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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

CLOSING IN ON CRIME

Anti-corruption campaigns are catching on

By Susan Berfield Hong Kong


ADMIT IT. YOU COULDN'T quite ignore the nagging suspicion that Thailand's sometimes unscrupulous politicians and businessmen might have exacerbated the nation's current economic distress. It is hardly a controversial idea, just an uncomfortable one (for Thai officials at least). Thank goodness for Pasuk Phongpaichit. The Thai economist will say what others are thinking: that corruption effectively short-changed many in the country.

Sure, the government's inability to manage financial liberalization led to the existing problems. But for months the IMF recommended to officials (in two different administrations) that they devalue the baht. They could have done so 15, nine, even six months ago, with less ruinous consequences. They didn't. Pasuk alleges some officials ignored IMF warnings because they "are a bunch of crooks" who move too easily, and carelessly, between the world of politics and finance. It was a simple calculation, Pasuk told an audience at the World Bank meeting in Hong Kong: devalued baht would lose a lot of people a lot of money. And since few knew about the IMF's worries, the officials could do as they pleased. "Economic decision-making is not strict enough, not transparent enough," says Pasuk. There, she said it: "transparency." That, and "accountability," are words you should be hearing a lot more often, no matter where you do business.

"Just getting the macroeconomic fundamentals right isn't enough anymore," says Masood Ahmed, head of the World Bank's Poverty Reduction and Economic Management Network. "The next level of development requires a whole new generation of reforms in governance. Corruption flourishes when there isn't accountability, and that will be an issue." And in countries with substantial corruption, the benefits of good economic policies often fail to reach those most in need.

Thailand's troubles may be one example of the way in which corruption can undermine development, and a government's effectiveness. Corruption covers a multitude of sins: bribery, nepotism, theft of public funds, to name a few. Officials, civil servants, businessmen big and small are all implicated. And no country is clean. Corruption has always been with us, in one or another form. People tolerated it: they considered it the price of economic growth, the cost of doing business, the quickest way to win a contract (or just get a telephone line), a perk of political power.

Today it is still hard to convince those who have benefited from development that they could be doing even better if it were not for corruption. Especially if the damage is not that obvious. Nor is it easy to persuade cynics that corruption can be reduced, even though Hong Kong and Singapore are living examples.

But more and more people believe that corruption does far more harm than good. One recent survey shows that most people regard corruption (in the public sector) as the biggest impediment to development. Another estimates that corruption reduces the flow of foreign direct investment by 16% in East Asia. The anti-corruption group Transparency International puts out an annual Corruption Perception Index. This year's reveals that four of the ten countries business-people regard as most corrupt are in Asia. They are (in order) Pakistan, Indonesia, India and Vietnam. China, the Philippines and Thailand are not far behind. Those results may be disputed, but few would disagree that corruption threatens progress -- economic, political and social. James Wolfensohn, the World Bank president, calls corruption a cancer, says it will be a factor in lending decisions and has made combating it a priority.

Russia and China have already said that they prefer to fight their own battles. But the point is that nearly all governments have taken up the cause. Just look at the recent news. China's top anticorruption official announced that his commission would step up its efforts to catch senior officials who have embezzled large sums of money. Vietnam's Communist Party chief warned parliament that it could be a "fatal disease" for a leadership that needs to get closer to the people. In Japan a just-promoted politician was forced (by public opinion) to step down from the cabinet because of his conviction for bribery in the 1970s. Korean prosecutors have demanded that the president's son be jailed for seven years for bribery and tax evasion. And Pakistan's former prime minister has been accused of stashing in Swiss banks at least $50 million, accumulated by taking bribes and commissions.

But going after top officials is just a start. A clean civil service, a strong judiciary and a free press are essential. There are no great secrets here: pay judges, police and bureaucrats (at least) a living wage; allow the media to operate without fear of being closed for libel, or less. An international accounting agency can help make a tax collection system more transparent. An anti-corruption commission can provide a permanent place to register complaints.

Citizens' groups are just as important. In the four years since Transparency International was founded (mostly by ex-World Bank officials), some 70 local chapters have opened, several in Asia. Their strategies and goals vary with the political terrain. But they all aim to keep up the pressure on governments to change. Corruption is a low-risk, high-profit business. Most people think it has to be the other way around.


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