Getting to grips with graft

The UN is working on a worldwide treaty to combat corruption. Overcoming such a pervasive scourge, even with a concerted international effort, will be hard

WHILE the United Nations’ top diplomats have continued exchanging harsh words over Iraq, a committee of UN experts has quietly been gathering this week in Vienna to draft an international treaty to counter a threat that arguably causes as much harm to human lives as weapons of mass destruction: corruption. Every year, crooked politicians, officials and businessmen around the world steal billions of dollars of public money, depriving national and local governments of resources to provide health care, sanitation, education and other vital services. Corruption in public and private life undermines economic development in many countries, further depriving them of the resources to offer their people a decent life.

As realisation of the human costs of corruption has grown, international agencies such as the UN and World Bank, and regional bodies such as the Organisation of American States and the African Union, have been paying increasing attention to the problem. At the World Bank-IMF annual meeting in 1996, the Bank’s president, James Wolfensohn, announced that fighting the “cancer of corruption” would henceforth be one of its main tasks. The Bank had already shifted its funding priorities away from big energy projects, which were especially prone to corruption, towards funding basic health and education projects, which are harder to embezzle. Since 1996, the Bank has launched anti-corruption projects in almost 100 countries, ranging from training judges to helping governments draft laws to increase openness.

Much remains to be done. Open a newspaper in almost any part of the world and the sleaze comes gushing out. In India, the government of Uttar Pradesh state is up to its neck in mire. The state's chief minister was caught on video soliciting bribes this month. Her administration is accused of covering up a scandal in which local fertiliser companies allegedly fiddled 12 billion rupees ($252m) of state subsidies. In Mexico, the Institutional Revolutionary Party, which (mis)governed the country for 71 years until it lost power in 2000, was fined $92m by an electoral court on March 14th, for failing to declare $45m of “campaign donations” from the state oil monopoly, Pemex. In Nigeria last week, the parliament voted to reduce the autonomy of the country’s Independent Corrupt Practices Commission, undermining President Olusegun Obasanjo’s clean-up campaign.

Though corruption does most harm in poor countries, richer ones are not immune from it: on March 17th, the biggest corruption trial in France’s history began in Paris. Thirty-seven defendants are accused of participating in the embezzlement of almost euro400m in political bribes and straightforward personal enrichment, from Elf, a former state oil company.

By its nature, corruption is hard to measure. In 1995, Transparency International, a non-governmental body, began using various opinion surveys to compile an annual world league table of perceived corruption (see chart). In the short term especially, it is hard to be sure if an increase in perceived corruption in a given country means that it is indeed becoming more corrupt or simply that public awareness of corruption is rising, perhaps because past scandals are coming to light. For instance, does Ireland’s recent slide down the league table—to below Britain and America—mean that it has become more corrupt? Or is it because the details of scandals in governments of the 1980s and early 1990s have only recently emerged?

Now that the league table has been established for eight years, however, it is possible to draw some fairly reliable comparisons. For instance, while Singapore has been consistently among the world’s highest scorers for clean government, its neighbour Indonesia has consistently been at the bottom of the table. Similarly, in Africa, Botswana has been judged fairly clean since joining the index in 1998, while Nigeria and Angola continue to be among the most corrupt. Such differences undermine attempts to explain corruption using racial or cultural stereotypes.

One of the main aims of the international convention on corruption that the UN is drawing up is to ensure that all countries have sufficiently strong laws to criminalise corrupt practices, to track down and confiscate ill-gotten gains and to protect witnesses. This was the aim of the regional anti-corruption convention agreed by the Organisation of American States in 1996, though ratification of the treaty by member states has been slow—and visible signs that the treaty is leading to action against corrupt officials have been even slower in coming. Likewise, Indonesia’s anti-graft law, passed in 1999, has yet to show much in the way of results. Passing laws is one thing, enforcing them when the justice system is itself riddled with corruption is another.

Some countries, though, have made progress in cleaning up public life. Singapore is one. In the 1940s and 1950s, corruption was rife there. But when the ruling People’s Action Party first came to power in 1959, it made a priority of fighting graft. Civil servants’ pay was improved, thereby reducing the incentive for seeking bribes. And the national anti-corruption agency was given more powers. Similarly, Hong Kong, though its standards still fall short of Singapore’s, has become a more honest place since the 1960s, when corruption was endemic. A big police corruption scandal in the 1970s led to the creation of a powerful anti-graft agency, which made a point of targeting powerful, high-level crooks. The improvement in Hong Kong’s reputation has continued in recent years: in Transparency International’s league table, it has overtaken America.

Beefed-up laws, broader investigative powers for anti-corruption agencies and improved international co-operation as a result of regional and worldwide treaties may all help. But there is the danger of overkill. A study in 1996 of anti-corruption measures in New York’s city government found that some had been counterproductive. New rules to prevent jobs being given to political cronies, and to avoid conflicts of interest among city employees, were too rigid, and were discouraging talented people from applying for posts. Over-zealous regulation of bidding to run city services had resulted in the contracting process becoming slow and unwieldy. In this case, a policy of “zero tolerance” turned out to be unhelpful. Better, the study concluded, to aim for the achievable—cutting corruption levels sharply—rather than the distant dream of eradicating it altogether.

Nigeria's elections

Big men, big fraud and big trouble

The deep rottenness of Nigeria's political system threatens all the economic gains this giant country has made
 

Reuters

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EVER since Sani Abacha expired in the arms of two Indian prostitutes, possibly from an overdose of Viagra, in 1998, Nigerians supposed that their worst days were behind them. The “coup from heaven”, as Abacha's death was called, seemed to release the country from three decades of increasingly ruinous military dictatorships that had brought Nigeria diplomatic isolation and economic collapse. In 1999, the country made a fresh start with a new elected civilian administration led by Olusegun Obasanjo, the outgoing president. He has been lauded in the West for his economic reforms and his drive against corruption.

But the organised vote-rigging and fraud that characterised the state and local elections on April 14th, as well as the parliamentary and presidential polls on April 21st, suggest that Nigeria may be sliding backwards again. Nigeria's own independent observers' group has called them a “sham”. The European Union, normally a master of nuance in these matters, baldly stated that the whole electoral process “cannot be considered to have been credible”, and remarked that its report was the most damning it had ever issued anywhere in the world.

The opposition parties have called for a re-run of all the elections. The only people who seem happy with the charade are officials of the inept and craven Independent National Electoral Commission (INEC) and those who appointed them in the ruling People's Democratic Party (PDP). The PDP's presidential candidate, Umaru Yar'Adua, won an astonishing 70% of the vote; but few will accept the result as anything other than a fraud.

The consequences could be extremely destabilising in a country as fragile as Nigeria: a brittle mosaic of about 300 different ethnic groups, equally divided between Muslims, largely in the north, and Christians, mainly in the south. This is a fractious and rancorous polity at the best of times. But with a full-blown insurgency raging in the oil-producing Delta, and relations between Muslims and Christians already tense, the last thing Nigeria needed was a new government that many will regard as illegitimate.

Much protest will take place in the courts, which will proceed at their usual glacial pace. But it will also take other forms. About 200 people were killed during the elections themselves, according to EU estimates. Most of the violence has been directed against institutions that (in popular belief) connived in the results. Several INEC offices were burnt down. In the big cities this week, thousands of police and soldiers were on the streets in armoured cars, ready for trouble. The situation could easily get out of hand.

In many African countries all this might pass without much comment. But Nigeria matters more than most. It is Africa's most populous country, with 140m people, and, after South Africa, the continent's second-biggest economy. It vies with South Africa, too, for diplomatic and military leadership. Its peacekeepers serve throughout the continent; Nigeria provides most of the troops in Darfur, for example. A strong and stable Nigeria has become essential to the project of building an Africa that can solve its own problems.

It is also the continent's largest producer of oil, and the sixth-biggest oil-exporter in the world. It already provides 8.5% of America's imports, a figure that could rise to 10% in a few years' time. Nigeria has been proposed as the answer to the West's concerns over energy security; a dependable oil ally, away from the turbulent Middle East and Venezuela's pesky Hugo Chávez. But given the current state of affairs, the oil price has been edging up all week on fears of worse to come in Nigeria.

The country's boosters had invested heavily in a successful presidential election. They hoped that this ballot—potentially, the first constitutional transfer of power from one civilian administration to another since independence in 1960—would cap the “Nigerian renaissance”. Instead, the country is sliding into grave political uncertainty. How did this happen?

The answer is to be found largely in Mr Obasanjo's government of the past eight years. When Abacha died, Nigerians looked to Mr Obasanjo—a charismatic Christian, ex-general and former president—as the man to guide them out of the country's mess. He won an election in 1999 and, after a slow start, set about tackling many of Nigeria's long-term problems. And he achieved a good deal.

A team of younger, zealous reformers, dubbed “the seven samurai” by one diplomat, was brought in to overhaul the economy. In particular, they confronted the corruption that had seen Nigeria's leaders pocket, by some estimates, $380 billion of the country's oil wealth since independence, the equivalent of about two-thirds of all the aid given to Africa during that time. Thus the “reform programme” was born.

At the macroeconomic level, Nigeria has been hailed as a success. A forceful former finance minister, Ngozi Okonjo-Iweala, got rampant inflation down to single digits last year and built up foreign exchange reserves that now stand at around $48 billion. The country has been achieving growth rates of over 5% in the past few years. So impressive have the statistics proved to international financial institutions that Nigeria has recently won debt relief, and the country's credit rating is now good enough to let it issue bonds on the global market.

It was the anti-corruption drive, though, that caught the domestic and international imagination. Mr Obasanjo set up an agency, the Economic and Financial Crimes Commission (EFCC), which at first amazed and delighted Nigerians with its success. It was headed by a wiry and energetic former policeman, Nuhu Ribadu, whose hand-picked enforcers have recovered over $5 billion in stolen assets and successfully prosecuted the sort of people, businessmen and policemen, who most Nigerians assumed would forever remain above the law.

This was all impressive stuff. But in other respects Nigeria's old problems remain, and have even worsened under Mr Obasanjo. For a start, much of the macroeconomic success is due to the high price of oil; it has made little visible difference to Nigerians' wretched daily lives. Over 70% still live on the equivalent of less than $1 a day; decaying hospitals, schools and roads tell their own stories. Bashir Borodo, the president of the Manufacturers' Association of Nigeria, reckons that in the poorer north of the country over 60% of university graduates are unemployed. And with so many people doing casual jobs, under-employment is massive too.

Besides all this, the deeply corrupt political system has remained intact and, if anything, entrenched itself under Mr Obasanjo. In Nigeria, politics is money, and money is politics. With economic activity almost totally dependent on the oil revenues that flow in through the central government coffers (over $50 billion in 2006), the surest way to enrichment is through political office—or through contracts from your best mates in those offices. Incumbency has become everything in Nigeria; to lose office is to lose almost the only means of survival, as well as immunity from prosecution. The extra cash flowing through the system from a higher oil price has merely raised the political stakes, making politicians more brazen than ever in their attempts to cling to office. Or, as Mr Obasanjo said himself, these elections were “do or die” time for his ruling PDP.

The result, as the EFCC's Mr Ribadu puts it, is “not even corruption. It's gangsterism. It's organised crime.” That is particularly true of local and state politics, where most of the money is actually disbursed. The problem is most acute in the five or six oil-rich Delta states. There the local elections on April 14th were replaced by something more like organised thuggery, with PDP gunmen beating up opponents, intimidating voters, snatching ballot boxes and stuffing them with pre-marked ballots. Winning candidates piled up huge victories on high turnouts in places where the ballot papers had never even arrived.

The rewards for such rigging can be impressive. In 2006, for instance, the governor of Rivers State, Peter Odili, had a budget of $1.33 billion to spend, considerably more than the budgets of some other west African countries, such as Mali and Niger. Moreover, Mr Odili had far fewer people to spend his money on.

Not that much of the money is actually spent on them. An almost total lack of transparency hides where most of the money goes, but a Human Rights Watch report managed to catalogue some items in the Rivers State budget for last year. The governor's office spent $65,000 a day on transport and travel and over 1.5 billion naira ($11.5m) on new cars; two new helicopters cost 5 billion naira, on top of the previous year's new jet; about 1.3 billion naira went on gifts and catering. By contrast, the capital budget for the health sector was 2.8 billion naira, in a state with some of the poorest, least healthy and worst-educated people in Africa.

When farcical election exercises deny people the opportunity to vote their politicians out of office, it is not surprising that many take up arms to get their share of the oil money, through kidnapping and illegal bunkering of oil. Political resistance slips easily into plain gangsterism. But the politicians, in turn, will employ the gangsters to do some kidnapping and bunkering for them. It is good business; over 100 foreign oil-workers have been kidnapped and ransomed in the past year alone, at about $500,000 a time. In much of the Delta it has now become difficult to distinguish between politicians, gangsters and insurgents. The charade of the state elections on April 14th will only have added to the bitterness and hostility in the region, making early resolution of the Delta insurgency even less likely than before.

On the day of the presidential election money-politics could be seen in action in central Kano, the dusty, dilapidated industrial capital of the north. There, in the local government area of Fagge, the PDP had budgeted 35m naira for political “mobilisation” and the main opposition party, the All Nigerian Peoples' Party (ANPP), 40m naira. In one ward, Fagge A, the PDP, according to one of its operatives, had budgeted 594,000 naira ($4,650) for 21,000 registered voters and 35 ballot boxes. Thus each “independent” presiding officer at the polling station was given 3,000 naira and his clerk 2,000 naira. Each policeman was getting 1,000 naira. That left payments of about 200 naira ($1.57) per voter—whose votes, far from being secret, were inked with a thumb on the ballot in front of party agents. Multiple voters, who will have registered several times with sympathetic election officials, might vote ten times, at a reduced bulk rate of 100 naira—still picking up a tidy 1,000 naira each.

The friendly officials are paid for a variety of services, one of which is not to scrutinise the register too closely. Hasia, for example, had just voted with the registration card of her mother, who had already voted herself. Hasia had the second of her mother's two cards. She has probably not even reached the legal voting age of 18. Her card clearly identified its owner as being 60 years old, but this had not proved a problem with the right official.

All day PDP and ANPP party agents were negotiating spot-prices on votes, rather like the oil markets that grease the rotten political machines. But at least there was voting in Kano state. To the north, in Katsina, Mr Yar'Adua's home state—which he had to win comfortably—it was more like the Delta, with ballot papers arriving very late or not at all. And, curiously, remarkably few presidential ballot papers arrived at the polling stations, leading many voters to conclude that they had already been filled in elsewhere.

In his own quest to hang on to the rewards of office, in 2005 Mr Obasanjo started a campaign to alter the constitution to allow him to run for a third term. Huge bribes, of up to 50m naira, were offered to parliamentarians to vote for the change, but the Senate bravely voted against it last year. Since then, Mr Obasanjo has misused every means at his disposal to ensure that his own PDP men win the state houses and the presidency, knocking his opponents out of the race by bringing charges of corruption against them from the EFCC.

So even the straight-talking Mr Ribadu's outfit has now been politicised. It has used high-handed and unconstitutional means to smear Mr Obasanjo's opponents and keep their names off the ballot papers. The EFCC has done some good work in the past. But, like the elections themselves, its credibility has been mortgaged to political expediency.

The charitable interpretation of Mr Obasanjo's behaviour is that he has to act this way to “preserve” the reform programme. If that is so, he has badly miscalculated; the reform programme has itself become a casualty of the rotten politics.

Can Nigeria expect anything better from Mr Yar'Adua, if he is sworn in as president on May 29th? Probably not. Despite a reputation for personal honesty, the obscure northern governor comes to power as a creature of Mr Obasanjo's PDP clique. With few obvious credentials for the job, apart from being the younger brother of Mr Obasanjo's former vice-president, he was hand-picked by the president against the will of many in the party. And Mr Obasanjo will retain considerable formal power as the party chairman. At least Mr Yar'Adua is a northern Muslim, taking over the presidency from a Christian southerner.

As a free-marketeer, he has pledged to continue the reforms of his master. But he will come to power with even less legitimacy than Mr Obasanjo had after his own flawed election victory in 2003. This will cause huge difficulties for him, especially if Nigeria's disillusioned Western backers give the country a wider berth.

Nigerian politics does not have to be like this. Given a chance, good state governors do emerge. In Cross Rivers, for instance, on the border with Cameroon, Donald Duke has effected an impressive transformation over the past eight years.

AP

A vote for Yar'Adua is unlikely to change her world

In the state capital, Calabar, the streets have no pot-holes. According to the state government, every village is connected to the national grid and everyone has access to clean water. There is almost no litter. Remarkably, instead of the fleet of blacked-out SUVs that normally idle outside governors' offices, ready to whisk the big man a few hundred metres down the road, outside Mr Duke's office stand brand new garbage lorries from Germany.

Moreover, Cross Rivers has no oil wealth. Mr Duke has achieved all this on a fraction of the money available to his neighbours. Instead, he has frozen official salaries, cleverly exploited existing resources and taken on debt. In partnership with private investors, he is also responsible for Tinapa, the largest retail and business development in west Africa. It contains several new giant studios to grab a large slice of the $200m-300m a year “Nollywood” film industry, which churns out, by some estimates, more films than either of its rivals in Los Angeles or Bombay.

The other key to the state's success is Mr Duke's love of the saxophone. Every Sunday evening he performs in his house with his band. And instead of trying to micro-manage his succession, rig the state elections and prepare for endless court battles, when he leaves office at the end of May Mr Duke is going off to America for a music course. It is an unusual example of a politician who is willing to let go.

But if honest and good leaders can make a difference, the only sure way to break the corrosive link between money and politics in Nigeria is to encourage a private sector that is vigorous enough to give people other ways to make money. As last week's vote-rigging showed, Nigeria is bursting with energetic entrepreneurial talent. But trying to start a business from scratch is almost impossible. Capital scarcely exists. Although banks are required by law to set aside one-tenth of their pre-tax profits for small business start-ups, few loans are actually made.

The biggest impediment of all to economic activity in Nigeria is the country's feeble and erratic power supply. All businesses have to have expensive generators that can double the cost of a start-up; they then have to employ people just to scuttle around grabbing whatever scarce diesel fuel they can find to supply the generators. Two weeks before the election, the ramshackle national Power Holding Company (known to Nigerians as Please Hold Candle) managed to churn out just half the electricity that the country produced in 1960 for about half as many people. If the new president could do just one thing to improve Nigeria's political and economic prospects, it would be the full electrification of his country.

“It is totally false”, wrote Chinua Achebe, Nigeria's greatest writer, 24 years ago,

to suggest that Nigerians are fundamentally different from any other people in the world. Nigerians are corrupt because the system under which they live today makes corruption easy and profitable; they will cease to be corrupt when corruption is made difficult and inconvenient. The trouble with Nigeria is simply and squarely a failure of leadership.

After Mr Obasanjo's failure, Africa's weary titan still awaits those leaders.