Last week, the Danish newspaper Politiken reported that the Danish government will pay £1million to obtain secret financial information on its citizens that was gathered as part of the ‘Panama Papers’ scoop.

The information will help them uncover corruption, tax evasion and money laundering – surely in the interests of justice? Yet the move was controversial. The information had originally been stolen from a major offshore law firm, Mossack Fonseca. Is it ever acceptable for a government to buy stolen goods, some asked?

One thing is for sure: the Panama Papers have focused worldwide attention on the problem of global corruption. They revealed that corrupt practices are not just a dirty habit of poor countries, but are widely practiced in wealthy countries too – and by their wealthiest members. It is not somebody else’s problem; it is all of ours.

In my teaching, I often compare corruption to tobacco. For many years, it was common knowledge that smoking caused cancer: the US Surgeon General publicly said so in 1964. And yet smoking remained fashionable, people continued to take it up in great numbers, governments failed to legislate, and companies did not change their practices.

Growing up in the 1980s, I cast around for explanations. Maybe the addictive properties of tobacco were to blame. Maybe human nature was too weak to resist. Perhaps governments had a vested interest in tobacco tax revenues. Or the tobacco lobby was simply too powerful?

The same kinds of explanations are often given for why corruption persists: Human nature? Culture? Vested interests?

But on tobacco, huge progress has been made. In many countries, governments have legislated against smoking in public places, fewer individuals take up smoking, and smokers are stigmatised rather than admired. Admittedly, laws are not always implemented and tobacco companies still see some developing countries as growth markets. But the trend, as my children grow up, looks radically different.

What are the lessons for the fight against corruption, or for achieving social and political change more broadly?

For the anti-smoking lobby, an important shift occurred when they started to highlight the effects of passive smoking. No longer was smoking just the problem of smokers; it was harming innocents – children, co-workers, even other patients in hospitals.

The world is beginning to wake up to the fact that corruption too is not a victimless crime. But anti-corruption campaigners must keep demonstrating the myriad harms that corruption causes. At the macro level, these are about retarding growth, exacerbating inequality, undermining the rule of law. For individual victims, corruption means being denied access to jobs or school places, watching your business collapse because you don’t have the right connections, or being unjustly punished for a crime you didn’t commit.

Anti-corruption campaigners also need to build constituencies. In the case of smoking, framing the problem as passive smoking meant that healthcare workers got involved, as did employees of bars and restaurants, so too parents – adding their voices to those of more obvious victims. This in turn motivated some employers to ban smoking, and forced governments to accept their responsibilities to protect vulnerable groups.

To fight corruption, too, we must involve as many stakeholders as possible. Force lawyers and real estate agents to admit their complicity in corruption – when they facilitate or turn a blind eye to money laundering. Remind people that the costs fall on them too: through soaring London house prices as corrupt tycoons buy up property, or shoddy public services as corrupt companies win contracts. And urge people to use their power to challenge corruption wherever they see it.

The Panama Papers investigation was a remarkable piece of journalism, but it was also a pioneering work of global political activism. Its effects are only just starting to be felt…

Liz David-Barrett

Any Brits reading German newspapers this week may well have felt a strange sense of déjà vu. Germany has its very own parliamentary expenses drama to deal with, and it has echoes of the 2008 episode that shook the UK’s political establishment. No matter how the so-called ‘Montblanc Affair’ pans out, a number of former and current parliamentarians (‘MdBs’) have some explaining to do. SCSC Director Dan Hough explains.

August is generally a quiet time for news. The Germans tend to call it the ‘Sommerloch’ (literally the ‘Summer Hole’) where little of note happens. Given some of the policy challenges that Germany currently faces (internal security, refugee integration, dealing with Brexit, the latent Eurocrisis) the summer of 2016 was never likely to be quite as quiet as usual, but a left-field drama surrounding fountain pains is threatening to leave a lot of former and current parliamentarians red-faced.

The affair is actually nothing new. Indeed, rumours of inappropriate use of parliamentary expense accounts surfaced back in 2009. But seven years later and these rumours have taken on new impetus. So what is going on?

The politics of stationary (!)
The affair centres around expenditure on, of all things, stationary. Hardly the stuff of which high profile dramas are normally made. The background is that German MdBs have a yearly budget of €12,000 with which they can kit out their (and their assistants’) offices. That money gets spent on everything from paper to mobile phones … and pens.

In some cases, Montblanc pens. For those not aware of the finer points of the stationary art, Montblanc pens do not come cheap. Indeed, they generally run in to the hundreds, and sometimes thousands, of Euro. Until March 2010, and to the surprise of many Germans, MdBs were perfectly entitled to splash out on luxury fountain pens such as these; the only thing they couldn’t do was spend more than the stipulated €12,000 per annum on all stationary combined. Rumours that MdBs and/or people in their offices were gaming the system by acquiring expensive pens and, say, giving them as Christmas presents were rife.

The mystery list
The affair had lost much of its salience over time, largely as no one knew who the MdBs concerned were. The federal parliament refused to publish more details about these cases than it had to by law – and that law said that as long as the overall amount spent was less than the maximum then there was, as the saying goes, nothing to see here. By August 2016 the Bild Zeitung, Germany’s most widely-read newspaper, was upping the ante. It had managed to get hold of a list (see here) – it refused to say where from – that revealed the names of 116 MdBs who’d acquired Montblanc pens. And, the Bild was quick to say that the list wasn’t complete and that there could subsequently be more revelations to come.

The list included politicians from all parties. High profile names such as the then home secretary, Otto Schily (SPD), were on there, as were two former General Secretaries of Angela Merkel’s CDU; Ronald Pofalla and Laurenz Meyer. Indeed, Mayer appeared to have bought 14 Montblanc pens in one 10 month period. Even the anti-capitalist Left Party wasn’t exempt; Diana Golze, then MdB and currently social minister in the eastern state of Brandenburg, was on there, too.

The party politics of scandal
The German commentariat has unsurprisingly been up in arms about MdBs splashing out on these luxury items. But, much as in the UK in 2008, parliamentarians have been careful not to break the rules. As noted above, as long as they (i) spend their money on items officially sanctioned by parliament and (ii) their spending doesn’t exceed 12K in total, they are in the clear.

In terms of the first of those points, there has been further intrigue. The Bundestag publishes a catalogue of stationary items that MdBs are free to purchase. MdBs (or more likely their assistants) order from that catalogue and parliamentary authorities pay the bill. Montblanc pens were included. MdBs are subsequently not only spending within the prescribed limit, but they are buying products that the authorities themselves prescribe (or, prescribed at the time, at least).

There may nonetheless be more to this stationary catalogue than meets the eye. Indeed, it might well play a role in explaining how the list of miscreants came to light. The company that until mid-summer 2016 provided the stationary, Bürofa, got in to a dispute with the parliamentary authorities over the costs it was charging to provide the goods. Andrea-Grigor Siewert, the company’s owner, claimed that demands to cut prices were out of order; indeed, if Bürofa did as the parliamentary authorities wanted it’d be forced in to bankruptcy.

Whether those claims are true remains a moot point. But one thing is clear. Siewart is a member of the Alternative for Germany (AfD), a new, right-wing party that is causing quite a stir in Germany. Indeed, he’s a former treasurer of the party in the Berlin district of Pankow. Claims that his political allegiances have cost the company the contract have not been slow in forthcoming.

One thing Bürofa does do, however, is possess a list of to whom it has provided which products. Parliament has shredded all of its information in this regard (it was only legally required to keep it for five years) but Bürofa hasn’t; by law, it needs to keep hold of all of its files for ten years. Might that be the source of the MdBs who’ve splashed out? Siewart certainly hasn’t denied it.

The challenge of ‘legal corruption’
Even though the ‘Montblanc Affair’ has been ongoing for the best part of seven years, it still has some life in it. Parliamentarians will not find it easy explaining how they came to spend thousands of Euro on pens when there are clearly plenty of other causes in need of attention (and money). The politics of this looks bad, no matter where you are on the political spectrum.

It is also an interesting case from a corruption perspective. Defining corruption is a task fraught with difficulty. Traditionally viewed as the abuse of a public role for private gain, the real world nonetheless illustrates that notions of ‘abuse’ and even ‘public roles’ and indeed ‘private gain’ are contested. This is particularly so when parliamentarians shape the rules that they themselves have to abide by. Put another way, rational actors are unlikely to craft rules that they know they are going to go on and break.

In terms the affairs of parliamentarians, the way round this has to centre around external oversight. Post-2008 the UK responded by creating the Independent Parliamentary Standards Authority (IPSA). That body was given “the remit and powers to introduce independent regulation of MPs’ business costs and expenses and, subsequently, pay and pensions”. IPSA has not been without its critics, but it does at least mean that parliamentarians no longer regulate their own financial affairs. Germany might well need to think about doing something similar in the future.

Following the recent EU referendum result (Brexit), across the UK almost everyone seems to agree – whatever their political bent – that something is rotten in the state of British politics.

The appalling campaigns that led up to Brexit, including the misleading statements of the Leave campaign, the so called “Project Fear” of the Remain campaign and the apparent media bias in favour of Leave, all mean that not only has the referendum’s legitimacy been questioned, but we face an existential crisis about the nature and character of the UK and its political system.

But, what has corruption got to do with any of this? Isn’t this just the hustle of real world politics? Can we really identify corruption at the heart of the conflict we see today in Westminster and beyond?

In this post I present some ideas to promote debate on these important questions. I suggest that corruption could prove essential to understanding how we arrived at the Brexit decision and how we might proceed from here, and that Brexit could lead to a more refined definition of corruption itself and how it functions in the UK context.
Brexit as an impact on anti-corruption progress

Corruption certainly has very much to do with Brexit, even if it is simply as a beneficiary of the uncertainty that has ensued. A great concern for corruption experts is that Brexit will signal a retreat for anti-corruption legislation and policy: with David Cameron’s resignation as PM, anti-corruption might fall off the political agenda and the commitments made at the 2016 London Anti-Corruption Summit could come to naught.
Transparency International and Corruption Watch have both provided insight into the potential threats to anti-corruption progress, including resource pressure on anti-corruption institutions affecting prevention and enforcement; the increased risk of regulatory capture as the UK seeks to retain its economic competitiveness; and bribery risks associated with entering new markets.

These challenges are rich seams for corruption research and should be pursued to ensure that the anti-corruption efforts of the last 20 years are not swallowed up in the post-Brexit turmoil.

Corruption as a lens to analyse Brexit and post-Brexit negotiations
The EU referendum took place within the turbulence and complexity of real world politics and there will inevitably be many ways to understand the outcome. For example, there are convincing arguments to suggest Brexit was in part the result of inequality and political unrest in a skewed economic landscape that has not fairly distributed the benefits of globalisation, and that the unpleasant rhetoric against immigration also played a role in convincing voters to reject EU membership.

However, a corruption perspective has the potential to supplement this work and contextualise and clarify more mainstream accounts. This might include investigating the Brexit vote as a revolt against perceived corruption and elitism, or analysing the impact of the lobbying power wielded by media moguls and big business.

A corruption approach can also inform our analyses of the post-Brexit negotiations. These will be a critical opportunity to apply corruption research techniques to a complex yet distinct policy-making context. What kind of transparency provisions will be in place? Who will participate or be excluded? What kind of accountability mechanisms will ensure that private or corporate interests do not capture the process?

Brexit as a way to expand our understanding of corruption
If a corruption lens is a useful analytical tool for Brexit, we might also consider whether Brexit can teach us something new about corruption. In the UK, there have been calls to reinvigorate analysis and move beyond more traditional approaches to defining corruption (see Whyte 2015; Beetham 2015). I suggest that as policy and politics in the UK is remade post-Brexit, it could provide a unique opportunity to develop our understanding of corruption and its shape and force in UK politics.

Traditional approaches might be complemented by an expanded notion of corruption. Closer attention could be paid to the distinction between legal and illegal forms of corruption (Kaufmann and Vicente 2005) or Thompson’s (2013) concept of institutional corruption. Institutional corruption shifts focus from “private gain” towards benefits that can be political or institutionally useful, emphasises systemic processes rather than one-off acts of “abuse,” and engages with a tendency to undermine an institution’s primary purpose (e.g. to protect the “public interest”).

These kinds of approach – while challenging – open up corruption study to analyses of democratic institutions and the ways in which they can be disarmed in the face of challenges to their power. They also open up the potential to refresh the debate about what the “public interest” might be and the multiple ways in which different forms of corruption can undermine this interest. Ultimately they might help to devise new ways of safeguarding the integrity of the post-Brexit negotiations and the interest of the people on whose behalf countless agreements will be made in the coming years.

Rebecca Dobson, rjs.dobson@gmail.com

References
Beetham, D., “Moving Beyond a Narrow Definition of Corruption,” in How Corrupt is Britain?, edited by D. Whyte, London: Pluto Press, 2015.
Kaufmann, D. and P.C. Vicente, “Legal Corruption,” World Bank, 2005. http://siteresources.worldbank.org/INTWBIGOVANTCOR/Resources/Legal_Corruption.pdf
Thompson, D.F., “Two Concepts of Corruption,” Edmond J. Safra Working Papers, No. 16, 2013.
Whyte, D., “Introduction: A Very British Corruption,” in How Corrupt is Britain?, edited by D. Whyte, London: Pluto Press, 2015.

The fight against corruption need not necessarily be a responsibility only of governments, NGOs or the international community. It can start from you and me. As corruption continuously damages people across all parts of society, some have come to realise that not doing anything about it is in and of itself part of the problem. Anti-corruption discourse tends to be identified as a global movement led by international actors at international conventions, or by initiatives that national governments introduce. Indeed, sometimes these can and do have positive results. On many other occasions, however, they can be a disappointment, and both a waste of time and money.

An example of this is Kosovo, where significant resources have been employed to tackle grand and petty corruption. Making progress has proven difficult, and Kosovo continues to stagnate in 103^rd place in the Corruption Perceptions Index. However, a new way of thinking has entered the anti-corruption discourse in Kosovo, seeking to dig out embedded roots of corruption. These efforts are intended to change the cultural perceptions and norms of people in Kosovo towards corruption. They aim to help people desist from facilitation payments, bribery, informal gifts and such like. If citizens are not aware that these processes are wrong and damage society, then one enabling tool to create change is simply to talk about it- and there is no better platform to do that than social media.

The UNDP mission in Kosovo took the initiative to include social media as an alternative way of monitoring and controlling corruption, and also to use this initiative as a platform to raise awareness and open a debate around corruption. In partnership with Internews Kosova and the Balkan Investigative Reporting Network (BIRN), the UNDP has developed a web-platform (“Kallxo”) which allows Kosovo citizens to report corruption in real time through multiple channels, including social media, SMS and the web. By mapping reported cases of corruption, this project aims at attracting citizens’ participation and raising awareness about the amount and form of corruption occurring in Kosovo.

However, this project is achieving much more than just prompting a debate about corruption and the abuse of power. The website reported 900 cases one year after launching the platform and these cases spanned from corruption in government, educational institutions, fraud at the local level and misconduct of public officials.

This success prompted people to view the role of public officials differently, expecting more transparency and accountability. Although this started only as an ‘information-sharing’ initiative about cases of corruption and poor performance of public administrators, it soon became a ‘crowd-sourcing strategy’ for civil society organisations. According to the UNDP’s latest report this meant that social media could fulfil a watchdog function and collect reports about cases of wrongdoing on the part of the authorities. It could also encourage civic engagement and collect information that would help overcome the resistance of public officials. In respect to this, Kosovo’s Anti-Corruption Agency claims to have strengthened its efforts to combat corruption. In 2013 Kosovo’s Chief State Prosecutor adopted an action plan to fight corruption finding 1,232 cases of corruption involving 3,123 suspects, out of which indictments were filed against 780 suspects.

Communicating and sharing information through social media involves a ‘collective action’ solution to corruption. What does this entail? In simple terms, collective action theory highlights the relevance of other individuals’ decisions (or non-decisions) in affecting ones own behaviour. When corruption is seen as ‘normal’, people may be less willing to abstain from corruption or take the first step in implementing reforms.

Can social media cure these endemic illnesses in society? Well, not completely, but it can make a contribution. While social media is a great tool for raising awareness and changing norms and perceptions, it cannot tackle serious incidences of grand corruption. Since this initiative depends on citizens’ participation and interest in anti-corruption, there might be a risk of a lack of commitment and trust between citizens to create this change. To mitigate these risks anti-corruption institutions need to manage expectations and better understand the functions that corruption may play, particularly in weak institutional environments such as Kosovo.

Kosovo’s website is now not only used to report corruption but also other cases of inefficiencies in public services at the local level. To date, around 30 municipalities in Kosovo have placed “Kallxo” on their official website to facilitate the municipality’s interaction with citizens. Kosovo’s internet penetration is 76.6%, almost the same as in developed countries. Surely, as argued by the UK Ambassador in Kosovo, Mr. Ruairi O’Connell, if used effectively this can help achieve a great political and cultural change in terms of tackling corruption.

Anti-corruption institutions have invested a great deal of effort in combating corruption in Kosovo. Those committed to fighting corruption must understand the power that social media has to change or reinforce public opinion on corruption. Its ability to work with traditional media could incentivise these anti-corruption efforts, creating an even greater chance for politicians to join the club, when they know the world is watching.

Rrita Ismajli, University of Sussex

Transparency International (TI), the world’s leading anti-corruption NGO, has published the latest edition of its annual Corruption Perceptions Index (CPI). On the face of it, the 2015 CPI shows the UK to be doing rather well. But let’s not get carried away, there’s still plenty of work to be done.

How much corruption exists and which states are best at fighting it? Transparency International, a leading anti-corruption NGO, has developed a way of giving us at least an indication as to what the answers to these questions might be. Every year TI publishes data on perceptions of corruption around the world. The 2015 version, published on 27 January, included 168 countries and territories, with every one being given a score out of 100. The nearer to three figures a country is, the better it is performing. The nearer to zero a country is, the more work it has to do.

As has become the norm, the Nordic countries come out on top – Denmark is in first place (91 points), whilst Finland is second (90) and Sweden third (89). North Korea (8) and Somalia (8), on the other hand, are joint 167^th (and last). Over the last 12 months the UK’s performance has improved noticeably. In 2014 Britain registered 78 points for 14^th place. In 2015 this improved to 81 points and 10^th respectively. Given that it takes time for change to happen, this leap is noticeable, and only a handful of countries can claim to have made more progress than the UK has this year (Czech Republic, Rwanda and Kuwait being good cases in point).

Why the improvement? On the one hand David Cameron’s governments have quietly begun to push a series of anti-corruption initiatives; in December 2014 the UK produced its first anti-corruption plan, for example, and David Cameron has made a number of big speeches where the issue of corruption has come up (see this one in July 2015 in Singapore for arguably the best example). Furthermore, both the Con-LD coalition and the Tory government that has followed it have made a relatively big deal out of tackling thorny issues such as revealing more about who profits from owning companies (so-called ‘beneficial ownership’).  The UK Prime Minister is also trying to mobilise international support for his anti-corruption agenda, and this will come to a head at a global anti-corruption summit in London in May 2016.  All of this is positive and, slowly but surely, the UK is making a name for itself as a real anti-corruption advocate.

We do, however, still need to be careful in reading too much in to all of this.  That’s so for two reasons. On the one hand the CPI is certainly not without its critics, and there are sound reasons not to take its findings too seriously. On the other hand the UK still faces a host of corruption challenges, and some hard yards lie ahead if these challenges are going to be met.

In terms of the CPI, it’s not clear that the results actually reflect the reality on the ground. Boiling down perceptions of corruption to one solitary number is undoubtedly an overly simplistic way of assessing the amount of corruption that is perceived to exist. Plus, in complex societies the types of corruption that financial centres such as the City of London face are likely to be altogether different to those facing, say, rural communities in northern Scotland.

Secondly, the CPI doesn’t even claim to measure what is really going on; TI, on the contrary, is always quick to claim that it measures perceived and not actual levels of corruption. Whilst knowing how people view problems is undoubtedly useful, it’s not the same as knowing what is actually going on. A nuance that can be lost all too quickly.

Respondents to the surveys included in the CPI are also left to define corruption for themselves. Practically, this makes sense, but it will of course mean that different people will be responding to a phenomenon that they could quite plausibly understand in different ways. Finally, the CPI also claims to concentrate solely on public sector corruption. That’s fine as far as it goes, but what of the regular stream of private sector indiscretions? Think Libor, think VW emissions, think GSK. The corrupt acts of private sector firms and individuals have impacts on the wider public (in these cases on the interest rates you pay, the air you breathe and the cost of the drugs that you need when you’re ill) and yet they are purposefully avoided.

So what should we make of the UK’s apparent anti-corruption success story? On the one hand, the CPI should never be taken too seriously. It has too many flaws for that. But paradoxically it may well be precisely these flaws that make people think a bit more and dig a bit deeper to work out what really is going on. In the case of the UK that digging will lead to a Prime Minister who does seem keen to make progress in this area. That doesn’t mean that the UK is sailing in tranquil waters; on the contrary, it should prompt us to engage with the challenge of, say, dealing with the money-laundering that goes through the UK’s outsized financial services sector and the open data agenda. If the CPI makes even a small contribution to helping us make progress there, then it is a parlour game worth persevering with.

Dan Hough

University of Sussex

The Extractive Industries Transparency Initiative (EITI) has now been around for well over a decade (see here for more on the EITI’s history).  Formed as a response to the much vaunted ‘resource curse’, the EITI has developed a position for itself as an important and innovative actor in the fight against natural resource-focussed corruption.  Indeed, it leads the way in developing consultative processes for more openness in the oil, gas and mining sectors.

The EITI board met for the 31^st time in Kiev from 7^th– 10^th December 2015.  And, there was important (internal) business to hand.  There are important changes happening within the EITI, one of which being the appointment of a new chair to continue the work of former UK politician Clair Short.

Fredrik Reinfeldt, the former Swedish Prime Minister (2006-2014), has now taken up his post as her successor.  On doing this he made an upbeat speech, claiming that he was “thrilled to be nominated as the next Chair of the EITI”.   He further added that “questions about openness, transparency and accountability have always been close to my heart” and that he was passionate about seeing natural resources “used in an equitable manner for the benefit of all citizens”.  

Reinfeldt will have plenty to keep him busy.  One of his first tasks will be to oversee the (s)election of new members to the EITI board in 2016 and shortly after that to co-ordinate and lead the EITI Global Conference in Peru (see here).

The challenges that led to the creation of the EITI remain every bit as significant now as they were back then.  The aim of improving transparency in the extractive industries is as important for developed countries as it is for less developed countries. In the USA, for example, big players such as Exxon Mobil Corp have not shared information about the taxes they pay at home, and that even though the company is a member of the EITI US Multi-Stakeholder Group (MSG). Indeed Exxon is one of several energy companies that has failed to share U.S. specific tax information for a recent report released by the EITI.

There is another potentially serious challenge facing the new chair, the board and the EITI secretariat in Oslo. Clare Short highlighted the issue in her November Newsletter before she handed over to Reinfeldt:

“The issue for the EITI is whether we should make something compulsory and set up many countries to fail or whether we should continue to encourage all countries to make progress.  The real issue is how the EITI should build on the work so far to encourage continuing progress towards the EITI Principles in all countries” 

Civil society groups, one third of the voting members of the EITI board, have been uncompromising in pursuing this relatively hard-line aim at a time when the chair believed more diplomacy was needed. Some London based ‘transnational advocacy non-governmental groups’ (TANGOs) have regularly blocked pleas from the board and industries to allow more time for some countries, such as Azerbaijan, to provide company and tax information to the EITI.

For those not quite so familiar with the EITI’s procedures, membership is often critically important to less economically developed countries (even with natural resources) not least because membership is also a qualification for international aid from the World Bank.

On the other hand London based TANGOs set standards for other MSGs around the world. Recently, for example, they introduced new guidelines for the disclosure of Beneficial Ownership information in UK extractive industries. This was first accepted by members at the UK EITI MSG last year and it has now been accepted by the EITI board:

EITI civil society organisations are normally expected to affiliate to Publish What You Pay (PWYP), an offshoot of Global Witness (GW created PWYP in 2002). Some NGOs, one a former affiliate of PWYP in the Democratic Republic of Congo, are nonetheless now applying directly to Oslo for associate membership of the EITI. This may also lead to opportunities for them to apply independently of PWYP for EITI board membership (for more on PWYP’s selection criteria for EITI board membership see here).

The EITI, as is evident from the above, is evolving. It might subsequently be worth keeping a closer eye on it in years to come.

Martin Brown

University of Sussex