced, where each country is examined on the basis of an equilibrium model of corruption including policy determinants, grouped as resources and constraints, ten policy recommendations are put forward proposing concrete paths of action towards reducing corruption risks in the most vulnerable countries. The recommendations emphasise in particular the importance of reducing administrative and fiscal opportunities for corruption, strengthening public audit and monitoring capacity more broadly, including civil society and media, and taking into account the cost-effectiveness of anti-corruption policies and the limitations of approaches based exclusively on repression.

The first volume of the Anticorruption Report series will be officially launched on 6 September 2013, at the European Consortium for Political Research (ECPR) General Conference in Bordeaux, France.

(The picture featured above is from rt.com and is credited to AFP/Patrick Hertzog.)

 

Report Takes Stock of Freedom of Information Protection Globally

FOI-march-PhilippinesThe Freedom of Information Advocates Network (FOIAnet), a civil society coalition that has promoted the right to information globally since 2002, has recently launched a report on developments in access to information in different regions of the world. The study, which was co-authored by different human rights advocates for each of the seven regions it covers, assesses those developments mainly from the perspective of their relevance to civil society, pointing out the main challenges and opportunities for right to information advocates in each regional context. It also presents success stories and lessons learned, in an attempt to foster knowledge sharing across the right to information movement.

Some common dynamics can be identified across regions in some of the study’s findings. A first important trend that can be observed is that civil society has had a fundamental role in pushing for freedom of information legislation in most regions, and even more so in countries where these laws have been passed more recently. The report documents numerous cases of broad civil society coalitions that have successfully pressured governments and Parliaments to discuss and adopt explicit legislation protecting access to information to all citizens. In some cases, such as Japan, Mongolia and Indonesia, these coalitions have succeeded after long-lasting campaigns to mobilize political support for the issue. In others, such as Philippines, Cambodia and Malaysia, despite campaigning for over a decade these coalitions have not yet prevailed over governments’ resistance. In Europe the creation of broad coalitions in favour of right to information has also been observed in a number of countries, including the United Kingdom, still in the 1980s, Spain and most recently Croatia.

At the supra-national level there have also been important developments in many of these regions. In Africa, for instance, several regional charters for the protection of rights include provisions for right to public information. In the American continent, the Organization of American States has worked to develop a model draft law by request of its member states, which should function as reference for freedom of information laws passed in the individual countries. In the Pacific region, much pressure for the adoption of freedom of information provisions in the national legal system is exercised by international organisations and donors, although very few countries in this region have passed a law in this regard and no supra-national framework or guideline has been established. Most emblematic is the situation in Europe, where European Union directives represent a great portion of legal provisions protecting right to information, and even enabling access to information across borders. More broadly, the Council of Europe has adopted the Convention on Access to Official Documents in 2009, which still needs to be ratified by other four members before it comes into force. Regional civil society networks, such as the Africa Freedom of Information Centre (AFIC) and the Alianza Regional in Latin America, also appear as important developments beyond the national level.

Additionally, great advances in information technology applied by civil society have contributed to disseminating access to information in some regions. In Europe, for instance, initiatives such as the British portal WhatDoTheyKnow.com and AsktheEU.org enables citizens to send information requests and documents responses making them publicly accessible.

Despite many positive developments, some challenges remain for furthering freedom of information across the globe. In several regions, a culture of secrecy in the public administration is still predominant in some countries, especially those with a past of authoritarian and oppressive regimes. In Africa, for instance, this was maintained even after liberation movements eventually came to power. As they had lived clandestinely before, the perception of secrecy as a means of survival has strongly influenced some post-colonial administrations following the victory of such movements. A lack of awareness among the population about the right to information is also a significant problem in some regions, and further civil society engagement to inform people and strengthen public demand for more transparency is still needed. Moreover, sometimes the danger lies in the manipulation of freedom of information legislation with the purpose of disguisedly restricting civil liberties. This can take place In particular in regimes that are often described as electoral autocracies, such as Zimbabwe, for instance, where a provision that punished “abuse of free expression” has been used by the government of Robert Mugabe to control criticism towards the government.

One important lesson that remains from civil society’s experience in several countries is the need for constant monitoring, giving the not so uncommon risk of backlash in the protection of access to information. This has been seen in South Africa, for instance. The first country in Africa to adopt freedom of information legislation, in 2000, it has recently passed a Protection of State Information Bill, popularly known as “secrecy bill”, which endangers some guarantees for freedom of information in the name of national security and anti-terrorism measures. In Hungary, also a pioneer in passing a freedom of information law in Eastern and Central Europe, recent propositions to amend the legislation in order to restrict the scope of information accessible by the public have raised concerns. Luckily civil society has strongly reacted against these negative developments, but these cases show that nothing guarantees that access to information will be forever guaranteed once it is first established.

(The picture featured above is from pcij.org.)

 

ERCAS Director Emphasises Role of Public Spending in Controlling Corruption

Villa Mondragone_1ERCAS director Prof. Alina Mungiu-Pippidi presented ERCAS’s most recent research work on corruption in the European Union (EU) at the XXV Villa Mondragone International Economic Seminar, organised by the University of Rome Tor Vergata, which took place on 25-27 June 2013. The seminar, entitled “The Long Term Policy View: Shifting Wealth, Income Inequalities and Demography”, brought together scholars working on a wide range of topics and included the panel “Economics of Corruption”, where Alina Mungiu-Pippidi discussed the relationship between government expenditure and corruption in a talk entitled “Big Government, Small Government and Corruption: a False Dilemma”. The panel also had contributions from Francesca Recanatini, from the World Bank, who discussed measurements of governance and corruption, Gregory Kisunko, also from the World Bank, who presented data on regional trends of corruption based on the Business Environment and Enterprise Performance Survey (BEEPS), with an emphasis on the corruption context in Russia, and Amedeo Argentiero and Carlo Andrea Bollino, from the University of Perugia, who talked about informal economy and its relationship to corruption.

In her presentation, Alina Mungiu-Pippidi contextualized corruption in EU member states by showing best and worst performers according to several available indicators from public opinion and expert-based surveys, such as the Eurobarometer and the World Economic Forum. According to these data, countries such as Romania, Greece, and Slovakia appear among those where corruption is perceived to be most prevalent. Additionally, preliminary results from a survey conducted at the subnational level by the Quality of Government (QoG) Institute as part of the ANTICORRP project were presented, also showing Romania as a country with high frequency of bribery in all country regions, and Bulgaria and Italy similarly as countries with considerable frequency of bribery, but concentrated in certain regions.

With regards to the debate on the relationship between government expenditure and corruption, it is interesting to notice that the least corrupt countries in the EU, according to the same indicators, include classic welfare states with big public sectors, such as Denmark, Sweden and Finland. Given this background, the analysis conducted by ERCAS looked at this issue from the perspective of whether different patterns of corruption can be observed in relation to different kinds of government spending. The results, already in part presented in the discussion paper “The Good, the Bad and the Ugly: Controlling Corruption in the European Union”, reveal that there are significant differences in the association between social spending and public investment expenditure: while higher government expenditure on health (as a percentage of GDP) is associated with stronger control of corruption, higher government investment in capital formation (also as a percentage of GDP) is observed in countries with weaker control of corruption.

The main explanation for this difference suggested in the study is that government expenditure on investment is more discretionary in nature, and therefore more susceptible to favouritism in its allocation, that is, certain parties, companies or individuals with privileged access to the government may receive preferential treatment in the award of contracts or distribution of funds. Evidence of favouritism has been collected in Romania and in Hungary. In the former case, Alina Mungiu-Pippidi has identified an association between election results for specific parties in power and the share of discretionary funds allocated to the government party at the local level. In Hungary, researchers from the Corvinus University Budapest, ERCAS’s partner in ANTICORRP, have identified changing trends in the market shares of large companies according to the change in government that took place in 2010. Interviews with company managers revealed the perception that this is explained by the preferences of the new government for particular well-connected firms.

The data analysis presented by ERCAS’s director at the conference also showed an association between lower control of corruption and higher public deficits. According to the theoretical model that orients ERCAS’s research work, corruption results from an equilibrium between resources and constraints, and successful anti-corruption approaches should tackle both parts of this formula, that is, should aim at decreasing resources and strengthening constraints. As public spending represents a kind of resource available for spoliation by predatory elites, it should also be targeted by efforts to reduce corruption, preferably in the direction of decreasing the share of funds that can be discretionarily allocated and by improving transparency about the allocation procedures of these funds. At the same time, it is important that these measures are accompanied by efforts to improve constraints by strengthening media freedom, civil society, social accountability and judicial capacity. For countries such as Romania, Italy, Slovakia, Greece, and Bulgaria, which are among the ones with high corruption risk in the EU, such measures are essential for a sustainable effort to improve governance in the long term.

 

ANTICORRP 2nd General Meeting in Florence Discusses Project Developments

The ANTICORRP project, funded by the European Commission’s 7th Framework Programme, has concluded its first year and held its second general meeting to present the project developments so far and discuss the next steps in its research activities. The meeting took place on 8-10 May 2013 at the European University Institute (EUI) in Florence and was also attended by members of the external Advisory Board Prof. Susan Rose-Ackerman (Yale University), Prof. Claus Offe (Humboldt University), Prof. Michael Johnston (Colgate University), Prof. Pascalis Kitromilides (University of Athens), Philip Keefer (World Bank) and Drago Kos (former President of GRECO).

The event had the participation of Prof. Diego Gambetta (EUI) as keynote speaker, who discussed why corruption in Italy is disproportionately high. In the second day of the event, researchers from several work packages presented an overview of research approaches and their current status. Prof. Bo Rothstein, from the Quality of Government (QoG) Institute, Gothenburg University, talked about the objectives of Work Package 1, entitled “Social, legal, anthropological and political approaches to theory of corruption”, where he emphasised the conceptual challenges associated with defining corruption and its absence in a meaningful way for comparative research.

Prof. Alina Mungiu-Pippidi presented the work that has been developed in Work Package 3, entitled “Corruption and governance improvement in global and continental perspectives”. This work package has conducted analyses on the evolution of control of corruption indicators for almost 200 countries in the past 15 years, and found that only a small number of countries appears to have managed to improve control of corruption significantly in this time frame, whereas a vast majority has seen no significant change. The next steps of the research in this work package will now focus on understanding processes of institutional change towards stronger control of corruption in countries selected from the best performing group, in order to identify some of the paths that may have led to their positive development.

Prof. Nicolas Charron, also from the QoG Institute, presented one of the main data collection efforts within the ANTICORRP project, namely a pan-European survey on quality of government and corruption at the regional level. This survey was first presented by the QoG Institute in 2010 and has now been replicated in a larger number of European countries as part of Work Package 5. The collected information is used for the compilation of the ‘European Quality of Government Index’ (EQI), and the main idea is to gain a better understanding of perceptions of quality of government and corruption from the perspective of citizens, in contrast to other existing expert-based surveys. Some of the preliminary results were presented regarding a comparison between the first and second surveys and within-country variation in the index, points that will be further pursued in the subsequent analysis of the survey data.

The event was closed with presentations by Prof. Rose-Ackerman, Philip Keefer and Prof. Johnston entitled “The status of anti-corruption research and policy”, followed by a discussion led by Prof. Donatella della Porta (European University Institute).

The next general meeting of ANTICORRP will be held in Berlin in the end of 2014.

 

Research Project Finds Signs of Political Influence in the Hungarian Public Procurement Market

As part of on-going efforts to monitor the Hungarian public procurement market and understand corruption, market shares and contract volumes of public procurement contract winners have been analysed by the research team at the Corruption Research Centre, Corvinus University of Budapest. The goal of the analysis was to determine what impact the change of government in 2010 has had on the public procurement market, and especially to explore whether there is substantive evidence for the common claim that politically connected firms control large parts of the Hungarian public procurement market. The new government implemented large scale personnel changes already in 2010, so if political connections matter for winning public procurement contracts, we should see drastic changes in companies’ market shares after the elections.

Preliminary results indicate that companies with the largest market shares in the public procurement market in 2009, that is, before the change of government, have greatly diminished in their market share by 2011, whereas the market share of the biggest companies in 2011 was insignificant prior to the change in government. Thus, the market share of companies with major public procurement orders before and after the change of government seems to have changed in opposite directions.

Statistical data analysis of all firms with public contracts between 2009 and 2011 also confirmed the significant effect of the change in government on the public procurement market, and thus the potential political influence over market performance of companies. With the help of a standard economic model, changes in the total contract value of almost 4,000 companies in the public procurement market in 2009 and 2011 were estimated. This econometric model takes into account company size, the location of company headquarters, the main public procurement market, and market concentration. The results show that companies with the largest total value of awarded contracts in 2009 performed significantly worse than anticipated by the model, while those with the largest total value of awarded contracts in 2011 performed above prediction. These results strengthen the hypothesis that, aside from the economic logic, political factors also played a role in determining the dynamics of public procurement markets in the period 2009-2011.

Furthermore, the companies performing considerably worse or better than what the standard economic model predicts tend to win public procurement contracts under conditions deemed to carry higher corruption risk than those companies whose performance fits a standard economic logic. They are more likely to have no competitor, tender in a non-open procedure, face extremely short submission periods, and their contracts are more likely to be modified after contract award.

Even though these results are only preliminary and much further research is needed, they have already spurred considerable media attention in Hungary, as they put into context numerous reports criticising individual companies for exploiting their political connections in order to win public procurement contracts.

 

(contributed by Mihály Fazekas, PhD student at University of Cambridge and participant in the public procurement research programme at the Corvinus University of Budapest)

 

Discussion Paper from ANTICORRP Research Evaluates Corruption Risk in EU Member States

For many years corruption was seen as a problem of the developing countries only. The European Union, on the contrary, was considered the temple of rule of law, exporting good governance to its peripheries and worldwide. While many European countries remain among the best governed countries in the world, the downfall of the Santer Commission on charges of corruption, the enlargement to new member countries with unfinished transitions and the economic crisis strongly indicate that control of corruption is difficult to build and hard to sustain. A discussion paper prepared as part of the ANTICORRP research project and released by the Hertie School of Governance, in collaboration with Bertelsmann Stiftung, addresses these issues in its analysis of control of corruption in European Union member countries.

The report, entitled ‘The Good, the Bad and the Ugly: Controlling Corruption in the European Union‘, shows the consequences of corruption on fiscal deficit, vulnerable employment, gender equality, government spending, tax collection, electoral turnout and braindrain in EU member states, arguing that corruption is not a marginal phenomenon, but a central factor affecting both the economic crisis and the recovery potential of European economies. It also presents corruption across European member countries highlighting the best and worst European performers at national and regional level and classifying countries in four different groups by corruption risk. Lead researcher Alina Mungiu-Pippidi offers a causal model explaining control of corruption and its main determinants and builds recommendations for improving control of corruption on the basis of the explanatory model.

The study was officially launched at the event “Understanding Corruption in the EU: the Policy Dimension”, at the European Parliament on 9 April 2013. The meeting was hosted by members of European Parliament Dr. Franziska Brantner, Jens Geier, Eva Joly and Monica Macovei. After the presentation by Prof. Alina Mungiu-Pippidi, the research findings and recommendations were debated in two discussion rounds with experts from the Bertelsmann Stiftung and researchers from ANTICORRP consortium members.

The first discussion round, entitled “The Effects of Corruption on Public Budgets, Tax Collection, Employment, Gender Equality, Electoral Turnout and Brain Drain”, was chaired by MEP Jens Geier and had the participation of Sabine Donner (Bertelsmann Stiftung), Davide Torsello (University of Bergamo), and Mihaly Fazekas (Cambridge University and Corvinus University Budapest).

 

 

The second discussion round focused on corruption and EU Funds. Chaired by MEP Monica Macovei, it included as discussants Valentina Dimulescu (Romanian Academic Society), Ruslan Stefanov (Center for the Study of Democracy, Bulgaria), Grzegorz Makowski (Stefan Batory Foundation, Poland), and Andrej Skolkay (Bratislava School of Communications and Media).

 

 

After public feedback the report will be reviewed and published as the first policy paper from ANTICORRP. The report has already received extensive media coverage, including features in Die Welt, the Spiegel Online, and the Euractiv news portal.

 

 

 

 

 

 

 

 

 

 

 

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New Report Assesses Changes in Anti-Corruption Policy in Russia under Medvedev Government

Corruption is a big problem in Russia. According to international indicators of corruption, it is considered the most corrupt of the emerging economies. However, for a long time Russian governments did nothing concrete to attempt to fight the problem. This seemed to change during the Medvedev administration, argues the report “Russia’s Anti-corruption Predicament: Reforms, Activism and Struggling Rulers”, published as part of the Corruption °C series edited by the Latvian think-tank Providus. The study, authored by Ivan Ninenko, deputy director of Transparency International Russia, analyses the reforms undertaken by Medvedev to strengthen the anti-corruption framework in the country. Although the report claims that Medvedev tried to bring the Russian legal system up to international standards, it recognises that the concrete impact of such reforms is yet to be felt.

The report begins by contextualising corruption in Russia, providing an interesting overview of corrupt practices since the Soviet period, and how corruption increased dramatically after the transition, with intransparent privatisation processes and the emergence of oligarchs and pervasive state capture. The main analysis concentrates on the anti-corruption instruments adopted during Medvedev’s term as President. Most of the achievements highlighted refer to new legislation adopted during his administration. The law “On Countering Corruption”, for instance, defined the term “corruption” in the Russian legislation and made it mandatory for public officials to disclose their income and assets and report any conflict of interest. Another important reform was the law “Providing Access to Information on Activities of Government Bodies and Municipal Bodies”, which was adopted in February 2009, granting Russian citizens access to public information. In July 2009, the law “On Anticorruption Expertise of Legislative Acts and Draft Legislative Acts” was adopted and introduced an obligation to check all new laws on possible corruption risks. Finally, in 2011 Medvedev also introduced higher punishment for bribery, amounting to 25 to 100 times higher than the sum of the bribe, eliminating the mandatory prison sentence for large bribes. This law aimed at decreasing the financial incentive for bribes, and although it was controversial at first, it is considered to have had an overall positive effect.

Although it claims that these legislative changes are considered to be important steps forward, the study makes it clear that there are numerous problems in the implementation of the new legislation. The sanctions for not complying with disclosure requirements imposed by the law “On Countering Corruption”, for instance, were rather insignificant and rarely enforced. By the beginning of 2012, Medvedev himself stated that this law was very inefficient. The implementation of the law of access to information is also limited in practice by the non-cooperation of certain state agencies and institutions. On the other hand, some good examples exist. Commercial courts in Russia have done incredible efforts to increase transparency about their cases, publishing not only all their decisions but even documents received as part of each case, including requests from government officials to “take a deeper look” into some cases. According to some judges, this degree of transparency led to such requests becoming rarer, thus ultimately contributing to reducing attempts to influence the courts’ proceedings.

What we can conclude from this analysis is that Russia, at least during the Medvedev government, appears to have taken the same route as many others countries plagued by systematic corruption: strengthening anti-corruption regulation. However, as also happened in many countries, these changes were not as effective as expected. The report concludes that Medvedev failed to make the government’s anti-corruption efforts credible, and most of the initiatives did not bring any significant improvement for the lives of citizens and businesspeople affected by widespread corruption. Nevertheless, other important developments have taken place in the civil society arena in the meanwhile. Increased access to internet and technology has enabled civic activists and bloggers to mobilise more people against corruption, and initiatives of individuals exposing wrongdoing by public officials online have increased. The main hope is that this rising pressure from Russian society will eventually contribute to bringing about real change in anti-corruption efforts in the country.

(The picture featured above is from themoscowtimes.com.)

 

New Book Shows Links between Politics and Business in Post-Revolution Georgia

In the past years Georgia has been praised for its consistent improvement in the fight against endemic corruption after the Rose Revolution. Important reforms in government institutions, such as a complete overhaul in the police and measures to improve the business environment, are believed to have contributed to its achievements. Despite such positive developments, however, some things did not change. This is what the book Who Owned Georgia, published jointly by Transparency International Georgia and the journalist Paul Rimple, brings to light: how the close (and intransparent) relationship between government and business interests was maintained during the Saakashvili administration.

The book examines in detail the persons and companies who own large shares in the advertisement, broadcasting, telecommunications, privatisation, mining, oil import and distribution, and pharmaceutical sector during the period 2003-2012. According to their findings, the collapse of the Shevardnadze regime was indeed followed by a restructuring of main economic sectors in the country, but during this process the close connections of politicians in the new government were benefited from the re-privatisation efforts conducted by Saakashvili. As mentioned in the book, “The new government, its friends and their relatives became owners of newly emerging companies built on the ashes of the old” (p. 6).

According to Mr. Rimple, a strong motivation for the book was the fact that so little of the connections between company owners and government is publicly known in Georgia. That does not mean, however, that citizens are oblivious to such relationships – gossip on who owns what is widespread, and many people even make deliberate decisions to avoid certain services or products based on the rumors they hear. Due to the need for public and reliable information on this topic, Transparency International initiated a project to collect ownership information of main companies in the aforementioned sectors, which culminated in the publication.

One of the main obstacles for the research work was the fact that many of the registered owners are offshore shell companies, thus making it difficult to identify the true owners of some large companies in Georgia. This phenomenon was observed in many of the sectors under scrutiny. In the telecommunications sector, for instance, the research found that ownership of the two biggest internet providers in Georgia is quite obscure. The company Silknet, which holds 76% of broadband subscriptions in the country, was owned by a company registered in the British Virgin Islands. Another artifice used by Silknet to further conceal its owners was a change in its status from limited liability to joint stock company, whereby it was not obliged to reveal its shareholders. The other big internet company, Caucasus Online, has a similar story: its main owner is a company also registered in the British Virgin Islands, which in turn is partly owned by other two companies on which no ownership information is available.

This interesting initiative is an important contribution in identifying considerable transparency gaps in main business sectors in Georgia. According to the authors, the goal was to offer readers “a travel guide into the amorphous labyrinth of who owned Georgia” (p. 8), and this is done a very innovative way. This publication can also serve as a good example for initiatives in many other countries where the close and obscure links between business and politics pose serious corruption risks.

The picture featured above is from www.thehindubusinessline.in.

 

ERCAS Hosts Event on Transparency in Development Aid

The European Research Centre for Anti-Corruption and State-Building (ERCAS), together with Transparency International (TI) Germany and the anti-poverty organisation ONE, hosted on 14 February 2013 a roundtable for the presentation and discussion of results of recent research on transparency and accountability in international development assistance. The study presented was conducted by former students of the Master of Public Policy at the Hertie School of Governance in partnership with Transparency International and students of Columbia University, New York, and assessed transparency and accountability in development aid from five donor countries (Germany, United States, Brazil, China and India) to four recipient countries (Colombia, Liberia, Nepal, and Sri Lanka). The event, which had the participation of German policy makers and civil society representatives, focused on the role of the assessment for German development cooperation.

Motivated by standing commitments of donor countries to principles of transparency and accountability in development cooperation, as evidenced by international agreements signed in Paris in 2005 and in Busan, South Korea last year, the main objective of the research project was to assess and compare to what extent these principles are effectively put in practice by traditional (Germany and United States) and new (Brazil, China and India) donor countries in the four selected countries. In order to do that, the team’s researchers verified how much information is made publicly available by donors on their development assistance to the selected countries. The study focused on transparency related to eight categories of information – country strategy, modalities of cooperation, processes of mutual accountability, distributive policies, total budget allocated, forward planning budget, monitoring and evaluation results, and conflict resolution mechanisms – and on additional four indicators of accountability – discussion of monitoring and evaluation results and implementation of processes of mutual accountability, of participatory mechanisms involving stakeholders in the formulation of development policies, and of processes for conflict resolution.

According to the results presented by Hertie School graduates Claudia Müller and Sandra Pfluger, the extent of transparency in the case of the selected indicators was very limited across the board. China was by far the least transparent country, while other donors published some information on their practices in the four selected countries, but much less than what one would expect given their international commitments. In the case of accountability practices, Germany fared comparatively well, with consistent implementation of the assessed practices, except in the case of conflict resolution.

The results were discussed by a panel including Ursula Müller, representing the German Ministry of Development Cooperation, Sieglinde Gauer-Lietz, director of the working group on governmental development cooperation at TI Germany, and Andreas Hübers, political analyst at ONE. The presenters and participants stressed the importance of Germany’s implementing principles and policies proposed within the scope of the International Aid Transparency Initiative (IATI).

(The picture featured above is from devpolicy.org.)

 

U4 Papers Discuss Weaknesses in Anti-Corruption Policies

In the past years, several reviews of donor-financed interventions in the field of governance and anti-corruption have shown a pessimistic picture of how much change has been in fact achieved by programmes in this field. This has raised questions about the adequacy of current approaches and how programmes can be improved in the future. Recent papers published by researchers from the Norwegian think-tank Chr. Michelsen Institute on the U4 platform contribute to this debate by identifying important weaknesses in the design, implementation and evaluation of anti-corruption interventions, and by suggesting some solutions to these problems.

The paper “Theories of change in anti-corruption work: a tool for programme design and evaluation”, authored by Jesper Johnsøn, discusses the need for clearer analytical frameworks in the design phase of anti-corruption programmes, which allow for a better understanding of the processes through which such programmes are expected to bring about positive change in controlling corruption. The author points out that this has been largely missing in many of the projects implemented in the last years, and highlights that such a framework is fundamental not only for the implementation of a programme itself, but also for a more comprehensive view of important pre-conditions that must be taken into account for a programme to succeed.

Targeted at policy makers and practitioners in the field of anti-corruption, the paper offers a framework and a methodology for the implementation of the theory-of-change approach, which has been applied more and more often in the past few years by the donor community, and stresses the usefulness of such an approach for improvements in the evaluation phase of programmes as well.

The second paper, “Mapping evidence gaps in anti-corruption: assessing the state of the operationally relevant evidence on donors’ actions and approaches to reducing corruption”, is authored by Jesper Johnsøn, Nils Taxell and Dominik Zaum and focuses rather on the evaluation of anti-corruption policies. The paper points out that, despite the increasing need for evidence on the effectiveness of anti-corruption interventions, systematic evaluations are rare, and the availability of evidence to orient future policy making is not only limited, but the methodological quality of existing assessments is often questionable.

In their review of the literature dealing with this topic, the authors focus on six intervention areas: public sector reform, oversight institutions, civil society support, general budget support, donors’ own systems, and multilateral agreements on international anti-corruption standards. For most of the policies assessed in the literature, strong evidence either for the positive results, or the lack thereof, of anti-corruption policies is generally lacking. The study finds sufficient reliable evidence only regarding the impact of public financial management reforms and supreme audit institutions, showing generally a positive impact in the case of the former, but inconclusive results in the case of the latter.

The two studies complement one another in offering policy-makers and practitioners an overview of what (and how little) we know on the impact of various anti-corruption reforms, and in proposing an approach to help overcome this deficiency with better design and evaluation of future anti-corruption programmes. Although they are not so enlightening in terms of new conclusive evidence on the impact of anti-corruption interventions, the effort to take stock of what has been achieved in the past decades and what can be improved next is a necessary exercise if weaknesses are to be addressed and more effective results to be achieved in the future.

 

(The picture featured above is from exposeghana.com.)

 

 

New Research Confirms Old Tocqueville

Academic research has for a long time been engaged in exploring what brings freedom and democratisation about, but has been much less concerned with the factors that lead to the fulfilment of its main purpose, namely the fair and equal treatment of citizens regardless of status or connections. In a new article recently published in the Journal of Democracy, Prof. Alina Mungiu-Pippidi discusses how societies can ultimately reach that goal, by empirically testing theses originally put forth by classic political thinker Alexis de Tocqueville.

The author starts from the observation that most new democracies have succeed in the first step, that is, in introducing free elections, but instead of making all the way to a governance regime truly based on ethical universalism, they are trapped in an intermediate but very stable stage of competitive particularism. In this mode of governance, individuals are not treated equally by state, but rather some of them are treated as above the law and have privileged access to public resources. Differently than authoritarian, patrimonialist regimes, public resources are no longer appropriated by a single ruler, but they are appropriated nonetheless, now by a few elites that compete for power. That is why many countries where free elections have been introduced in the recent past still struggle with systemic corruption in the form of widespread particularism.

Thus the main question in the study’s background is: how can societies evolve away from a governance regime based on competitive particularism towards one grounded in ethical universalism? According to Mungiu-Pippidi, the reason why competitive particularism is so ubiquitous and stable in new democracies is that the society at large, which loses from unfair allocation of resources in favour of few privileged groups, fails to impose normative constraints on those groups, which would prevent them from continuing with their predatory behaviour towards public resources.

The solution to this problem, she argues, is the development of normative constraints in the form of strengthened accountability of those in power, and this must be fostered by collective action of an “active and enlightened citizenry”. Once a significant part of the society, including a part of the elites, believes in ethical universalism as a superior mode of governance, and is determined to act for its prevalence, the path to good governance is laid down. But how does that come about? Based on Alexis de Tocquevilles’s analysis of American society, civil association, political participation and an active press are fundamental to foster collective action, as they reduce the costs of articulating citizens towards common goals. It is thus this accumulated capacity for collective action that makes all the difference in societies that manage to achieve and consolidate good governance.

Mungiu-Pippidi puts this thesis to an empirical test. She first tests whether civic and political engagement in fact go together. Using data from the World Values Survey for 68 countries between 1995 and 2008, she finds that political party membership is significantly associated with the number of civic voluntary associations, while controlling for income, religion, experience of democracy, education and age. She then tests the strength of normative constraints as a predictor of control of corruption levels in a pool of 153 countries. Using the control of corruption indicator compiled by the World Bank, she finds that press freedom, internet connections, Protestantism and number of civil society associations, as proxies for normative constraints, are significant predictors of control of corruption, also when controlling for development.

Despite these findings, Mungiu-Pippidi highlights that we cannot take for granted that these elements will necessary lead to increased normative constraints and, consequently, improved control of corruption. In the case of press freedom, for instance, it is often the case that the media itself is the target of predatory control by competing elites, and instead of serving the public interest are used for partisan purposes. Another limitation is the lack of a solid network of civil society organisations in many parts of the globe, where often all that exists is a handful of activists engaged in the promotion of normative constraints against corruption, who unfortunately don’t have the resources to effectively change the rules of the game in their societies. However, she also points out that here the donor community could play a larger role in fostering such forces towards the strengthening of normative constraints and more effective anti-corruption efforts at the national level in many developing countries. In this respect, the finding regarding the role of internet connections also offers great potential for targeted action to facilitate collective action in such environments through the promotion of online platforms.

Photo credit: Mike Benedetti

 

World Bank Publishes Financial Disclosure Law Library

The World Bank has recently set up a Financial Disclosure Law Library with a first-of-its-kind worldwide collection of laws and regulations on disclosure requirements for public officials’ assets and business activities, including income, properties, liabilities, stock holdings, positions outside public office, among other things. According to the World Bank, this new resource aims to help practitioners and policy makers to learn from the experience of other countries and act to improve and strengthen financial disclosure systems.

In launching this initiative, the World Bank has highlighted the importance of financial disclosure systems in the fight against corruption. “Financial disclosure systems make it harder for corrupt officials to hide their criminal activities or ill-gotten wealth,” says Jean Pesme, Manager of Financial Market Integrity at the World Bank. An article by Ivana Rossi and Tanya Blackburn published on the Bank’s blog page also explains that the disclosure of income and assets of public officials is particularly useful for prevention, detection, investigation and prosecution of corruption-related crimes. It thus contributes also to improving accountability of public officials and to fostering public trust in institutions by fighting impunity. The authors also mention that efforts to strengthen financial disclosure systems have been boosted by the adoption of the G20 Anti-Corruption Action Plan and the “High-Level Principles on asset declaration by public officials” at the G20 Los Cabos Summit last year.

The virtual library covers more than 1,000 laws and regulations from 176 jurisdictions. These documents include constitutions, codes, laws, decrees, acts, regulations, orders, rules, etc. in 33 languages. The portal allows users to search information according to topic (such as disclosing officials, information disclosed, restrictions, or enforcement), jurisdiction, region, income level and language.

The information gathered in the online library shows interesting features of financial disclosure systems worldwide, as well as regional disparities. A report published by the  World Bank last year had already pointed out that in some regions, such as Latin America and the Caribbean, over 90% of countries have disclosure systems, whereas in others, such as in the Middle East and North Africa, it is much lower, around 53%. There are also disparities regarding public access to the disclosed information: although 78% of the countries included in the database have some kind of disclosure system, only 43% provide open access to the data. A yet lower percentage systematically makes use of the information to monitor public officials and identify potential irregularities: only 36% check the disclosed information regularly for inconsistencies.

The new law library is an important contribution to comparing and evaluating the implementation of disclosure requirements as a resource in the fight against corruption in different countries. Most importantly, it can lead to improved sharing of best practice and to the identification of deficiencies and gaps to be addressed by policy makers in future reforms.

The picture above is featured in the article “Why do financial disclosure systems matter for corruption?”, by Ivana Rossi and Tanya Blackburn.

 

2012 Corruption Perceptions Index Launched

Transparency International (TI) has released today the latest version of its Corruption Perceptions Index (CPI), which assesses 176 countries and territories based on how corrupt their public sector is perceived to be. Each country receives a score in a scale from 0 (high corruption) to 100 (low corruption) and a rank comparing its position to the other countries assessed. This year’s results show that corruption continues to be a severe problem in most countries, with two thirds of them scoring below 50.

According to the 2012 index, Denmark, Finland and New Zealand are at the top, with a score of 90. A central reason for this positive assessment lies on the fact that these countries have well-established government institutions and strong law enforcement. Nevertheless, not even the countries perceived as least corrupt in the world are immune to corruption and some studies have pointed out vulnerabilities, especially in the relationship between politics and business.

At the very bottom are Afghanistan, North Korea and Somalia, similarly to previous editions. Some interesting, though pessimistic developments refer to the consequences of the financial crisis in Europe and of the Arab Spring in the Middle East. The countries most affected by the crisis in the Eurozone have underperformed based on their ranks this year, and the countries that underwent revolutions in the Arab World also experienced either stagnation or deterioration in their ranks.

Another important aspect related to the 2012 CPI is a significant methodological change with regards to previous editions. The main improvement this year is that the index will from now on provide for an assessment of country trends over time based on each country’s score, which was not possible with data from earlier editions. This is because the index was earlier composed using the ranks of each country in a series of business and expert-based surveys conducted by other organisations. In the new methodology, on the other hand, TI uses the raw scores of each country from the same sources, thereby allowing analysts to better assess changes over time. Nevertheless, the organisation highlights that this comparability will only pertain to the data starting from this year onwards, and the change in scale from 0-10 to 0-100 was also a decision to strengthen the distinction between the old and new methodologies.

More information on the 2012 CPI can be found on transparency.org.

 

UNDP Releases Study on Gender and Corruption

New report shows that women are disproportionately affected by corruption, especially in poor and marginalised environments

 

The United Nations Development Programme (UNDP), together with the Huairou Commission, released a report on the relationship between gender and corruption at the 15th biennial International Anti-Corruption Conference (IACC), held on 7-10 November 2012 in Brazil. The report, entitled “Seeing beyond the State: Grassroots Women’s Perspectives on Corruption and Anti-Corruption”, was presented during a side event on “Mainstreaming Gender and Incorporating Grassroots Women’s Perspectives in Global Anti-Corruption Initiatives and Agenda”, organised by UNDP. The study addressed the issue from two perspectives: how to empower women locally by raising visibility of their actions, and how to identify ways to reduce the impact of corruption on women.

So far the relationship between gender and corruption has not been adequately investigated, despite the fact that the misuse of power which corruption represents can be experienced differently by women and men. The study adopts a bottom-up approach to understanding corruption in order to evaluate its impact on previously neglected groups, such as women living and working in poor and marginalised communities. The report is based on the study of 11 communities across eight countries from three continents.

One particular example of how corruption can affect women differently is illustrated by Priya Pillai, strategic planner at the Best Practices Foundation, a partner of the Huairou Commission. She explained that grassroots women often experience corruption in the form of “physical abuse, sexual favours, and giving and taking of bribes when accessing basic services”, and that general definitions of corruption should incorporate such experiences.

The ways in which women experience corruption vary in accordance with the context, the study shows: “As primary caretakers of their households and communities, grassroots women experience corruption in enrolling their children in schools, denouncing physical abuse against family members, partaking in government subsidised programmes and participating in electoral processes. […] they are far more likely than men to be engaged in vulnerable employment and their unpaid care work is undervalued. Due to social and cultural discrimination, corruption impacts them disproportionately.”

The authors conclude that corruption has a negative impact on the empowerment of women and their participation in grassroots initiatives. Yet, women also have a key role in fighting corruption in communities, and their strategies are worth presenting. The report highlights that, because they are “facing corruption in their everyday lives, women from marginalised communities know best how to deal with corruption in the way that both empowers them and increases the quality of life of their families and communities.”

 

New Index Evaluates Transparency in Slovak Public Companies

TI-Slovakia’s ranking reveals lack of transparency and high politicisation of state- and city-owned companies

 

Transparency International (TI) Slovakia has released a ranking measuring the level of transparency in 45 state- and city-owned Slovak companies. The new tool comes in response to media reports of abuses in the administration of such firms, and to findings of previous studies showing high corruption risks in the sector.

Another motivation to assess the level of transparency in Slovak state companies comes from the fact that freedom of information legislation in Slovakia applies to them only with restrictions. According to an article by TI-Slovakia’s executive director Gabriel Sipos, published on Transparency International’s blog, they are exempted from most of the requirements of access to information laws because of their semi-commercial status. Thus their activity is less transparent and harder to control when compared to government institutions.

In order to produce the ranking, TI-Slovakia evaluated the companies’ websites, sent requests based on freedom of information legislation, and collected data from external databases, such as the website of the Office for Public Procurement. In addition to the 45 selected national companies, 15 foreign state-owned companies were assessed for comparison.

The index revealed a poor level of transparency within state-companies. TI-Slovakia concluded that the biggest public companies are the least transparent. Out of the 45 national companies evaluated, only one scored “B+”, 8 scored “B” or “B-”, and the rest received lower marks. One third did not reply to the information requests, although it is mandatory for them. Moreover, two thirds of the companies refused to disclose salaries and CVs of their CEOs.

Another finding of the study refers to the level of politicisation in state-owned companies. TI-Slovakia’s analysis showed that about two thirds of those companies’ supervisory board members and board of directors’ members are replaced within one year after the parliamentary elections, and only 10% of them stay longer than one term in their positions. This seems to be strongly connected with the lack of transparency in those companies.

The release of the ranking and its media coverage has already generated reactions by some politicians and administrators towards efforts to improve the level of transparency in state-owned companies. The Minister of the Economy, Tomáš Malatinský, for instance, declared that he would implement TI-Slovakia’s recommendation to publish contracts of state company managers. TI-Slovakia aims to repeat the ranking biannually in order to provide the basis for future analysis of the evolution of transparency in state-owned companies in Slovakia.

The picture featured above is from digiphile.wordpress.com.

 

Batory Foundation releases poll on whistle-blowing

The results of a new opinion poll carried out by the Batory Foundation in Poland evaluated Poles’ opinion on whistle-blowing at work. The opinion poll was carried out on 11-18 April 2012 by the Polish Public Opinion Poll Centre (CBOS). The report, entitled “Heroes or Snitches”, revealed that almost 70% of those surveyed would be prepared to assume the role of the whistle-blower. Nevertheless, the report highlights the factors that still discourage Poles from reporting irregularities in the workplace.

According to the data, 68.9% of respondents said they would report irregularities to the management of their firm and 64.5% to the relevant authorities. Yet, they would prefer to do so anonymously rather than revealing their identity. There is, however, a share of 24-26 % of Poles who would not report problems either to their employer or to the relevant authorities.

The report pointed out two main causes for people’s reluctance to report irregularities in the workplace. The first lays in the lack of adequate legal protection for whistle-blowers, a problem mentioned by nearly two thirds of respondents. The second is the “fear of being ostracised in the workplace”. Many respondents would expect a negative reaction on the part of the employer, such as dismissal, harassment, or disciplinary action towards the whistle-blower. Moreover, there is also a social stigma associated to whistle-blowing in Poland. Thus, people expect that the majority of their work colleagues would not approve of such action. This is related to the finding that more than 30% of respondents consider loyalty towards work colleagues to be more important than loyalty towards the employer.

The study showed that the social acceptance of whistle-blowing is also dependent on the nature of the irregularity which is reported. The greatest acceptance is found in cases of corruption or those “generally recognised danger to people: physical danger (non-compliance with safety procedures, driving a vehicle while intoxicated) or mobbing”. Conversely, reporting cases when one is acting for his/her own benefit, without posing a direct threat to other employees, is less likely to be supported by co-workers. Finally, the majority of Poles expressed their support for whistle-blowing by those working in professions which are likely to discover irregularities in the workplace (police, medical profession, public administration and educational system).

The picture featured above is from allgov.com.

 

Corruption in Bulgaria on the Rise

The Centre for the Study of Democracy (CSD) in Bulgaria has been periodically monitoring corruption in the country for many years. The methodology developed by the centre in partnership with Vitosha Research, called Corruption Monitoring System (CMS), has recently generated a new assessment, revealing that administrative corruption has actually increased in Bulgaria since 2011.

The study released by CSD evaluated how often people engaged in corrupt activities from 2011 to 2012 and whether they felt pressured to do so. According to their survey, approximately 150,000 bribes were paid to civil employees every month in 2011. The number is higher than that for the previous year, when the results of the assessment had shown some improvement in the figures. Moreover, about 25% of those surveyed for the study gave money or gifts to public employees for regular bureaucratic services in 2011.

These results corroborate other assessments of Bulgaria as one of the countries with highest levels of corruption in the European Union. In 2011 the EU’s Eurobarometer ranked Bulgaria fourth in terms of corruption pressure, after Romania, Lithuania and Slovakia, as was reported by Trustlaw. These findings have been taken as evidence of the current government’s inefficiency in curbing corruption. However, the current level of corruption is still lower than it was during the previous government (2005 – 2009), CSD’s study reports. This is due to the implementation of certain reforms as a result of the conditions imposed by the European Union for Bulgaria’s accession in 2007.

The report also highlighted the inefficiency of the judiciary in addressing the problem of corruption, as no top political figure has been charged for corruption crimes so far. One author of the study explains that “due to the impunity with which corruption is carried out at the higher levels of power… Bulgaria is one of the few – if not the only – European countries with no proven political corruption,” despite Prime Minister Boiko Borisov’s promise to end the cooperation between high level officials and organised crime, reported Eurobrussels.

That being said, authors point out that “this problem cannot be solved with law-enforcement tools alone […] but requires fundamental reform in the public administration. Fighting corruption implies understanding the source of the problem”. The study concluded that corruption pressure in Bulgaria is associated with the structure of public administration and the lack of a more customer-oriented approach in the provision of public services to the society, and that a sustained improvement in control of corruption requires measures to systematically change this scenario.

 

Corruption Research Centre at the Corvinus University of Budapest Monitors Public Procurement

(contributed by Mihály Fazekas, researcher at the Corvinus University of Budapest)

 

While Hungarian authorities publish announcements on the country’s public procurement activities in line with the 2004 EU Directive, this information is not available in a structured format for those who would like to gain insights going beyond any individual announcement (e.g. tracking how much a company won in a given period). In addition, information is not checked before publication by any public authority resulting in multiple errors in the announcements such as typos, missing information, inconsistencies.

In order to improve the current situation and to advance effective corruption control in Hungary, the Corruption Research Centre systematically collects data appearing in the Official Public Procurement Bulletin from 1996 until recent times (quarterly updates). The information is downloaded in a structured database and data quality is enhanced by correcting obvious errors and inconsistencies. For example, a large amount of information on the value of contracts awarded appears written out by letters rather than numbers often ignoring basic grammar rules. We also assign to contract winners their unique tax IDs which allows for tracking companies’ activities over time regardless of changes in their names or addresses.

Using the database constructed from official data, semi-annual monitoring reports are published by the Centre in order to inform citizens of general public procurement trends as well as shed light on specific issues. As these reports have spurred significant media coverage they succeeded in initiating discussions with some important stakeholders. In the February 2012 report, for example, we uncovered the list of the biggest issuers of tenders and companies winning most tenders, which prompted protests from some of them claiming that data was falsified. While referring to exact published announcements could resolve some of the controversy, it also became clear that multiple versions of the same announcements are published in the Official Bulletin without clear reference to each other (e.g. a corrected version of the announcement may appear without clear reference to the obsolete original announcement). This clearly causes significant legal uncertainty for ordinary citizens even in the case of simple questions such as how much a concrete awarded contract was actually worth. In order to alleviate this problem the Centre now explores potential corrections and multiplications among announcements to improve data reliability.

A common theme throughout the reports of the last two years is the strength of competition in Hungarian public procurement. A simple metrics which we monitor recurrently is the contracts awarded when there was only one bidder. Surprisingly to us and to many journalists picking up our findings, about 50% of all contracts were awarded without any serious competition in the last years, without any sign of improvement lately.

Among our future priorities, making the whole dataset publicly available features high. Once data reliability is firmly established and quality improvement possibilities exhausted, the Centre’s database will be able to fully serve the wider public. In addition, after establishing contact with our Czech and Slovak colleagues working on public procurement data a joint report is planned for early 2013 exploring cross-country differences.