Thursday, 1 October 2009

Who's Corrupt?

I am from a corrupt country. On the Transparency International (TI) index, Pakistan ranks 134 out of 180. Indeed, stories of our leaders’ corruption are rife and we are continually looked upon with suspicion. We also believe that we are bad, very bad!

We are called corrupt because of perception surveys. Question include “do you expect to pay a bribe when you get a certain public service”. So if a minor underpaid functionary in tattered clothes collects a small tip of a few dollars, of course that is bribery. And then dark, poor countries are considered corrupt!

But recently, this has become laughable. The pure countries at the top of the TI scale — the white countries — do not seem so lily white. Of course there is no little guy collecting small bribes and there are no meaningful bribes collected for providing public services.

But then as we have seen in the last two decades, corporate balance sheets have been doctored, shareholders ripped off by venal corporate bosses while boards gleefully looked on, collecting hefty commissions. Executives that ran their companies into the ground walked away rich! No law chased them! No board member took a fall.

But of course this was not corruption. Bonuses, retention fees and golden parachutes are not corruption. The retirement plans and nest eggs of poor people went up in smoke, but that is not corruption according to TI. Only petty bribes are!

Do watchdogs like TI notice what Enron, Tyco, Oxford Health, Citibank, Bernie Madoff, AIG, Merrill Lynch and so many others were doing? Do they see how lobbyists managed to sneak into a law a clause to protect outrageous bonuses? Did that change the rating of the United States?

I searched the TI ratings for some impact of these developments. There was none. Alas, no perception survey captures that!

We have seen lobbyists influencing policy again and again to the detriment of the little person. And the line between lobbyists and policymakers has been quite unclear given the convenient revolving door between the offices of the two groups. But lobbyists are performing a useful function making sure that the public keeps paying for bad food, unnecessary expensive healthcare, gas guzzlers, and guns. I guess this is not harmful. Only petty bribes are.

We are told again and again that the dark, poor countries need to set up a state of the art procurement process. The kind where friends of the powerful get ‘no-bid’ contracts; the kind where the government gives out single sourced contracts to friendly firms; where non-competitive awards are quietly made in the dark to firms; where project overruns are large and legion.

“Consultants” can be paid handsomely for stating the obvious. Who are these consultants? Most of them come out of the Rolodex of some enterprising fellow who is linked well with an aid establishment or a procurement officer. Many of them are just retired minor officials in some white bureaucracy. Of course, poor dark people are too corrupt to be hired to these jobs, except at the very lowest rung of the totem pole.

Rich countries are so generous they give poor countries aid to help them out of poverty. Of course, only pure white people are to get these funds. TI and others are funded in the name of the poor by such aid. No one asks the poor, who are the intended recipients, whether this money should be doled out in their name to agencies like TI. Much of the aid that is intended for slumdogs is spent by consultants, lobbyists, international agencies and international NGOs. The poor see little of it.

If it gets to a poor area or a school, it is after the lion’s share has been absorbed by consultants, lobbyists and INGOs like TI. These incestuous relationships between donors and their friends to produce reports, perception indices, technical assistance and trainings in exotic capitals of the world must be for the benefit of the slumdogs.

Aid donors also hire consultants to run many poor dark governments with abandon. They make policy, they run departments. No one holds them accountable to any results. Their money cannot be withheld. Thousands of dollars later, we remember that there might have been some friendly connection somewhere and we rush to hush it up. Project after project leaves the poor world poorer.

But then the consultants and donors tried, and of course no one dares accuse them of any wrongdoing. But then in the clean white world, consulting, lobbying, non-competitive contracting and procurement are all nice words — not like bribery in the poor dark world.

Many denizens of the poor, dark, corrupt world acquire quality human capital and even perform well in the superior clean white world. But they are not to be trusted with aid projects or anything to do with serious economic development in their countries. Of course, high-priced consultants from a Rolodex are better since TI says they come from clean countries.

When payoffs have fancy names like ‘bonuses’, ‘incentive fees’, ‘no-bid contracts’, or ‘single sourced’, they are respectable. Slumdogs are penalised because they are not capable of these fancy titles. That makes sense: please give more money intended for the poor to TI to tell the poor how slumdogs taking petty bribes are bad, very bad. But truly their crime is lack of nomenclature, corporate governance and bureaucracy that makes even makes trillion-dollar malfeasance respectable!