06 February 1998 - 08 February 1998

Corruption: Progress in Counter-Stratagies

Chair: The Honorable John Brademas

In 1995 Ditchley had held a notable conference to consider the international threat of corruption and how to tackle it.  As we began our re-addressal of the subject we noted how strikingly awareness of it, and of its pernicious effects, had advanced in the meantime.  Societies almost everywhere were alerted to it, for example by salutary publicity for indices, even if inescapably judgmental, of its relative national incidence;  innocence was over, and complacency fading.  (We recalled that the Managing Director of the International Monetary Fund had recently pointed to the incidence of corruption as a significant factor in the East Asian financial crisis.)  Arguments about useful economic “lubrication” were nowadays much less often heard;  zero tolerance was increasingly recognised as necessary, with wide differences as between behaviour at home and behaviour abroad no longer thought acceptable.  The central task now was to exploit the new climate of awareness to put in place genuinely effective counters and safeguards.

We spent a little time, though not too much, on considering how broad the focus of early action ought to be.  Should it concentrate just on bribery - on situations where the consideration wrongly provided was money or its close equivalent - or reach also to the improper provision of other advantages in breach of duty (as for example in the nepotist allocation of jobs)?  These wider instances could all damage democratic honesty, trust and efficiency.  But we agreed that bribery was the central case.

Similarly, we wondered how high private-to-private corruption should rate among priorities for effort.  There were problems of definition and of harmonisation across different countries, and several participants were inclined to regard this field as mostly unfruitful at present.  Nevertheless, we were aware that infection could easily spread across imprecise boundaries to the public arena if attitudes were lax in the private sector, notably in regard to the matter of lavish corporate entertainment (for which codes of conduct should surely be developed).  And we were reminded that corruption and related crime were especially to be expected in environments where legal enforcement of private contract was weak.

The massive potential significance of the new anti-bribery convention adopted towards the end of 1997 by the Organisation for Economic Cooperation and Development was evident to us all.  It built on earlier OECD initiatives - such as a 1996 recommendation to end everywhere the tax-deductibility of overseas bribes, a feature that had previously disfigured the scene in some countries - and created a new base for counter-bribery activity across a broad front, even if some areas such as private-to-private activity and political-party funding remained outside its scope, and its import related only to the “supply” side of corruption.  Its value as yet was however as a platform, not an end-point, and much needed to be done to build upon it.  The first step must be effective incorporation into national law - especially in the United States, as inescapably trend-setter.  It was highly desirable also to spread its acceptance beyond the original thirty-four signatories to the whole membership of the World Trade Organisation, which ought to recognise its relevance as a curb on a grave restrictive practice in international business.

Action needed however to run well beyond enactment.  Standard-setting alone, for all the psychological and normative impact of explicit law, would not suffice, and its impact might soon fade if vigilant monitoring and effective enforcement did not follow in order to entrench attitudes and build trust throughout industrial sectors and trade régimes.  We acknowledged that credible assurance was not easily achieved across national boundaries;  and constructing mechanisms of whose efficacy in restraining competitors private firms would feel confident would surely need much study, dialogue and patient effort - perhaps sometimes sector by sector, to shape “islands of integrity”.  New collective fora might need to be created, and governments would have to stand ready to exert uncomfortable finger-pointing pressure both domestically and internationally.  The campaign could not easily be managed in sovereignty-conscious national compartments alone;  and the desirability was strongly urged of extending the role and powers of EUROPOL and INTERPOL to tackle corruption as well as narcotics crime.

The conference heard divergent views about how far trustworthy cultures could be built by legal enactment.  Suspicion was said still to be felt in Europe, for example, about whether the long-standing Foreign Corrupt Practices Act in the United States had really altered the behaviour of US firms;  might not evasion - as by the use of local subsidiaries, or the manipulation of tendering - still be widespread?  But most United States participants, while noting such suspicion as itself a matter to reckoned with, judged that the FCPA was by no means as porous, nor its impact on corporate attitudes as superficial, as this implied;  and by analogy it was to be hoped that the OECD Convention too might progressively re-shape attitudes among business leaders in healthy ways even where direct legal impact might not readily be demonstrated.

We observed, in that regard, that corporate codes of conduct widely and strongly promulgated within companies had a valuable part to play alongside the law;  their content might not everywhere be the same, but key features should be constant.  The anti-corruption theme should indeed, it was urged, form an increasingly high-profile element in the development of corporate-governance approaches as a whole.

What contribution to the campaign might be looked for from non-governmental organisations?  As the wide-ranging impact of Transparency International already made evident, the role of NGOs - including professional groups - in monitoring, alerting and challenging could be an important feature, perhaps especially where they had independent locus for direct access to the courts.  We were however warned not to expect too much from civil society in countries marked by corruption at its most severe, as often happened in transitional economies where changing property rights enhanced opportunity.  The forms of civil society did not guarantee civic virtue;   organisations might be client-serving in real purpose or effect, and even indeed part of the problem rather than the solution.  For proper effect NGOs should be neither so close to government as to be their mouthpiece nor so alienated and adversarial as to be impotent;  but this balance did not always exist dependably.  That said, the general climate of opinion in society had a massive bearing upon the issue of corruption, and there were widespread signs of modest but useful advance.  Education - for example in schools - and public awareness of the real costs imposed upon society could progressively erode the culture of passive acquiescense, and could build a sense of outrage, of recognition that corrupt action ultimately damaged the whole of the community, of improvement achievable and of disgrace among the guilty.

As we turned to areas of high risk we acknowledged that the financing of political parties sometimes posed particular difficulty, especially though not only where parties were client-based.  Definition of wrong-doing in operationally-workable ways was often awkward;  but the field could not be ignored, and the search for healthy rules and safeguards should not be shelved.  We noted also that corruption or weakness in the mechanisms of law and order - among the judiciary and the police - was doubly pernicious, as imperilling the fight in all other areas too.  The independence of prosecutors could be among the most important safeguards.  And we recalled again, from our previous conference, how corrosive the effect could be of serious underpayment of public officials in key roles, especially in governmental structures where regulation remained complex and non-accountable official discretion extensive.  The improvement of such structures, so as to reduce risk, remained a necessary part of the agenda, since the removal of opportunity was often as important as the deterrence and punishment of misbehaviour.

We wrestled a good deal with the effects which particular features of international financial systems - such as off-shore havens, shell companies or trusts and bank secrecy - might have in impeding the anti-corruption drive.  Technical problems were formidable, we knew;  but legislation empowering (which might be as much needed as requiring) banks to disclose corruption-related information, and perhaps applying to the proceeds of corruption the same types of régime as already bore upon drug-related transactions, might have a part to play.  The trade-off with considerations of privacy needed re-examination, as for example through placing upon public-service employees the onus of explaining any surprising evidence of personal wealth (and of risking at least pension forfeiture if explanation was found inadequate).

The role of aid conditionality much exercised our discussion.  International financial institutions as well as donor countries increasingly recognised the impact corruption could have in stultifying aid, and enhanced leverage was being sought.  It was not easy to implement conditions effectively  unless real will existed in the recipient country;  use of this instrument had to be situation-specific, and sustained.  But there were useful possibilities at least for requiring greater openness and better process, for example in the use of audit;  audit patterns should wherever possible make corruption risk a priority concern, and external firms securing public contracts might themselves be required to pay for thorough independent scrutiny.  Protection for the “whistle-blower” - though in some political cultures such behaviour could not readily be looked for, or trusted - might also help;  and the media, though not everywhere immune to their own forms of corruption as well as sometimes in need themselves of protection, could much reinforce awareness, accountability and the full exploitation of transparency in process.  Transparency indeed - letting in the sunlight, as one participant put it - was an instrument of exceptional significance in any strategy.

We were conscious that we had identified a long catalogue of matters needing to be tackled.  Successful strategies would have to be many-faceted;  coalitions of government, business and civil society to “own” and implement them would need careful construction;  and the design of action programmes would have to be sensitive to the particularities and realistic priorities of the setting.  Vulnerabilities and feasibilities would not be uniform across different political, social and business environments, and ultimately only internally-accepted remedies, not externally-imposed ones, could prevail.  But there were good models, success stories and cautionary tales available to enhance the merits of learning, confidence-building and information exchange within governments and countries as well as between them.

There remained issues which we had scarcely plumbed, like the huge financial power of drugs-related and other organised crime;  and we knew also that the creative ingenuity of corruption-exploiters made the task of fighting them a matter for continuous effort, with no conclusive silver bullet available to expunge all problems.  But confidence in progress already made - and perceptions of a substantial practicable agenda at hand to be tackled - enabled us to end the conference with a sense of optimism, of contact and exchange to be maintained (notably through the good offices of Transparency International) and of a cogent case for another Ditchley gathering on the subject early in the new millennium.

This report reflects the Director’s personal impressions of the conference. No participant is in any way committed to its content or expression.

Chairman: The Honorable John Brademas
Chairman, National Endowment for Democracy


Dr Mushtaq Husain Khan
Lecturer in Economics, School of Oriental and African Studies, University of London

Ms Dianne Stafford
Deputy Director, Legal & Constitutional Affairs Division, Commonwealth Secretariat

Dr Margaret E Beare
Director, Nathanson Centre for the Study of Organized Crime and Corruption, Osgoode Hall Law School, York University
Mr Maurice D Copithorne QC
Associate Counsel, Ladner Downs, Barristers and Solicitors, Vancouver
Mr Horst Intscher
Assistant Deputy Minister, Department of the Solicitor General, Ottawa
Mr Rodney T Stamler
President, International FIA Holdings Limited;  formerly Assistant Commissioner Royal Canadian Mounted Police

Dr Jean Cartier-Bresson
Assistant Professor of Economic Sciences, Paris XIII University
Mademoiselle Laurence Giovacchini
Head of Mission, Service Central de Prévention de la Corruption

Dr Peter Eigen
Chairman of the Board, Transparency International, Berlin
Dr Hermann O Franz
Chairman of the Supervisory Board, Siemens AG, München

Mr Soli J Sorabjee
Senior Advocate, Supreme Court of India;  formerly Attorney General

Signor Andrea Di Nicola
Researcher, Transcrime, University of Trento

Dr Eduardo Ibarrola-Nicolin
Deputy Attorney General of Mexico

Ms Carolyn Ervin
Project leader, OECD activities on bribery in international business transactions

Dr Wiktor Osiatynski
Director for Education Programmes, Helsinki Foundation of Human Rights, Warsaw

Professor Dr Mark Pieth
Professor of Criminal Law, Criminal Procedure and Criminology, University of Basel;  Chairman, OECD Expert Group on Bribery in Commercial Transactions

Mr Ian Blair
Chief Constable, Surrey Police
Ms Caroline Mawhood
Assistant Auditor General, National Audit Office
Dame Barbara Mills DBE QC
Director of Public Prosecutions
Mr George Moody-Stuart
Chairman, Transparency International (UK)
Mr Stephen Silber QC
Criminal Commissioner, The Law Commission
Mr Roger Wilson
Head, Government and Institutions Department, Department for International Development
Mr Karl Ziegler
Director, Centre for Accountability and Debt Relief

Ms Nancy Zucker Boswell
Managing Director, Transparency International USA
Mr John F Crawford
Partner-in-charge, Paris Office, Jones, Day, Reavis & Pogue
The Honorable Kevin J Ford
Deputy Commissioner, City of New York
Mr Fritz F Heimann
Counselor to General Counsel, General Electric Company;  Chairman, Transparency International USA
Professor James B Jacobs
Professor of Law and Director, Centre for Research in Crime and Justice, New York University School of Law
Professor Michael Johnston
Professor of Political Science, Colgate University
The Honorable John T Noonan Jr
Judge, US Court of Appeals
The Honorable Stephen D Potts
Director, Office of Government Ethics, Washington DC
Mr Donald H Rivkin
Senior Counsel, Schnader Harrison Segal & Lewis, New York
Mr Thomas D Thacher II
President and CEO, Thacher Associates LLC;  previously Vice President and Inspector General, The New York City School Construction Authority
The Honorable Thomas J White
Deputy Director, Office of Investment Affairs, US Department of State