Building Public Trust in Government: How the UN Convention against Corruption can help Iraq

UNODC Executive Director Antonio Maria Costa

ICI Initiative on Good Governance and Anti-Corruption; Baghdad, 17 March 2008

Thank you Mr. Chairman. I am honoured to be here. Let me take this opportunity my dear Staffan (SRSG De Mistura) to recognize with appreciation the extraordinary work you have been doing here in Iraq, re-launching so forcefully the presence of, and the assistance provided by, the United Nations.

Prime Minister,

Excellencies,

Ladies and Gentlemen,

The day before I flew to Baghdad, a friend stopped by my Office and we had the following exchange:

'W hy do you travel to a conflict zone?'

' To fight corruption!'

' Iraq must have bigger problems than that!' 

Actually, it was the Prime Minister who described the fight against corruption as ' yet another conflict in Iraq, for a future of peace and trust among the people, and with their state'. I agree. This non-violent conflict is meant to enhance the software of development (namely integrity and good governance), and support the hardware of infrastructures and reconstruction. 

This conference also confirms your intention to step up implementation of the International Compact for Iraq (ICI), that you co-chaired with Secretary General Ban Ki-moon at Sharm el-Sheikh last year. It is a drive towards integrity in governance to accompany ongoing democratic processes and private sector growth. 

An absolute legacy

Dear Iraqi friends, fear not. Corruption is not an Iraqi problem only: it is present in all countries and in all administrations, under different species. In Iraq it's a vestige of the earlier regime built on political terror, but also on looted national wealth, squandered public assets, and on public money dished-out to cronies. My Roman ancestors (not immune from the disease) already recognized the hard logic:  power corrupts, absolute power corrupts absolutely. This absolutely devastating legacy is visible in estates throughout the country. It is less visible, but also very present, in financial centres around the world, where huge sums of Iraqi money have been laundered. 

Corruption is not just a financial issue, public money lost to the benefit of a few.  Everywhere on the planet, it is a corrosive force that:

-     destroys trust in public institutions

-     robs a country of its development

-     deprives the poor of basic services

-     funds violence and terrorism

-     empowers organized crime.    

Corruption has crept even into some of the most trusted institutions: blue chip corporations, the media, the judiciary, sport and even into noble organizations such as the Olympic Committee and - I am ashamed to admit - the United Nations. We went through painful times because of the miserable handling of the Iraqi oil-for-food account. 

How are things now? I sense, we face a welcome climate change in governance. Planet Integrity is more than warming up: its population is incensed. This Baghdad meeting is further evidence of the rising global temperature from Nigeria to Peru, from Japan to Ukraine, from Indonesia to Bangladesh, where government officials have landed behind bars, charged with corruption and abuse of power. From the USA to Korea, from Germany to Italy and China, the same has happened to renowned corporate CEOs, guilty of bribery and embezzlement. Public tolerance of corruption is running out, in Iraq and elsewhere.

The UN anti-Corruption Convention

While public attitudes are changing in relation to domestic conditions, the blueprint for change is a recent international agreement among the Member States of the United Nations: the Convention against Corruption (UNCaC). Allow me to elaborate on its applicability to Iraq's current conditions, and explain how the country can best fight corruption by implementing it.  

The Convention was brokered by my Office in the biennium 2002/03, endorsed by the General Assembly in December 2003 and signed by a staggering number of countries (140) since. It came into force recently (in late 2005). There are 109 State Parties to it - namely almost 60% of the UN membership has ratified it.  But not yet Iraq! 

As the custodians of this Convention, at UNODC we are glad to learn of the government's strong political commitment to ratify it without delay.  The people of Iraq expect anti-corruption actions: this is the one to begin with. The international community, especially foreign investors, are also watching: without this commitment on the part of Iraq, there cannot be private sector development in the country. 

By acceding to the Convention, Iraq will commit to an international treaty, with clear rights and duties. It will be Iraq's right to claim other nations' help in combating this scourge, and bring resources back into the government's coffers. Democracy and development will benefit. It will be Iraq's duty to establish state-of-the art laws, institutions and measures to fight corruption and help others do the same.  

What does the Convention oblige Iraq, and other contracting countries, to do?    Nothing more than what you would like to do on your own, if I can judge on the basis of the political platform of honesty and accountability on which you were elected. And nothing more than what you would need to do, given the enormous resources generated by the oil sector, its rising prices and its robust multiplier across the economy. Let's recognize it: so much wealth accumulated so fast, is both an opportunity and a temptation.  You all know what I mean. 

In order to manifest the benefits Iraq can expect from accession to the Convention, let me take you through its four elements: (i) prevention, (ii) criminalization, (iii) asset recovery and (iv) legal cooperation.

(i) Preventive measures

First, prevention. I am not talking about posters, advertisements and greater public awareness. Not at all.  From Al Basrah to Zakho, people are already aware of the severity of the problem. Rather, I have in mind concrete public management practices that promote the rule of law and prevent the problem to begin with. The UN Convention requires full disclosure by public officials of their earnings and assets, and full compliance with suitable codes of conduct. I was glad to learn that the new Iraqi legislation envisages some of this. Senior officials, who earn a few hundred dollars a month, obviously cannot afford luxurious villas and expensive cars: if they do, this should be explained. Some countries have been even bolder: in Nigeria, a country that since independence (40 years ago) has lost a staggering $400 billion to corruption, assets not declared by officials, when discovered, are seized. We would be happy to help implement as tough measures as you wish.  

·    UNCaC calls (in Article 6) for the establishment of an independent anti-corruption authority. Such an agency already exists in the new Iraq: it's the Commission on Public Integrity (CPI). I salute the recent work of Dr. Rahim Al Akily. His credentials are impeccable: I wish him, and his institution, all the best. UNODC can help CPI, including clarifying its focus, so as to balance prevention and accountability with investigation and prosecution. This would demarcate the division of roles with other agencies. We can also help draft legislation so as to enhance CPI's independence, as called for by the Convention, as well as the protection of its staff. 

·    Integrity of the justice system. If the judiciary is corrupted, governance is compromised. Because of this, in many countries UNODC has prioritized its technical assistance to build high standards of integrity for police investigators, prosecutors and judges. We have already trained a number of Iraqi magistrates, together with ISISC. More is needed. A democratic country, with an elected parliament and government, needs accountability throughout the system, and especially integrity of its watch-dog: the judiciary. 

·    According to UNCaC, there must be effective accounting and auditing standards in both private and public budgeting. A lot of corruption occurs when these two halves of society meet - like when governments tender contracts to private companies. This is a major risk in Iraq, with so much money flowing rapidly, into reconstruction. Over the millennia, from the Tigris to the Euphrates, this cradle of civilization has created some of humanity's greatest cultural wealth, above ground. It must now guard against its natural wealth, under ground, from becoming a resource curse (as economists call it). Transparency in public procurement and resource management will make it possible for Iraq to pass appropriate energy laws, and negotiate honest and transparent oil extraction and production sharing agreements. UNDP, in conjunction with the World Bank and IMF, can provide most valuable expertise. My Office is ready to join, and assist Iraq's Board of Supreme Audit to sharpen its skills. I take advantage of the presence of BSA's President, Dr. Abdul Bassit Al Turki, to thank him for his sterling work.

(ii)Criminalization and law enforcement

The UN Convention requires countries to criminalize corruption and apply effective law enforcement against it. This means adopting legislation to punish bribery, embezzlement, abuse of power, and mis-appropriation of public property. The overall effort is strengthened further if abuse of functions and illicit enrichment are also made criminal offences. This will help improve the security situation: where government control is weak, strongmen take law enforcement and public money into their own hands. This creates a vicious circle of more insecurity and greater corruption.

 The Convention also calls for criminalization of the laundering of the proceeds of crime, and for protection of witnesses and victims - with compensation for damage. Our legislative assistance program (based on UNODC manuals, best-practice rosters and tool-kits) has been found helpful around the world:  it could help protect brave Iraqi citizens who want to speak-out and blow the whistle against corruption. 

(iii) International co-operation

For decades, so much Iraqi state money has disappeared, often through complicated international transactions. Now that the cancer surgery has taken place, chemotherapy will help. 

The third pillar of the Convention calls for such an advanced medical treatment, based on extradition, mutual legal assistance, joint investigations, transfer of proceedings, and the transfer of sentenced persons. Symbolically, let me say that this Convention is not a pier, open towards the unknown: it is a bridge connected to other countries -- international co-operation is crucial in fighting across borders a crime that knows no borders. 

All parties stand to benefit. Actually, Iraq can gain from these collaborative measures more than the average: we have proven quite successfully that the more a country has suffered from corruption, the greater the advantage to be expected. 

(iv)Asset recovery

The fourth UNCaC pillar is about asset recovery. The measures here are truly revolutionary. Last September the World Bank and UNODC launched a Stolen Asset Recovery (or StAR) Initiative, based on the Convention. 

Why is this revolutionary? Because the world over, corrupt leaders have amassed fortunes by illegally taking over, or siphoning off money from state-owned enterprises, rigging procurement contracts, stealing foreign aid or even looting cash straight from the central bank. Iraq has also suffered this fate. Our goal is to make it harder for kleptocracts to steal public money, and easier for the public to recover it.  Equally far-reaching is the clause in the UN Convention, that abolishes banking secrecy as an impediment to anti-money-laundering investigations of corruption charges. 

The Iraqi people deserve to get their money back, and here is my proposal. Once Iraq becomes a Party to the UN anti-corruption Convention, the government of Iraq may consider joining the countries already assisted by UNODC and the World Bank, to recover stolen assets. It will take quite some time before this process is launched: in any event, I hope your government, Prime Minister, will consider this hypothesis favourably. Asset recovery brings cash, for sure: above all it is a preventive measure. 

Impediments to integrity   

All I said so far sounds perfectly reasonable. So why is progress towards integrity so slow, and why is corruption so pervasive?

Let me review a few reasons, and what can be done about them. 

First, greed. Since its earliest origins, humanity has been greedy. As with other such congenital weakness, we may think of social vaccines, building corruption anti-bodies from an early age - in schools, at home, and in the work place. I therefore urge all ministries in Iraq to agree on, and be part of, an overall national anti-corruption strategy without delay.  Civil society can play a key role in this regard. 

Second, vested interests.    So many politicians promise clean government, but fail to deliver. Their best intentions are well-served by anti-corruption officials, so many of them in this Hall. But, as we have seen time and again, middle-level bureaucrats block reforms. They have a lot to lose. The challenge is to squeeze these vested interests out - by exposing them in the media, by using whistle blowers, and by collecting the evidence needed to bring them to justice.  I pay tribute to the CPI investigators killed in the line of duty.  Since insecurity is partly the result of corruption, building integrity can also build peace.  

Third, the complexity of financial crime. The speed and openness of financial transactions today is being exploited by white-collar criminals. That is why Iraq needs an effective financial intelligence unit - and we stand ready to provide technical assistance.

Fourth, layering. Corrupt gains are so well-hidden under so many layers that it is hard to find and unpack the trail of Chinese boxes. Hence, information from whistle blowers is crucial. We need an incentive scheme to reward them, including through bounties.

Fifth, difficult monitoring of UNCaC. Following Iraq's ratification, we could help Iraq assess its own progress towards integrity. ICI would welcome such a report by the national government. Here is what I suggest to do: at the Conference of the State Parties in Indonesia (a few weeks ago), my Office tested a mechanism to monitor progress in implementing the UNCaC. It is peer-based, with volunteer countries (16) assessing one another. Given the conditions of Iraq today, I offer the services of UNODC to help the government vouch to the international community the progress it is making. We can provide technical support, standardized criteria, questionnaires and assessment tools developed for the meeting in Indonesia.  The process would be run by the Iraqi government, with our capacity-building assistance.

Sixth, lack of coordination. Sometimes national authorities have a tendency to compete, thus undermining common efforts to fight corruption.  That is why it is useful to count on a national anti-corruption strategy, with a clear division of labour.  But this is not enough: the work of the Joint Anti-Corruption Council (JACC), under the leadership of Dr. Ali Allak, is so crucial to foster coordination among relevant agencies - the CPI, the BSA and the Inspector General.  

UNODC is at your service to tighten up this coordination: but the main onus is on you.  I urge national administrations to assume their responsibility, set the tone at the top, hold staff accountable, and extend full cooperation to the anti-corruption agencies.        

A UNODC down-payment

In conclusion, I urge Iraq to ratify and implement the UN Convention against Corruption. Per se, this will not build trust in the government, or reduce the damage of corruption. But it will send a message of commitment to public accountability, and pave the way to the measures I described -- under a vast program of technical assistance. It will also help achieve the country's highest priorities: national reconciliation, security and governance.  

As an informal down-payment, the United Nations Office on Drugs and Crime can commit itself to establish a presence in Baghdad as speedily as possible to serve as a source of expertise to the Government of Iraq in support of its actions against corruption. Our staff will interact with relevant Government entities, development partners, and the international community with the objective of coordinating actions. 

The United Nations as a whole offers a partnership to turn good intentions into actions. Let us start now, at this meeting, to identity specific areas of cooperation, so that the rule of law will prevail over the rule of the bullet and the bribe. 

Before closing, I would like to express the appreciation of my Office to the UNDP Country Director Paolo Lembo, for the realization of this important forum. Good job Paolo.

I thank you for your attention.