Chair:
Heather Marquette, Doctoral Candidate/Lecturer, University of Durham, United Kingdom

Panellists:
Jose Louis Condereau, Minister of the Mexico Government, Nuevo Leon State, Mexico, and Prof. Roberto Garza-Leonard, University of Monterrey, Mexico
- Co-Responsibility: Binds that Work: Honesty and Good Government
Kerry Pedigo, Doctoral Candidate, Curtin University of Technology, Australia
- International Business Ethics: An Australian Perspective
Prof. Ahmad Jafari-Samimi, University of Mazandaran, Iran
- Corruption and Central Bank Independence: Evidence from Developing Countries
Scott Gehlbach, Doctoral Candidate, University of California, Berkeley, USA
- Social Networks & Corruption
King Tsao, Associate Professor, The Chinese University of Hong Kong, China
- Combating Corruption with Chinese Characteristics: The Public Sector Reforms
Heather Marquette
- The World Bank's Anti-Corruption Programme

Discussant:
Ahmad Jafari-Samimi
Sam Gehlbach
Kerry Pedigo

Contribution by Heather Marquette

The World Bank's Anti-Corruption Programme

The WB started its research in 1998, which was based on structure of a thesis.

Basic points of the research programme:

1. The research looks at the theory underpinning the programme - relationship between corruption, democracy and economic growth. The relationship is not as clear as bank literature suggests. It also looks at the political nature of the bank, because of its articles and how this has impacted on the anti-corruption programme.
2. History - how the bank takes the existing political and economic environment and then becomes a leader.
3. The development of good governance and corruption agenda at the bank, starting in the African region. The research also deals with the important role of the general counsel, TI and EDI. Arrival of Wolfensohn has proven extremely significant.
4. The programme of the Bank - 4-part strategy:
   • procurement
   • financial management
   • department for institutional integrity, blacklist
   • core course, diagnostic, community empowerment, psm, mainstreaming (CAS, etc.), international partnerships and research
5. Other bilateral donors and comparative advantage: confusion between both bi- and multilateral donors means a lack of clear purpose for many and duplication of efforts.

Conclusions:

The bank needed to address corruption, especially with international pressure and the changing norms brought about with the end of Cold War. However, the current bank's programme needs rethinking: it is too complex, too political (especially community empowerment work), too ambitious (overstretches the Bank's capacity). The Bank needs separate VP (like environment and gender), and also official policy.

Recommendations:

Unless the bank amends its articles with the full consent of the international community, it should pare down its work to focus attention on its own affairs (procurement, its own integrity) and delegate its more controversial work to others.

Contribution by Jose Louis Condereau and Prof. Garza-Leonard

Co-Responsibility: Binds that Work: Honesty and Good Government

The main aims of the governmental anti-corruption programme are the following:

• To find out why and where corruption flourishes, and focus on these spots
• Developing role models, pinpointing vulnerable areas
• Increase productivity in public service with high ethical standards
• Establish specific processes and system responses to fight corruption
• Adopt models of administrative efficiency

Steps taken:

• Promoting the political willingness to fight corruption
• Developing anti-corruption tools
• Strengthening values
• Administrative reform
• Legal framework
• Ethical codes for each area
• Training programs for individuals working for the government, teaching them to be more flexible

Contribution by Kerry Pedigo

International Business Ethics: An Australian Perspective

Ethical issues for CEOs in Australia focus on ethical issues in private enterprises

Main issues:

1. Bribery: money, entertainment, gifts, prostitution, junkets
2. Breach of contract
3. Human rights: child labour, working conditions
4. Misrepresentation
5. Environment
6. Quality of products
7. Confidentiality
8. Pricing: pressure for discount
9. Intellectual property: IT business

Responses of CEOs to these issues:

1. Refusal: losing the business transaction
2. Compliance, usually involving an intermediary, local agent, to do the transaction

Observation:

The complete lack of knowledge of the existence of a legal framework making foreign bribery illegal among the CEOs interviewed

Conclusion:

The best way to handle corruption for CEOs is building relationships based on mutual trust.

Contribution by Prof. Ahmad Jafari-Samimi

Corruption and Central Bank Independence: Evidence from Developing Countries

Mr. Samimi focused on the study of the policies for reforming central banks in order to fight corruption, describing the types of corruption:

• creeping
• lower
• higher
• hyper

Can a policy be reformed to reduce corruption? Does the independence of the central bank help?

The study of the link between having an independent central bank and corruption was carried out, using the TI-CPI. The starting point involved 11 countries with independent an central bank in the EU. The subjects of the research were 18 developing countries

Conclusion of the study:

There is a significant relationship between central bank independence and corruption in developing countries. Central bank independence is essential for controlling corruption.

Contribution by Scott Gehlbach

Social Networks and Corruption

Connections and money act as both substitutes and complements for corruption when dealing with corrupt officials. There is a distinction between favours and extortion. Favours apply to friends and extortion to strangers

Conclusion:

Social networks, by implying obligation, to not act in an opportunistic way and by providing information, encourage illegal services to be provided to friends. Thus they result in higher bribes for those outside the network.

Social networks help to explain the nature and extent of corruption in various parts of the world including Eastern Europe and the former Soviet Union, where networks of this type are an institutional legacy.

Contribution by King Tsao

Combating Corruption with Chinese Characteristics: The Public Sector Reforms

The main problems that China faces in the battle against corruption were described by Mr. Tsao:

• changing party attitude, recognising corruption as a problem
• huge existence of legal reforms to tackle corruption suffering from lack of implementation.

Formal arrangements:

• local rules & regulations
• local initiatives to handle corruption

The Central Party Disciplinary Committee has a very important role in catching top leaders and setting the trend.

Informal arrangements:

• investigation teams
• emphasis on virtue and ethical standards, especially for government officials
• initiative from the people
• reporting centres
• letters to newspapers

Conclusion:

China has undertaken a huge effort to combat corruption. However, there are limitations: the need for political stability, economic growth, the feeble existence of civic society, unconsolidated institutions and reforms

However, China is ruled by men, not by law.

Discussion:

Delegate: A methodological question - what kind of statistical techniques have you used?

Scott Gehlbach: There is no use of statistical techniques. We are studying the link between weak and strong ties and defining probabilities.

Delegate: How have you disseminated the information?

Coindreau & Garza-Leonard: Through the press and the media. We have not established a complaints centre yet. There is awareness in the public sector, but not amongst the general public. The first stage of the programme has lasted 1.5 years and has focused on solidifying a core of individuals to voluntarily take part in this programme. Only after that are we planning to take it to the general public. At least one public step has been taken, making public or official the fees for government services.

Delegate: Are you going to use an estimative model?

Jafari-Samimi: Yes, but further on.

Delegate: Why do CEOs not know about the FCPA regulations?

Kerry Pedigo: The late process of the adoption of the law and the regulation were not advertised.

Delegate: What definition of corruption did you use?

Jafari-Samimi: None. The study is based on data and empirical research alone.

Delegate: Can we explain the Russian case? The Russian Central Bank diverts money to offshore bank accounts. How can we make them accountable with a lack of legislative control?

Jafari-Samimi: We do not have a measurement for state bank independence, therefore I can't say that the Russian Central Bank is independent or not. There are two types of measurements in the academic sphere - first, the legal measurement based on the legal framework in which the bank operates; but it's not relevant for this situation in the field. And second, the actual measurement for taking into account the turnovers (the length of the mandate of central bank heads). This applies for China as well. There is no transparency, so we cannot have a clear picture about what is happening in China and Russia. I am sorry to say so.