ETHICS AND GOOD GOVERNANCE DFID S APPROACH TO ANTICORRUPTION

ETHICS AND GOOD GOVERNANCE: DFID’S APPROACH TO ANTICORRUPTION MARK ROBINSON CHIEF PROFESSIONAL OFFICER, GOVERNANCE, CONFLICT AND SOCIAL DEVELOPMENT 1

‘An even greater duty on us … to ensure that aid secures 100 pence of value for every hard-earned British taxpayers’ pound we spend’ ‘And let no-one be in any doubt whatsoever: a zero tolerance approach to corruption’ Andrew Mitchell, Secretary of State, October 2010 2

Corruption: ‘the abuse of entrusted power for private gain’ Transparency International Corruption: Three risks 1. 2. 3 Brake on development • Funds stolen • Diversion of resources • Taxes evaded • Bribes paid • Policy decisions distorted • Exacerbates risk of conflict and instability Misuse of DFID funds • Poor use of public resources • Threat to public support for aid at home Risk to UK global reputation • Bribery by international companies • Financial centres holding and laundering stolen funds

DFID tackles all sides of the equation 1. Bilateral programme – DFID Country offices – public financial management (PFM) / audit should mean better fiscal discipline, more strategic allocation of resources and better value for money – Parliaments, Public Accounts Committees, Anti-Corruption Commissions – key sectors: police, investment environment, revenue management, service delivery (health, education) – community-based monitoring of budgets 2. Working with multilaterals – World Bank: stronger internal programming through DFID secondees and support for Stolen Assets Recovery Initiative – IMF: anti money laundering advice – UN: DFID assessing audit regime of each major agency 4

Strengthening parliamentary committees • In Ghana, DFID supported the Public Accounts Committee (PAC) from 2007 to 2009, • This included assistance with a place to meet, research on cases, access to library materials and electronic information systems, training the media on the role of the PAC and specific cases, and finance for public sittings of the PAC. • Broadcasting PAC hearings on radio and TV got people talking about corruption and the standard of questions and answers improved. 5

Combating Corruption: in partner developing countries • Strengthen country PFM systems Better Public Financial Management: • Broader empowerment and accountability improvements • Fiscal discipline • Complementary international initiatives • Value for money • Strengthen anti-corruption enforcement • Use UN convention against corruption to agree specific remedial actions 6 • Strategic resource allocation Less corruption

3. Safeguarding aid – better internal controls & response to frauds; mapping vulnerabilities across DFID operations – designing corruption risk management into programmes / sectors 4. Making international action work – effective UK action on international cases (bribery, asset recovery) – extractives – EITI, Natural Resource Charter; transparency of payments (Dodd-Frank) – levelling the playing field for all (e. g. G 20, UN Convention and anti-money laundering standards) 7

Global architecture • 2005 UN Convention against Corruption (UNCAC) - for the first time sets out agreed obligations for all countries to adhere to. To date, 158 countries (and the EU) have become parties to the Convention, one of the highest tallies for a UN Convention. UNCAC pays particular attention to the importance of ensuring efficient and effective legal co-operation between countries in dealing with corruption cases that span more than one jurisdiction. • UK is co-chairing G 20 Anti-Corruption Working Group - hope to see progress on, e. g. , ensuring level playing field on combating bribery (China, India, Russia - non-OECD players) - and on ‘non-traditional’ sanctions such as travel and visa bans • DFID working with Commonwealth Secretariat on collaboration with African Commonwealth Anti-Corruption Commissions - first conference convened all ACCs last year in Botswana where we explored scope for mutual help between ACCs • DFID is part of a donor partnership with the International Organisation of Supreme Audit Institutions (INTOSAI), the worldwide body to which most Supreme Audit Institutions (including the UK NAO) belong. • UK will also co-chair the Open Government Partnership in 2012 and chair G 8 in 2013 we will use these major opportunities to press on anti-corruption, transparency and accountability further globally. 8

Other Whitehall DFID-funded Intelligence Cross Whitehall PEPs Strategy Group [DFID secretariat] (HMT, SOCA, SFO, FSA, City of London Met Police SOCA Overseas corruption Intelligence Cell Investigation Prosecution Met Police City of London Police Bribery o/s by UK companies & citizens – developing countries 25 current cases; 2 prosecutions 11 on charge; £ 6. 5 m identified for restraint/confiscation Serious Fraud Office Investigation and prosecution Bribery & money laundering 9 Crown Prosecution Service Confiscation orders Tracing & recovering stolen Assets – developing countries £ 150 m+ restrained 6 prosecutions since 2009 Recovery & Return Crown Prosecution Service 2 posts dedicated to developing country casework (commencing Mar 11)

Results in UK asset recovery work • Real and cost effective successes – we have spent around £ 4 -5 m since 2006 on asset recovery in the UK (around £ 1 m per year) yet have recovered more than £ 160 m • Former Nigerian state governor James Ibori is on trial at Southwark Crown Court as we speak as a result of the work of our Metropolitan Police Unit 10

Independent Commission for Aid Impact (ICAI) • Independent of DFID • Reports to Parliament (International Development Committee), not to DFID • Remit to scrutinise all UK oda, in all Govt Depts • 4 Commissioners, mainly private sector background (and former head of Kenyan anti-corruption commission) • KPMG contracted to deliver studies 11

ICAI CORRUPTION STUDY The questions: • How effective are DFID’s approaches to protecting UK aid funds from fraud and corruption? • How well does DFID help its partners countries to fight corruption? Publication date – 22 November 12 IDC Hearing – 13 December

5 key findings: 1. ‘Must tackle issue more assertively’ … Anti-corruption strategy in each country 2. ‘Resources in counter-fraud anti-corruption fragmented’ … Review structure to develop more co-ordinated approach 3. ‘Need clearer procedures for managing risk in specific aid types and sectors’ … Develop processes for particular aid types and invest in due diligence 13

4. ‘Scale up support for law enforcement and national accountability institutions’ … Focus on supporting more robust law enforcement & innovative forms of beneficiary monitoring and community mobilisation 5. ‘Need to increase capacity to collect and manage intelligence on corruption’ … Invest more in intelligence collation and analysis of risks in particular sectors and countries. Currently too reactive. 14

DFID’s response • DFID can shape wider donor approach in coming years – seen as highly positive opportunity • Should be proactive and on the front foot – as much a change in working culture than simply more /heavier procedures • Immediate priorities: – Developing country level fraud anti-corruption strategies – Building up internal coherence through a Fraud Risk Management Group – Beef up effort on empowering community/beneficiaries’ voice – Engage Whitehall partners on supply of technical skills for partners – Work with multilaterals to improve systems – Strengthen specialist skills and capacity across DFID 15

Our three pronged strategy • domestic action here at home on bribery, tackling illicit flows and recovering stolen assets for eventual return • action in the international sphere to encourage more international legal collaboration on cases, especially moving ahead on asset recovery • action in our partner countries, especially trying to get UNCAC as the operating framework for donor/government collaboration and planning 16