Every other week, the Task Force will be highlighting a Featured Allied Organization. The Task Force has 125 member organizations from all over the world which endorse its mission. Click here to access previous Featured Allied Organization posts. This week’s Featured Allied Organization is Pragati, Koraput.

Pragati, Koraput was established in January 1992 with the mission of improving the quality of life of tribal people and underprivileged sections of society living in remote pockets of Koraput district in Odisha, India. The tribal people in this region, due to their isolation, have been cut off from the mainstream of society and deprived of the basic amenities of life.  Pragati, Koraput plans activities based on analysis of the socio-economic and political contexts of the area and community dynamics, with emphasis on community empowerment. Their programs seek equitable, peaceful, productive and inclusive relationships within communities, protection of the environment and a culture of participation to influence and shape their lives. Their programs are unique in that they involve Community Based Organizations in project planning, implementation, monitoring and management.  To this end, Pragati, Koraput liaises with Panchayati Raj (local assemblies) and Government line departments, and networks with local, state and national NGOs and people’s organizations.  Current programs include: civil society development, natural resource management, system of rice intensification, sustainable agriculture, women’s self help groups and cooperatives, disaster risk reduction, and community based rehabilitation for persons with disabilities.

The featured photograph was taken at the District Level Women’s Convention which took place in January 2011.  To learn more about Pragati, Koraput and their programs please visit their webpage .

In case you’ve missed India’s catapult into this discussion, here’s the background.

In April of 2009, after becoming very upset by the evidence there are rivers of ‘black money’ flowing out of India, the president of the Bharatiya Janata Party (BJP), Rajnath Singh, told voters that if they elected his party into office he would, within 100 days, “bring back all the black money stashed in foreign banks and distribute [it] among ‘the common poor people.’” As we know, the BJP did not come to power inIndia in 2009 so fortunately for Rajnath Singh, his party never needed to prove this monumental task was possible. It’s not, by the way.

In the last two years there has been relentless pressure from Indian citizens and politicians on President Manomohan Singh to “bring it back;” a phrase which has become something of a common term in the world’s largest democracy. Unfortunately for India, this has proven to be a monumental—make that impossible—task.

The more important, and more effective, course of action is to stem the outflow in the first place. And in recent months India has significantly expanded its efforts in this area. To this end, India recently joined the Financial Action Task Force and the Task Force on Financial Integrity and Economic Development’s Partnership Panel. It has also completed negotiations for 16 new tax information exchange agreements (TIEAs) with mostly notorious tax havens, including: the Bahamas, the Isle of Man, the British Virgin Islands, Cayman Islands, Jersey, and Gibraltar.

Two weeks ago, I noted that while this was a step in the right direction “TIEAs are not nearly strong enough to allow for effective fight against tax evasion… [because] under TIEA requirements, tax information is only provided if another country specifically requests it.” I said what India really should pursue is automatic exchange of tax information and predicted that, “given the progress of the last two years, in the next two, we may see India on the forefront of the international arena, calling for automatic tax information exchange.”

Two years? Try two weeks.

On Thursday, at the G20 Summit in Cannes, Prime Minister Singh stood in front of the leaders of the world’s twenty most powerful countries and urged them to agree to automatic exchange of tax information. He said: “G-20 countries should take the lead in agreeing to automatic exchange of tax related information with each other, irrespective of artificial distinctions such as past or present, for tax evasion or tax fraud in the spirit of our London Summit that ‘the era of bank secrecy is over’.”

Unfortunately the G20 is not on the same intellectual fast-track that India is steering. As GFI noted in a recent press release: “While the final declaration mentioned automatic exchange of tax information as a potentially useful tool in tackling non cooperative jurisdictions, it stopped short of calling for its implementation—instead stating that they would ‘consider’ it “on a voluntary basis as appropriate.”

While this is, of course, a bit of a disappointment, we should remember Prime Minister Singh’s comments are a huge victory for transparency. This discussion will take time. As they say, Rome was not built in a day, and secrecy won’t be dismantled in that proverbial day, either. We must be patient in our pressure on the rest of the world as it catches up with the Indian thought leaders. But who knows? Maybe they’re not as far behind as it might seem. I’ve already underestimated the power of this idea once.

~FreeBirD®~ / Flickr

On Monday, October 10, a variety of prominent Indian business leaders under the larger title of India Inc released their second open letter to the Indian government.  This letter argues for the need to make striking changes to India’s legislation regarding bribery and corruption.  It was written with an eye toward a newly proposed law called the Lokpal Bill which has been discussed extensively over the past year and is expected to be formally presented before India’s parliament in the near future.  This bill intends to fight corruption by creating an ombudsman-style body with the power to investigate corruption in the government and consider citizens’ complaints.

The advancement of the Lokpal Bill is the result of a push for action over both the short and long terms.  Over the past few years there has been a popular call for change underscored by allegations that India’s telecommunications minister sold mobile phone licenses to the highest bidder in 2008.   However, passing a bill of this kind is by no means a new idea for India.  According to The Times of India, Indian policymakers have unsuccessfully attempted to implement an investigatory organization of this kind a total of ten times over the last 40 years including Prime Minister Manmohan Singh’s concerted effort in 2004 which was subsequently blocked by powerful lobbying groups.

India Inc’s discussion of corruption and bribery in the letter focuses on the need to not only institute an effectively designed bill but to push beyond the current proposal.  Although India Inc supports the current bill, it believes that “the Lokpal Bill is only one small but critical step in the national task of weeding out the plague of corruption in India.”  Whereas the Lokpal Bill effectively addresses a large amount of the existing corruption, the businessmen argue that it would fail to consider the problems in “daily life which [are] vitiated by corruption in almost every sphere of [our] normal dealings.”

In order to fight corruption on a broader scale than the bill offers, India Inc looks outside of national boundaries for advice.  The letter encourages the government to consider the United Kingdom’s Bribery Act 2010 which extends personal liability to the highest levels of an organization and includes up to ten years of jail time for anyone involved in bribery.  Following the UK’s framework would make it far more difficult for Indian executives to escape blame for their subordinates’ actions by simply “turning a blind eye.”  To prevent executives from throwing others under the bus without actually changing their corporate practices, the UK guidelines make the entire company culpable for “the failure to prevent bribery by an associated person.”  In addition, India Inc argues that it is necessary to punish “the giver as well as the receiver of the bribe” in order to effectively diminish the impact of corruption.  This is to say that while preventing executives and politicians from accepting bribes is certainly important, the problem will not be fully corrected unless there is a greater deterrent against offering bribes in the first place.

After underscoring the need for improving the conditions in India, the letter notes the importance of eliminating judicial flaws.  Regardless of the extent to which a law would prevent corruption, the unfortunate fact is that legislation alone will not produce the necessary change.  In reality, enforcement and the pervasive mindset play at least as important a role in the task of creating legal order as the laws do on their own.  In countries such as India where corruption runs rampant, progress can only be made by addressing both the legal system and the bureaucratic framework that ensures the effective application of the laws.  It is a valuable start to enact more concrete laws.  However, without restructuring the implementation process, conditions cannot actually be improved.  As India Inc’s letter astutely points out, one of the greatest challenges in the fight against corruption is that prior to widespread institutional reform, “even the best crafted legislation will not cleanse the system.”

Image License:  Some rights reserved by ~FreeBirD®~

As we know, the BJP did not come to power in India in 2009 so fortunately for Rajnath Singh, his party never needed to prove this monumental task was possible. It’s not, by the way.

At the time Global Financial Integrity (GFI) had estimated annual illicit financial flows from India were somewhere between $22 and $27 billion. Last year GFI released another report examining IFFs from India and found that between 1948 and 2008 India lost a total of $462 billion as a result of corruption, bribery and kickbacks, criminal activities, and efforts to shelter wealth from a country’s tax authorities.

Since then, India has only become more excited about black money. There has been relentless pressure from Indian citizens and politicians on President Manomohan Singh to “bring it back;” a phrase which has become something of a common term in the world’s largest democracy. Unfortunately for India, this has proven to be a monumental—make that impossible—task. As Dev Kar, GFI’s Lead Economist has suggested, to differentiate the licit from illicit would be like distinguishing two cups of water—one hot and one cold—that were poured into the same bowl. It just doesn’t work that way for many reasons. For one, that illicit money has accumulated overseas for decades, which means that some of it wasn’t illegal at the time it was sent away, some of has passed its statute of limitation, and for much of it the home country just doesn’t have jurisdiction over.

More recently, India has expanded its efforts in the international arena. This is important because curtailing flows of black money is easier—and more significant—than efforts to “bring it back.” To this end, India recently joined the Financial Action Task Force and the Task Force on Financial Integrity and Economic Development’s Partnership Panel. It has also completed negotiations for 16 new tax information exchange agreements (TIEAs) with mostly notorious tax havens, including: the Bahamas, the Isle of Man, the British Virgin Islands, Cayman Islands, Jersey, and Gibraltar. MC Joshi, the chairman of the Central Board of Direct Taxes (CBDT), notes this progress “coupled with the fact that negotiations have been completed with 56 jurisdictions in the past two years for Double Taxation Avoidance Agreements and TIEAs…will enable us to combat evasion and avoidance of taxes.”

Unfortunately for India, however, the country may not be so lucky. While this is all a very good step in the right direction, TIEAs are not nearly strong enough to allow for effective fight against tax evasion. Under TIEA requirements, tax information is only provided if another country specifically requests it. This means that countries must have a reasonable idea that a certain citizen is evading tax, which would first require an investigation or other such effort. As Raymond Baker, Director of GFI, has noted “these agreements […] maintain bank secrecy.” He argues India should approach “the European Union for an agreement to have automatic exchange of tax information with the EU…A country of the size and power of India should say: ‘We want the same agreement that you have going between the countries belonging to the EU.’”

But I don’t mean to minimize India’s accomplishments. The country’s discussion of black money has matured substantially in the two years since the BJP was shouting about bringing it all back in 100 days. At the time, I postulated that black money was merely a fad in India and that “its promises to recapture its billions…won’t have much effect on its long term public policy initiatives.” My statement has been proven very, very wrong. India is deadly serious about black money and becoming increasingly more serious about curtailing these flows. Given the progress of the last two years, in the next two, we may see India on the forefront of the international arena, calling for automatic tax information exchange.

HONG KONG – India is playing a major role in the global crusade against tax crimes and has completed negotiations for 16 new tax information exchange agreements (TIEAs), according to the chairman of the Central Board of Direct Taxes (CBDT) M C Joshi.

The pacts with the Bahamas, Bermuda, the Isle of Man and the British Virgin Islands have entered into force, Joshi told an international tax conference organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Read more…

Fortunately, as a result of efforts by organizations like the Center for International Private Enterprise, international aid and development organizations have increasingly understood the importance of addressing both the supply and the demand of corruption.

The OECD 2009 Anti-Bribery Convention, for example, specifically addressed the issue of the supply of corruption, while also attempting to addressing demand. The OECD notes:

It is clear that there are two sides to bribery. As the largest exporters of trade and investment in the world, multinationals represent, by far, the greatest potential source of bribe money. The supply side was a logical place for our countries to start, notably given that these countries are home to most multinational enterprises. However, the problem of the demand for bribes is not being neglected. The OECD promotes cooperation with a number of other regions of the world, and other international instruments also offer sound strategies to combat the demand side.

The World Bank (WBG), like the OECD, has become concerned with the supply of corruption, particularly as it applies to WBG operations. In 2007 the Bank adopted a new Governance and Anticorruption (GAC) Strategy in March and an Implementation Plan in October. The Strategy shows promise, but has experienced an interesting limitation. A recent audit by the Independent Evaluation Group shows that since adoption of the GAC, the World Bank has remained too focused on improving its own resources and reputation in dealing with those issues. That is to say, the Bank has been so careful about providing a potential supply of money for corruption that it has overlooked other important elements of anticorruption.

What are those other elements? According to the Navin Girishankar, the study’s main author, the Bank needs to focus on institutions and policies within borrowing countries that will make them more accountable. And while the Bank has made a lot of promises to help countries strengthen their public sector, they have yet to show results in any concrete projects. As Girishankar put it: “The bank has to focus on helping countries develop the capacities to govern… There is a gap between the plans and the follow-through that needs to be filled.”

It’s true. It is easy to become overly focused on the micro-interactions that take place in a corrupt exchange. Those are important and powerful factors, but so are the surrounding institutions that allow the exchange to take place. Or as an economist might see it: there is a demand of corruption, a supply of corruption, and a set of “market” conditions that drive the transaction. Those market conditions are the nation’s institutions.

Joachim von Amsberg, vice president for the Bank’s operations policy and country services, responded that he could “live with a criticism that we have spent too much time protecting our own money.” And it’s good to hear the Bank is being careful. But now it’s time to solve the problem.

While the piece is largely intended as some light-hearted fun, it may well turn out to be something more than a way to pass some time on the internet.

It can sometimes be hard to illustrate the importance of the issues the Task Force deals with, especially because these issues are hard for the public to learn about.  While reality TV stars arrested for money laundering may make national headlines, the role money laundering can play in terrorism garners much less attention.  This isn’t necessarily surprising, as illicit financial flows are complex processes that rarely make for glamorous headlines.  Usually, these issues reach widespread audiences only in the most monumental of occasions, like the quest to recover Qaddafi’s stolen money.

This game offers a new way to shed light on these issues.  As the game is emailed, tweeted, and linked by people around the globe, people’s curiosity will be piqued.  Some will decide to Google who Anna Hazare is, and learn more about how corruption impacts not only India, but the world as a whole.  Armed with a better understanding of the situation, people become more aware of how those issues are reflected in their own lives.  Hopefully, the American officeworker playing Angry Anna behind his desk will later care more about, for example, attempts to defend a strong FCPA, support tighter rules to stop corrupt governments, or efforts to end tax haven secrecy.

Obviously, no silly online game is going to be the solution to the fight against illicit financial flows, but it is refreshing to see such an innovative and humorous way to spread aware

BERLIN – After the Arab Spring, an Indian Summer. In recent weeks, thousands of people have taken to the streets to support an Indian activist’s calls for stronger anti-corruption legislation, in the form of the Jan Lokpal bill, which would set up an independent anti-corruption body, and to protest his initial arrest on 16 August 2011.

Anna Hazare first went on hunger strike after a series of political corruption scandals rocked the country in quick succession. Hazare started a debate that has engulfed an entire country: what does it take to fight corruption at all levels of society? What can governments, citizens and civil society do to make a real difference?

Corruption takes a huge toll on India’s economy. Global Financial Integrity reports that US $19 billion in illicit money leaves the country each year. Our 2010 Global Corruption Barometer shows that corruption is also a daily burden for India’s citizens: 54 per cent of households paid a bribe in a 12 month period to receive basic services.

Only 25 per cent, meanwhile, think that their government’s efforts to fight corruption have been effective. The question for Indian leaders is how to move from commitments made to a real reduction of corruption in the lives of Indian citizens?

Civil society organisations see the Jan Lokpal bill as a means to meet the obligations of the UN Convention against Corruption, which India ratified in May 2011, particularly by installing mechanisms for the investigation and prosecution of corruption.

Laws alone will not stop corruption: political leadership and citizen participation are crucial. India’s vibrant democracy can be its best weapon against corruption. Our survey shows that 74 per cent of people in India could imagine themselves getting involved personally in the fight against corruption, far more than the Asia-Pacific regional average of 31 per cent and a global average of 49 per cent.

Communities and civil society groups can do much more when backed up by strong laws, and need to have faith that people who report corruption will be protected, and those reported on will be investigated.

Petty bribery hits the Indian poor hardest, an injustice heightened by the fact that they are often asked for bribes to access services that should be free. A study carried out by our chapter, Transparency International India, indicates that poor households paid 9 billion rupees (US $205 million) in bribes to access basic services.

In response, Transparency International India launched a grassroots initiative to help 8,000 impoverished rural families use their right to demand information from public officials as a weapon against bribery.

The Pahal (“beginning”) programme has made villagers more aware of their rights while encouraging them to participate more in local processes. Communities have used their right to information to expose and counter corruption by carrying out social audits of government programmes. In one village, half the population turned out to scrutinise public expenditure on an education support programme, identifying falsified records, payments to false names and evidence of bribery.

The initiative shows how anti-corruption measures like those proposed in the anti-corruption Jan Lokpal bill can have an impact, if they allow for robust civil society involvement. Volunteers are trained to raise rural communities’ awareness of right to information laws and how these can be used to find out which services they are entitled to. While continuing to operate in Chhattisgarh, Orissa, Jharkhand and Bihar states, in July 2011 Pahal was expanded to a fifth Indian state, Tamil Nadu.

The Indian public view political parties, closely followed by parliament, as the most corrupt institution in their country. Diminishing faith in politicians can trigger a destructive cycle where reform-minded politicians struggle to convince voters of their good intentions, and citizens see little point trying to hold politicians to their promises.

To rebuild credibility and trust, we have helped communities and committed public officials come together around what we call a Development Pact. These negotiated public agreements commit local politicians and public officials to delivering on priorities, as set out by the local communities. Priorities include anything from the building of community halls, schools, roads and health centres to the disclosure of information about social support programmes.

More than 20 Development Pacts have been signed in three Indian states, with local politicians and public officials as “champions” of integrity. In many pacts, villagers and communities have closely cooperated with local leaders and also monitored the implementation of the pact. Communities have alerted the “champions” when work did not go to plan, demanding investigations when contractors used poor material or did not carry out their work.

Goals agreed in the pacts have had a direct impact on the lives of thousands of people in many communities, from the new school building in Chhattisgarh to a sanitation campaign in Rajnagar. Many of the politicians involved believe that signing the pacts helped assure their election, providing a reward for demonstrating political will to deliver on promises.

With national and state anti-corruption bodies lacking independence, power and resources, and new whistleblower protection yet to come into force, citizens need help addressing corruption.

Our chapter has set up telephone help-lines to address the grievances of corruption victims in two Indian states: Tamil Nadu and Jharkhand.

They have received calls about police and officials refusing to register their complaints, and requests for advice about dealing with extortion by public servants and filing right to information requests.

The Tamil Nadu helpline has dealt with 3,000 complaints so far, with calls from neighbouring states routine.

To expand its support to citizens confronting corruption, the chapter plans to beginAdvocacy and Legal Advice Centres in Delhi and Orissa soon.

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Press release: Transparency International India condemns the arrest of Anna Hazare

Our blog posts on India and development pacts

Transparency International India’s work on Integrity Pacts

Interview with Anupama Jha, Executive Director, TI India

Video: TI Chair Huguette Labelle on corruption in India

The Economic Times:‘The Jan Lokpal Bill can do this’

The Guardian: Corruption in India: ‘All your life you pay for things that should be free’

CNN Business 360 blog: ‘How does corruption rank with global economies?’

Contact:

Sophie Brown
press@transparency.org
+49 30 34 38 20 19

Vietnam and the World Bank recently held the first Viet Nam Anti-Corruption Intiative, or VACI.  The Initiative encouraged the public—whether ordinary citizens, NGOs, or private business—to develop proposals to help combat corruption in their communities.  VACI then selected 34 promising ideas, and awarded a total of approximately $450,000 to help fund the implementation of these plans in the coming year.  It is hoped that this initiative will be repeated in 2013.

In order for pervasive corruption to be combated effectively, public support for anti-corruption initiatives is essential, and this year has seen people around the world taking a stand against graft in their societies.

The year began with ordinary Tunisians and Egyptians boldly casting out the corrupt dictators who stole their countries’ resources for decades.  Bribery reporting websites, such as IPaidABribe.com (I Paid A Bribe), have become popular in India, China, and elsewhere.  I Paid A Bribe has seen over 12,500 bribes reported, totaling almost $7,000,000 (317 million rupees).  Now, the Indian public continues to take a strong anti-corruption stance, with students, Bollywood stars, and even Mumbai’s famed dabbawallahs, or lunch-deliverymen, have thrown their support behind Anna Hazare and his India Against Corruption movement.

The persistence of, bribery in the developing world, or tax evasion in countries like Greece and Italy, stem from the pervasive nature of the problem.  When people feel that corruption is just part of “the cost of doing business” or that they have no realistic alternative to resorting to bribery, it becomes intractable.  Programs like this initiative from the World Bank offer people in developing countries the resources they need in order to rid their societies of corruption.

VACI’s sponsored initiatives include seemingly basic elements, like educating members of the country’s Khmer minority about their legal rights and resources when dealing with corruption.  These basic tools are the first step towards empowering populations   With luck, this model of financing grassroots efforts towards transparency will provide a successful model to emulate elsewhere.

Anna Hazare | Source:T.I.

Yesterday, anti-corruption leaders in India called on citizens to turn off their lights in the evening to protest the detention of more than 1200 anti-corruption campaigners in New Delhi, The New York Times reported.

The campaigners were detained following the arrest of well-known activist and Transparency International Integrity Award winner Anna Hazare early yesterday morning. Local police arrested Hazare at his home, according to the BBC after he vowed to go ahead with a hunger strike in a public park against corruption despite local police denying him a permit to hold the demonstration.

The New York Times said that the likelihood of a showdown became evident when Hazare applied for a police permit to stage an indefinite fast. The police set 22 conditions for the protest to take place, six of which Mr Hazare refused to accept, including a three-day limit to the hunger strike and a cap of no more than 5000 protesters.

Transparency International India condemned the arrest of Hazare and other anti-corruption activists as unconstitutional and a violation of civil liberties.

“[The government] has not been able to check rising corruption in the country and is trying to muzzle the voice of those who raise their voice against corruption. This is undemocratic and [an] injustice to the people of this nation”
Anupama Jha, Transparency International India’s Executive Director in a statement

Leading up to the Lokpal Bill: Anna Hazare’s three-decade campaign against corruption in India

Hazare and his supporters have been calling for a law to establish an independent Ombudsman (Lokpal Bill) to tackle corruption, with the power to investigate any official, including the prime minister and judges.

Anna Hazare has been tackling government corruption in India for almost three decades. In 2003, Transparency International gave Hazare an Integrity Award for his efforts and spoke to him about his thoughts on how corruption can be overcome.

Public trust in the Indian government’s ability to tackle corruption is low after a series of recent corruption scandals, according to the article. TI’s own 2010 Global Corruption Barometer shows that 74 per cent of Indians think corruption has increased in last three years and that only 25 per cent think that their government’s efforts to fight corruption have been effective.

As discussions about the Lok Pal Bill heated up last month, our Chair, Huguette Labelle, recently gave an interview about the cost of corruption in India, and the importance of independent oversight bodies, see below:

Cross-posted from the Space for Transparency blog.