Best Practices Certification: A New Tool to Fight Corruption

Publication Date01 Apr 1999
Pages121-127
DOIhttps://doi.org/10.1108/eb025929
AuthorL. Michael Hager
SubjectAccounting & finance
Journal of Financial Crime Vol. 7 No. 2 Analysis
Best Practices Certification: A New Tool
to Fight Corruption
L. Michael Hager
'I wayfared all the lands
and saw corruption on earth . . .'1
'It is a terrible thing,' says the heroine of a Jhabvala
novel, 'bribery and corruption . . . but what can a
few honest people do when it is so deeply rooted in
political life?'2 This is a question that has plagued
good citizens everywhere, but especially so in the
developing and the economic transition countries.
Until recently, it was a question that few would
dare to utter in public places.
Thanks to Transparency International (TI), a
Berlin-based non-governmental organisation estab-
lished in 1993, and the World Bank, the subject of
corruption is no longer taboo. A global consensus
has steadily developed over the past few years that
corruption is not only wrong, it also destructive of
economic development and free market systems
in an era of globalisation. Since TI enlisted sup-
porters through local chapters and, in partnership
with the Economic Development Institute (EDI) of
the World Bank, have conducted 'integrity work-
shops'
in developing countries, 'anti-corruption' has
become politically correct.
Indeed, active involvement of the World Bank has
been central to the anti-corruption 'revolution' now
underway. Soon after assuming the Presidency of
the Bank in mid-1995, James D. Wolfensohn
highlighted the issue in his first speech before the
Annual Meeting of the Board of Governors. He
then asked the Bank's General Counsel to review all
proposals for attacking corruption and to consider
initiatives for possible action by the bank. In his
chapter 'Corruption A General Review: With
an Emphasis on the Role of the World Bank', Dr
Ibrahim F. I. Shihata described the initial actions
taken by the Bank.
Since the mid-1990s, Dr Shihata has written and
spoken extensively on the subject of corruption and
the means of combating it. At a gathering in Rome
in 1998 jointly sponsored by the International
Development Law Institute (IDLI) and the Italian
Avvocatura Generale dello Stato on 'The Problem
of Corruption: Prevention and Judicial Control', he
said that corruption 'turns the rule of law to a rule
of individuals pursuing their private interests',
Before addressing judicial control issues, he cited
some of the pernicious effects of corrupt behaviour
as follows:
it undermines public confidence in government
and the government's ability to implement its
declared policies;
it undermines the effectiveness of the state and the
political legitimacy of government; and
it leads to the weakening and possible disruption
of democratic systems.
For developing countries the impact is even greater.
It discourages foreign investment and trade by
increasing transaction costs, thwarts environmental
protection by allowing violations of the law and
deepens social inequities by favouring those who
can pay bribes.
Elsewhere, Dr Shihata observed that corruption
'usually results from two types of situations. The
first is where, in the allocation of benefits or even
the mere allowance of opportunities, the temptation
to realize private gains prevails over the duty to
serve other interests which are usually common
interests. And the second is where, in the application
of rules, the opportunity to grant special favors
undermines the general obligation to apply public
rules without discrimination.'5 In both cases, public
office is betrayed.
What can be done to prevent and control
corruption?
ANTI-CORRUPTION EFFORTS TO
DATE
Dr Shihata has acknowledged that 'corruption is
often based on deeply rooted causes related to the
values with which people grow up and the system
which governs their relationships, both among
themselves and with their government'.6 Thus he
favours a 'comprehensive approach', one which
'encompasses the experiences of different disciplines
Journal of Financial Crime
Vol.
7 No. 2, 1999, pp. 121-127
© Henry Stewart Publications
ISSN 0969-6458
Page 121

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