In 2010, the world's twenty most powerful nations formed an action plan to fight corruption. That was a welcome step, but it should be fairly obvious that just under three years later, the phenomenon of corruption remains alive and well. In mid-February the G20 Anti-Corruption Working Group (WG) will meet again under the co-chairmanship of Russia and Canada in Moscow. But can it make any significant progress?
The international community has already established some important measures against corruption, above all the Organization for Economic Co-operation and Development Anti-Bribery Convention and the United Nations Anti-Corruption Convention. Yet both have their limits. The former is too narrow (since it focuses only on the select club of the world's richest countries), while the latter is too broad (since it tries to include everyone, whether large or small).
The WG, by contrast, offers a potential Goldilocks configuration. By combining the established industrial powers of the OECD with the rising new economies of the BRICs, the G20 brings together an auspicious combination of states. But there's a problem here, too: A number of the key member countries of the WG are deeply implicated in the "secrecy jurisdictions" where a large part of the proceeds of corruption are held.
The United Kingdom is profoundly ambivalent about its dependencies in the Channel Islands and the Caribbean; Washington shows great indulgence toward the many U.S. corporations that park their funds offshore ( 19,000in the Cayman Islands alone); Russia's elites like to hold their funds in Cyprus; and China's newly-rich love to park their cash in the United States.
Yet there are grounds for hope. As a result of the financial crisis, finance ministries in the United States and Great Britain have noticed for the first time that there are huge revenue costs against the indirect advantage of soaking up the corrupt funds flooding into the financial markets of London and New York. In Russia, meanwhile, as Putin attempts to gain much greater control of Kremlin-licensed oligarchs, the mood is moving against the export of capital. In China, the exposure of Chongqing Party Secretary Bo Xilai and former PremierWen Jiabao as multi-millionaires has raised the nominal campaign against corruption to the front of the agenda promoted by new Communist Party chief Xi Jinping. He may mean business. So this might be the moment for the WG to get something done.
There are plenty of opportunities to be seized. First of all, the problem of political finance needs to be attacked boldly. Across the world, the raising of political funds for campaign-related purposes is probably the largest single source of corruption. The widespread recognition of the issue of political funding in the 2012 election in the United States has advanced the case for reform. But the problem may run even deeper elsewhere. (It costs $10 million to run a constituency-based campaign in India, for example.) Action has to be domestic, and Brazil has shown the way with the imprisonment of 29 congressmen for taking bribes under President Lula in 2005 and 2006. The minimal step would be to outlaw cross-border political funding, as has already been done in the United States, the United Kingdom, and several other countries. Here international collaboration is both practical and necessary.
Similarly critical is the behavior of international companies -- not just the usual suspects in the Fortune 500, but also thousands of other firms that affect the business culture in every country. That the problem remains entrenched is demonstrated not least by the recent scandal surrounding Walmart in Mexico. But there are some signs of progress. The OECD Anti-Bribery Convention has triggered some limited changes in corporate behavior, but actual prosecutions are few except in the most active seven countries. A number of countries (including China, India, Russia, and Indonesia) passed anti-foreign bribery legislation in 2011, but it remains to be seen how these new laws will be enforced. Outside the legal process, thousands of companies have committed in the last twenty years to a set of high ethical principles, including the rejection of corruption. The U.N. Global Compact and the World Economic Forum's Partnering Against Corruption Initiative offer leading examples of such standards. But their effective enforcement depends on a willingness by the participating companies to submit to an external review process by an independent assessor -- a notion so far seldom adopted.