I have written before about the negative effects that corruption has on struggling economies [for example see my post Corruption, Development-in-a-Box, and Global Resilience]. It’s not just that corruption siphons off sorely needed resources into the bank accounts of nefarious political leaders and bureaucrats, corruption makes all government processes less efficient, the business climate less trustworthy, and chances for progress slight. The World Bank and the United Nations are now reported to be working together to help developing countries recover funds that been stolen as a result of corruption so that they can be properly invested in the country from which they were taken [“World Bank and U.N. to Help Poor Nations Recover Stolen Assets,” by Warren Hoge, New York Times, 18 September 2007].

“The World Bank and the United Nations announced Monday that they were setting up a system to help developing nations recover assets stolen and sent abroad by corrupt leaders that amount to an estimated $40 billion a year. ‘There should be no safe haven for those who steal from the poor,’ Robert B. Zoellick, the bank’s president, said in presenting the plan with Secretary General Ban Ki-moon. Mr. Zoellick estimated that the overall cross-border flow of global proceeds from criminal activities, corruption and tax evasion was $1 trillion to $1.6 trillion annually, and said that even a small portion of that could provide financing for much-needed social programs. He said that every $100 million recovered could pay for immunizations for four million children, or provide water connections for 250,000 households, or finance treatment for a year for more than 600,000 people with H.I.V. and AIDS. The problem of stolen assets is most acute in Africa, where an estimated 25 percent of the gross national product of states is lost to corruption, he said.”

Imagine the devastating effects that a 25 percent decline in America’s GDP would have on it. As bad as that situation would be, the U.S. economy is highly resilient compared to those of most African states. That is why this new program is so important. The program is not aimed at recovering the money for the countries involved, but building up their capacities to track it down and provide the international backing they need to get it returned to national coffers.

“The new system will work to build the capacity of developing countries to track stolen money going overseas and to emphasize ways that financial centers can better detect and deter money laundering. ‘This is not just a developing-country issue because the funds inevitably end up in developed countries,’ said Danny Leipziger, the bank’s vice president for poverty reduction and economic management. The bank intends to assist countries in devoting recovered money to proper development use ‘to make sure it is not stolen twice,’ Mr. Leipziger said. The program is being developed in partnership with the United Nations Office on Drugs and Crime, whose executive director, Antonio Maria Costa, said the initiative came at a time when the sophistication of financial transactions made recovery an increasingly complex process requiring expert assistance. Ngozi Okonjo-Iweala, the former finance minister of Nigeria, who oversaw the return of $505 million to her country from Switzerland, said the new plan would help countries like hers by denying corrupt officials a foreign place to hide the money. ‘It means that people who are corrupt will know that any money sent out will be sent back to the countries from which they came,’ she said. Ms. Okonjo-Iweala said that at the time that she was working to repatriate Nigerian money in 2005, the campaign had to be conducted with no international backing and did not produce timely results. ‘There are some countries — I don’t want to name them — whose legislation only allows them to freeze the assets if they are discovered, and there is nothing that says they should repatriate them,’ she said. That has changed since the United Nations Convention Against Corruption went into effect in December 2005, obliging countries that ratified it to cooperate.”

The article concludes by noting that 98 countries still have not ratified that convention, including Canada, Germany, India, Israel, Italy, Japan and Switzerland. Hopefully, these countries will get on board and the new program will work well enough to discourage corrupt leaders and encourage those with integrity. The change is unlikely to happen overnight, but there are come encouraging signs. More on that in another post. According to the 2006 survey by the Berlin-based organization Transparency International, “Finland, Iceland, and New Zealand are perceived to be the world’s least corrupt countries, and Haiti is perceived to be the most corrupt. The index defines corruption as the abuse of public office for private gain and measures the degree to which corruption is perceived to exist among a country’s public officials and politicians. It is a composite index, drawing on 12 polls and surveys from 9 independent institutions, which gathered the opinions of businesspeople and country analysts. Only 163 of the world’s 193 countries are included in the survey, due to an absence of reliable data from the remaining countries. The scores range from ten (squeaky clean) to zero (highly corrupt). A score of 5.0 is the number Transparency International considers the borderline figure distinguishing countries that do and do not have a serious corruption problem.”

Not a single African country rises above the 5.0 level.

Source: Transparency International, 2006. Web: www.transparency.org .

The index is not static and countries do move up and down on a regular basis. According to the report, “countries that have significantly improved their rating since the 2005 index were Algeria, Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan, and Uruguay. Some of the countries that have a significantly worse rating since 2005 include Brazil, Cuba, Israel, Jordan, Laos, Seychelles, Trinidad and Tobago, Tunisia, and the United States. Because inclusion in the index requires at least three sources Afghanistan, Fiji, Liberia, Palestine, and Somalia, with only two sources in 2006, were not included.” Good governance and transparency are important for development. Good governance and transparency are elements that Development-in-a-Box™ stresses as helpful preconditions for success. The implementation of internationally recognized standards and best practices helps establish these conditions.