[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
COMBATING CORRUPTION IN THE OSCE: THE LINK BETWEEN SECURITY AND GOOD
GOVERNANCE
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HEARING
before the
COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
NOVEMBER 19, 2014
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Printed for the use of the
Commission on Security and Cooperation in Europe
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COMMISSION ON SECURITY AND COOPERATION IN EUROPE
LEGISLATIVE BRANCH COMMISSIONERS
SENATE HOUSE
BENJAMIN CARDIN, Maryland, CHRISTOPHER SMITH, New Jersey,
Chairman Co-Chairman
SHELDON WHITEHOUSE, Rhode Island JOSEPH PITTS, Pennsylvania
TOM UDALL, New Mexico ROBERT ADERHOLT, Alabama
JEANNE SHAHEEN, New Hampshire PHIL GINGREY, Georgia
RICHARD BLUMENTHAL, Connecticut MICHAEL BURGESS, Texas
ROGER WICKER, Mississippi ALCEE HASTINGS, Florida
SAXBY CHAMBLISS, Georgia LOUISE McINTOSH SLAUGHTER,
JOHN BOOZMAN, Arkansas New York
MIKE McINTYRE, North Carolina
STEVE COHEN, Tennessee
COMBATING CORRUPTION IN THE OSCE: THE LINK BETWEEN SECURITY AND GOOD
GOVERNANCE
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NOVEMBER 19, 2014
COMMISSIONERS
Page
Hon. Benjamin L. Cardin, Chairman, Commission on Security and
Cooperation in Europe.......................................... 1
Hon. John Boozman, Commissioner, Commission on Security and
Cooperation in Europe.......................................... 3
Hon. Sheldon Whitehouse, Commissioner, Commission on Security and
Cooperation in Europe.......................................... 13
Hon. Robert Aderholt, Commissioner, Commission on Security and
Cooperation in Europe.......................................... 16
WITNESSES
Dr. Halil Yurdakul Yigitguden, Co-ordinator of OSCE Economic and
Environmental Activities, Organization for Security and
Cooperation in Europe.......................................... 4
Shaazka Beyerle, Senior Advisor, International Center on
Nonviolent Conflict............................................ 6
Anders Aslund, Senior Fellow, Peterson Institute for
International Economics........................................ 8
APPENDICES
Prepared Statement of Hon. Benjamin L. Cardin.................... 22
Prepared Statement of Hon. Christopher Smith..................... 23
Prepared Statement of Anders Aslund.............................. 24
Prepared Statement of Dr. Halil Yurdakul Yigitguden.............. 26
Prepared Statement of Khadija Ismayilova......................... 38
Prepared Statement of Shaazka Beyerle............................ 41
RFE/RL's Coverage of Corruption in the OSCE Region............... 44
COMBATING CORRUPTION IN THE OSCE REGION: THE LINK BETWEEN SECURITY AND
GOOD GOVERNANCE
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NOVEMBER 19, 2014
Commission on Security and Cooperation in Europe,
Washington, DC.
The hearing was held from 10:02 a.m. to 11:15 a.m. EST in
Room SVC 203/202 Capitol Visitor Center, Washington, D.C.,
Senator Benjamin L. Cardin, Chairman of the Commission on
Security and Cooperation in Europe, presiding.
Commissioners present: Hon. Benjamin L. Cardin, Chairman,
Commission on Security and Cooperation in Europe, Hon. Robert
Aderholt, Commissioner, Commission on Security and Cooperation
in Europe, Hon. John Boozman, Commissioner, Commission on
Security and Cooperation in Europe, and Hon. Sheldon
Whitehouse, Commissioner, Commission on Security and
Cooperation in Europe.
Witnesses present: Anders Aslund, Senior Fellow, Peterson
Institute for International Economics; Dr. Halil Yurdakul
Yigitguden, Co-ordinator of OSCE Economic and Environmental
Activities, Organization for Security and Cooperation in
Europe; Khadija Ismayilova, Host of ``Isden Sonra'' (``After
Work''), RFE/RL Azerbaijani Service; Shaazka Beyerle, Senior
Advisor, International Center on Nonviolent Conflict.
HON. BENJAMIN CARDIN, CHAIRMAN, COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
Mr. Cardin. Good morning. Welcome to this hearing of the
Helsinki Commission. I particularly want to welcome our
witnesses that are here for participating in this very
important hearing. Yesterday I had a chance to speak to the
Helsinki plus 40 group that was in town from the parliamentary
assembly to look at where we need to progress.
At that time, I acknowledge that the Helsinki agreement
which will celebrate its 40th anniversary in the next year, has
accomplished, I think, much more than was ever thought possible
when it was first conceived almost 40 years ago. It has
achieved, I think, two basic principles. And that is that good
governance and human rights are critically important to
stability and growth of a country.
And secondly, the commitments that are made under Helsinki
are not just the internal concerns of that country, but are of
international concern to those countries that are members of
the Helsinki process. So for all those reasons, I think we have
been extremely successful over a 39-year period in bringing
about a sea change, not just within the OSCE but also globally.
Today's hearing, I think, is particularly important because
it deals with the subject of combatting corruption on the OSCE
region, the link between security and good governance. To me,
this is the key--an area that has not gotten the same degree of
attention as some of the other issues within the OSCE.
It hasn't had quite the attention of the human rights
dimension, although we certainly understand that an honest
government is a basic right of all the citizens of its country.
And it has not gotten the same type of exposure as military
security has within the OSCE process. So we very much look
forward to the discussion of combatting corruption and how we
go about doing it.
Democratic societies function best with a high level of
trust in each other and the institutions that underpin
democracy. Corruption undermines that trust, and thus
undermines the very foundation of democracies. Research has
shown a high correlation between failed states and endemic
corruption.
That's not to say that every country doesn't have some
degree of corruption, including the United States of America.
We understand that. But we also understand that those countries
that are successful, have in place mechanisms to deal with
corruption. They have independent judiciaries, they have a free
media that acts as a watchdog against corruption and are
committed to dealing with corruption at any level of
government.
But unfortunately there are countries within the OSCE that
have not made that fundamental commitment. The upheaval and
turmoil that we have witnessed over the past couple of years is
surely one of the most convincing pieces of evidence that we
have to show the link between corruption and security. The
spark that lit the fire in Tunisia was a street vendor sick of
paying bribes to the police. That's what was the spark in
Tunisia.
In Ukraine, the corruption that had plagued that country
for decades only intensified recently. And a major component of
the Euro-Maidan protests--the revolution of dignity--was the
people's disgust with pervasive governmental corruption. With
the election of President Poroshenko in May and a new, pro-
European parliament elected last month, Ukraine has a real
opportunity. While it is not an easy environment given Russia's
aggression and de-facto control of parts of Ukraine, some steps
have already been taken. But much more needs to be done.
In Russia, corruption and consolidation of power at the
center has allowed the Putin government to undermine the
legitimacy of its judiciary, silence independent journalists
and systematically deprive NGOs of the ability to operate
freely.
In Hungary, the U.S. recently announced that six Hungarians
were determined to be ineligible to enter the United States
under the authority of Presidential Proclamation Number 7750,
which makes individuals excludable when there is credible
information that those individuals are either engaging in or
benefiting from corruption. The head of the Hungarian Tax
Authority has publicly stated she is one of the six.
We went to great extremes in the Congress to underscore the
individual human rights violations against Sergei Magnitsky and
passed the Magnitsky Act, which made it clear in regards to
Russia that we will not allow individuals who have committed
gross violations of internationally recognized human rights to
visit our country and use our banking system. We did that to
underscore our outrage that Russia did not hold those officials
accountable--in the Sergei Magnitsky tragedy--accountable for
their actions.
But in Hungary, the U.S. administration is using the basic
tools it has to exclude individuals from our country that have
participated in significant corruption within their own
country. There are disturbing trends in Hungary, making it more
difficult for civil societies and independent media to report
on and combat corruption. This includes the expansion of
criminal penalties for defamation using emergency parliamentary
procedures and the subsequent threat to use those provisions
against those raising concerns about the tax authority and the
National Bank.
So we have challenges. And it's not just in one country,
two countries and three countries. We have challenges that the
OSCE needs to confront. We need to figure out how we can
develop the type of strategies that we have in the other
baskets in the OSCE within the economic basket as to how we can
deal with corruption within the OSCE and be a model for the
global community.
With that, I'm pleased that Senator Boozman is here, an
active member of the Commission, and I call upon him for any
opening comments that he would like to make.
HON. JOHN BOOZMAN, COMMISSIONER, COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
Mr. Boozman. Well, I appreciate you holding the hearing,
Mr. Chairman, and as you pointed out--and I certainly associate
myself with your remarks--the importance of this particular
topic. So again, I look forward to the testimony. Thank you
very much.
Mr. Cardin. Well, thank you very much. Again, it's a
pleasure to have you here today.
Let me turn to our witnesses. Unfortunately, Ms. Ismayilova
is not here. We had invited her to join us today. She's an
investigative journalist with Radio Free Europe/Radio Liberty
in Baku. She was not able to join us today because of a travel
ban imposed on her by the government of Azerbaijan. She has
provided a written statement and copies have been distributed
and will be made part of our hearing. And we regret that she is
not able to join the panel today.
I would like to welcome Dr. Yigitguden, who has been the
coordinator of the OSCE economic and environmental activities
since February 2013. He is a former senior Turkish diplomat
with extensive experience in the energy sector.
We also have Ms. Beyerle, who is a visiting scholar at the
Center for Transatlantic Relations at the School of Advanced
International Studies at Johns Hopkins University. She is also
a senior adviser with the International Center on Nonviolent
Conflict. This year she published a book, ``Curtailing
Corruption: People Power for Accountability and Justice.''
And finally, we have Mr. Aslund, who is the senior fellow
at the Peterson Institute for International Economics. He's an
expert on economic policies in Russia, Ukraine and Eastern
Europe, and he focuses on the broader implications of economic
transition.
The complete bios of all of our witnesses have been
distributed and made available to all. And let me start, if I
might, with Dr. Yigitguden.
DR. HALIL YURDAKUL YIGITGUDEN, CO-ORDINATOR OF OSCE ECONOMIC
AND ENVIRONMENTAL ACTIVITIES, ORGANIZATION FOR SECURITY AND
COOPERATION IN EUROPE
Dr. Yigitguden. Thank you very much, Mr. Chairman.
Chairman Cardin, Senator Boozman, ladies and gentlemen, it
is a pleasure for me to testify today at the U.S. Helsinki
Commission to members of the United States Congress. I
appreciate the opportunity to be at the U.S. Congress today,
and I am privileged to be a part of a hearing on combatting
corruption.
Before I continue, may I respectfully ask that my prepared
statement, along with the ``Information Note on the
implementation of the 2012 Dublin Declaration on Strengthening
Good Governance and Combatting Corruption, Money Laundering and
the Financing of Terrorism'' provided earlier to the commission
be put into the record?
Mr. Cardin. Without objection, that report will be put into
the record, and without objection, all of the witnesses'
statements will be made part of our record. And you may proceed
as you wish.
Dr. Yigitguden. Thank you very much, Mr. Chairman.
Mr. Chairman, today I testify in front of you in my
capacity of the coordinator of OSCE economic and environmental
activities. Economic and environmental matters represent an
important element of OSCE's approach to security.
To tackle challenges in this area, my team cooperates on
the ground with our current 15 OSCE Field Operations, organizes
an annual economic and environmental forum and holds a yearly
implementation meeting to assess progress and identify future
priorities. The office works closely with the organization's
chairmanship and performs under the guidance of the economic
and environmental committee and the secretary-general.
Our activities include anti-money laundering, transport and
security, gender-sensitive labor migration, border and customs
policies, water management, controlling dangerous waste,
climate change, sustainable energy and involving the public in
decisions affecting the environment. With other international
partners, the OSCE is also an active member of the environment
and security initiative.
Today I will concentrate my speech on our work in the area
of good governance and combating corruption.
Good governance and transparency affect economic efficiency
and growth and thus remain among key elements of the OSCE's
comprehensive approach to security.
The increasing importance of good governance issues
requires continuous dialogue. Therefore, adopted in Dublin in
2012 by all participating states of the OSCE, the Declaration
on Strengthening Good Governance and Combating Corruption,
Money Laundering and the Financing of Terrorism provides the
OSCE and my office with a strong mandate. The declaration
emphasizes that ``good governance at all levels is fundamental
to economic growth, political stability and security.'' The
document calls upon the OSCE ``to continue providing valuable
assistance to participating states upon their request, also in
sharing among themselves, through the OSCE platform for
dialogue, national experiences gained and good practices.''
There is a need to enhance efficiency and transparency of
public institutions, implement higher standards of integrity
and improve asset declaration systems to identify possible
corrupt activities in the OSCE area. I am pleased to note that
the OSCE supported training activities to develop increased
awareness, professional capacity and knowledge in prevention
and repression of corruption and money laundering produced
results in 2014. For example, with the assistance of the OSCE,
Kyrgyzstan was removed from the Financial Action Task Force
grey list.
The OSCE has been selected to chair the newly established
Anti-Corruption Working Group in Tajikistan to lead
coordination efforts engaging civil society and other public
bodies on anti-corruption issues and initiatives. In
partnership with the World Bank, we supported towards money
laundering and terrorism national risk assessments in Croatia,
Montenegro and the former Yugoslav republic of Macedonia this
year.
Distinguished members of the commission, money laundering
and corruption are interlinked, and oversight and law
enforcement authorities must have adequate skills and resources
to conduct investigations and prosecutions of these phenomena.
Contemporary crimes do not stop at national borders, and cross-
border exchange of information becomes essential.
Therefore, one of our flagship events this year was a
workshop on cross-border cooperation against corruption and
money laundering for government officials from Central Asia,
South Caucasus and Eastern Europe that took place in Vienna in
early October. The event, co-organized with the United Nations
Office on Drugs and Crime and Eurasian Group on Combating Money
Laundering and Financing of Terrorism brought together 50
participants from financial intelligence units, anti-corruption
and law enforcement agencies, financial institutions and
specialized international organizations. Participants and
experts discussed links between corruption and money
laundering, ways to counter cross-border movements of proceeds
of corruption, domestic coordination in identifying, tracing
and recovering illicit assets, use of legal persons and other
legal arrangements to conceal criminal assets. Participants
were also introduced to good practices for the drafting of
mutual legal assistance requests as well as the use of regional
networks to facilitate co-operation in asset forfeiture and
recovery. I would like to express my gratitude to the
government of the United States for providing financial support
to this event.
The acknowledgement of the negative effects of the lack of
appropriate economic governance by the political leaders and
policymakers can be seen in numerous developments in the OSCE
area. Therefore, participating states should take advantage of
the platform of OSCE offers and its capacity to produce results
similar to those mentioned above.
There is a need to enhance transnational cooperation among
participating states as well as other international actors in
the area of good governance. We remain convinced that the
enhanced efforts should be supported to develop and deliver
tailor-made capacity-building activities, to deploy anti-
corruption measures, strengthen national financial intelligence
units and build additional corruption prevention mechanisms.
Mr. Chairman, by 2015 my office also plans to publish a new
OSCE Guide on Combating Corruption. The old one is 10 years
old, so we are near to finalizing a new one. It will consist of
five parts and 21 chapters written by more than 40
contributors. The OSCE publication is being prepared in close
cooperation with the Office of Democratic Institutions and
Human Rights, Office of the Special Representative for the
Freedom of the Media and major actors in the anti-corruption
area, UNODC, OECD, Council of Europe's GRECO group, Anti-
Corruption Academy in Vienna and Basel Institute of Governance.
In conclusion, let me assure you that my office, jointly
with the OSCE network of field operations and partners, will
continue conducting targeted regional and national awareness-
raising and training activities. We will also endeavor to
mainstream good governance in our other economic and
environmental activities by incorporating transparency and
anti-corruption elements wherever relevant.
Thank you very much again for the opportunity to serve as a
witness at this hearing today. I very much look forward to our
discussion and also to our continued cooperation. Thank you
very much.
Mr. Cardin. Thank you for your testimony.
Ms. Beyerle.
SHAAZKA BEYERLE, SENIOR ADVISOR, INTERNATIONAL CENTER ON
NONVIOLENT CONFLICT
Ms. Beyerle. Thank you, Chairman Cardin, for your
leadership in drawing attention to corruption, particularly in
OSCE participating states. And thank you, Senator Boozman, for
coming today and for your interest. I know you both are very
busy.
It's an honor to participate in this hearing and to share
with you conclusions and recommendations from new research on
the positive role of citizens in impacting corruption,
including in the OSCE region. It's fitting today that Congress
will commemorate the 25th anniversary of the nonviolent Velvet
Revolution and will honor the late Vaclav Havel.
Since thousands of jangling keys rang through the air in
Prague, citizens continue fighting and impacting corruption and
impunity. Around the world and in some OSCE countries,
literally millions of people have wielded nonviolent power to
gain freedom, freedom from corruption.
The focus of my research is on what civic actors and
citizens, exerting their collective power, have been doing to
curb corruption as they themselves define it and experience it.
Sixteen cases were documented and analyzed in depth from
around the world, including in four OSCE participating states:
Bosnia and Herzegovina, Italy, Russia and Turkey.
And recently, as Senator Cardin mentioned, in Hungary,
thousands have mobilized against a corrupt, increasingly
authoritarian regime and an Internet tax designed to thwart the
free flow of information.
But the good news is that citizens organized in nonviolent
campaigns, movements and community initiatives are vital
protagonists in combating corruption. And as importantly, these
homegrown efforts generally don't require huge amounts of
money, nor do they usually need external financial assistance.
It's the ingenuity, creativity, resources and voluntary
participation of ordinary people that provide the foundation
for action. They've achieved notable outcomes, which were
summarized in my written testimony.
One example is the Movement to Defend Khimki Forest in
Russia, where citizens have stalled the bisection of an old
growth state-protected forest from a large highway and illegal
development that involves mysterious shell companies around the
world and the French firm, Vinci. Both the European Bank for
Reconstruction and Development and the European Investment Bank
have pulled out of the project, and the Paris prosecutor is now
investigating Vinci for financial crimes.
During my research, I asked activists what they need from
external actors. They implore the international community, of
course including the U.S., EU and OSCE, to look beyond formal
NGOs. They say pay attention to and engage directly with civil
society organizations and informal civic groups when they visit
your countries or seek contact with your diplomatic missions on
the ground. We don't need to put them through a convoluted
process controlled by NGO gatekeepers to reach you.
Second, threats and repression are the norm rather than the
exception. Therefore, protection and solidarity can be critical
when activists and their families request it.
Based on my research, allow me to offer these additional
recommendations. Some are not new but reinforce good practices
underway.
Sometimes civil society initiatives do seek financial
assistance, but they want modest amounts for self-organization
and capacity-building, not large amounts for formal projects
designed by external actors.
Also, the worst thing international actors can do is throw
large sums of money at homegrown grassroots civic initiatives
or to encourage them to turn into formal conventional NGOs.
They don't need that to succeed.
When it's wanted, provide legal and technical support and
access to information that civil society may not be able to
acquire in their own countries.
A third recommendation is--where censorship and
intimidation are rife--amplify civil society voices by
supporting their online information and news outlets,
alternative satellite television programming and multilingual
international outlets such as Radio Free Europe and Radio
Liberty. The bill that's now in the Senate to revamp Radio Free
Europe and Radio Liberty is exactly the kind of measure that's
valuable.
Fourth, use top-down multilateral approaches, such as the
United Nations Convention Against Corruption, and democratic
mechanisms, in third party countries, such as our own, to
support civil society movements and campaigns targeting
corruption and impunity--for example, the aforementioned Paris
prosecutor investigation of Vinci and congressional hearings
such as the one we are having today.
Lastly, please target global financial corruption.
Legislative and institutional measures to curb illicit
financial transactions and the conversion of ill-gotten gains
into legitimate businesses and properties can disrupt systems
of corruption that civil society is fighting in OSCE
participating states. I've heard voices from civil society
herald the Magnitsky Act. I'd like to thank you, Senator
Cardin, and also Senator John McCain, for your efforts to
extend the law's reach through the Global Magnitsky Human
Rights Accountability Act. And I'd like to share with you that
I was present when Sergei Magnitsky's mother, Natalia, received
the 2011 Transparency International Integrity Award given to
her son after his death. And I will never forget the sorrow
that was etched in her face when she came up to the stage to
receive the award.
In conclusion, allow me to share a few lessons from this
research. First, citizens bring a missing component to the
anti-corruption struggle. They bring extrainstitutional
pressure to push for change when power holders are corrupt and
are unaccountable, and when institutional channels are blocked
or ineffective.
Second, traditional top-down approaches are based on a
flawed assumption that once anti-corruption structures are put
into place, illicit practices will naturally change. But as we
know and as we see, unfortunately, that's not always the case.
Indeed, how can we expect those benefiting from corruption
within institutions to be the ones to curb it?
A third conclusion from my research is that top-down and
bottom-up approaches are complementary and definitely not
mutually exclusive. Both are needed, and they create valuable
synergies.
Lastly, citizens don't fight corruption in the abstract.
They do so to overcome poor unaccountable governance, poverty,
displacement, organized crime and other forms of oppression and
injustice. We can learn from their approach.
In closing, allow me to pay tribute to the leaders,
organizers and regular citizens who courageously and creatively
are curbing corruption and abuse, one of whom is in the room
today from Bosnia and Herzegovina, Srdjan Blagovcanin. They
prove that while corruption brings out the worst in people,
fighting corruption can bring out the best. Thank you for your
attention, and I look forward to your questions.
Mr. Cardin. Well, thank you very much for your testimony.
Mr. Aslund.
ANDERS ASLUND, SENIOR FELLOW, PETERSON INSTITUTE FOR
INTERNATIONAL ECONOMICS
Mr. Aslund. Thank you very much, Mr. Chairman, Senators
Boozman, Whitehouse. Thank you very much for this opportunity
for me to speak on what I consider a very important topic:
corruption in Ukraine and how we can defeat it. And my message
to you is that it can be done, but it has to be done now (hard
and fast) by the new government.
Ukraine today is in a triple crisis. The worst is of course
the military aggression from Russia, and that has caused an
aggravation of the financial crisis, but the underlying crisis
in Ukraine is its old internal enemy, that is corruption, and
that's what I'm going to talk about today. But all these
threats need to be fought at once, and Ukraine needs all the
international support it can get.
Your words about the importance of good governance today,
Mr. Chairman, ring very true with regard to national security
for Ukraine. They all go together. Ukraine would not be in this
national security crisis without its severe corruption.
Ukraine ranks 144 out of 177 on Transparency International
corruption perception index so this is a profoundly corrupt
country. The corruption really reached its peak under President
Viktor Yanukovych, and indeed, the corruption, together with
repression, were important reasons why he was ousted.
The fight against corruption must start at home, and it
must start from the top and with a political cleansing of the
top. And this process started, as you mentioned, on October 26
when Ukraine elected a new government which has a solid reform
majority. Among these 423 new deputies, most are new deputies.
They have not been in the old, rather corrupt situation before.
Many, a few dozen of the new deputies are anti-corruption
activists. These are not likely to be silenced or bribed. But
the new parliament which is soon to convene, it needs now to
form a new coalition government, and it should start to act
both against the financial crisis and against corruption.
After the politics comes the state. Ukraine's public
service is widely considered pervasively corrupt. Cleansing
Ukraine from its corruption will require several interrelated
measures, and Estonia and Georgia show how you clean up the
government.
To begin with, the state needs to reduce its regulatory
role by abolishing a lot of old Soviet regulations which have
now just been used for extortion. The deputy prime minister,
Volodymyr Groisman, said recently that Ukraine has 80 different
inspectorates controlling organs and controlling departments,
and he argued that at least 60 should be closed down. These
organs do not work in order to improve regulation of a state,
but they are organs in order to extort money from the citizens
and repress them as well.
Minimizing state interference in the economy, whether by
privatizing state-owned assets or cutting regulations, reduces
opportunities for corruption. In October, Ukraine adopted a law
on lustration. It scrutinizes top officials which have served
in high positions in corrupt agencies. This entails the
creation of an independent commission to scrutinize all top
judges and prosecutors in Ukraine because you can't have an
independent judiciary that is independently corrupt. It has to
be cleaned out from outside.
Since the early 1990s, all the truly rich in Ukraine made
their money on gas trade. It functions like this: you buy gas
at a low state-controlled price and you sell it currently at a
12 times higher price. In that way, a few billion dollars are
made by very few people each year in Ukraine. There's one way
of solving it: unify the energy prices. The common objection is
that this will have social costs, but give compensation to the
poor for the social costs, (real cash compensation); the World
Bank is very skillful at doing this. They've done so in more
than 30 countries, notably in Latin America, where
administration is often worse than in Ukraine. So this is
possible, and it has to be done. This is not a matter of social
cost. It's a matter of fighting corruption, because the people
that control the gas trade have normally owned Ukrainian
politics.
Another source of major corruption is public procurement.
The general perception under Yanukovych was that 50 percent was
a normal kickback for a public contract. The government
officials now say that 20 percent of all public contracts were
stolen, which sounds low, but that would be 2 percent of GDP.
What is needed is a law on public procurement that it be open
and transparent. Such a law has been adopted, and it is
important that the new government really implements it.
Of course, the tax system is another major source of
corruption. The tax police have been the most repressive organ
in Ukraine. A lot of changes need to be done in the tax system
to clean it up, simplify it, in particular, abolish the tax
police. Taxation should not be a matter of repression. It
should be transparent and legal.
Coming to the international side, there are two things that
are important. One is the association agreement with the
European Union, which is a document of nearly 3,000 pages. It's
a laundry list of reform laws that Ukraine needs to adopt. And
the European Union is offering technical assistance to get that
done. The Ukrainian people have made a choice for Europe, and
if they stick with it and pursue reform with determination,
they have the best chance to clean out the Augean stables of a
long-corrupt system.
The other international organization that plays a major
role in Ukraine is International Monetary Fund. So far, it's
mainly IMF demands that have done away with corrupt practices
such as the strong demand for a decent procurement law. And of
course, the United States is the biggest shareholder in the
IMF. The United States also engages directly in Ukraine through
bilateral assistance, through USAID. It rightly engages in
Ukraine's energy reforms, which, as I've mentioned, will be
crucial for controlling top-level corruption in Ukraine, and on
top of that, improve state finances and energy efficiency and
national security.
So my final words are that the United States has a major
interest in the economic and legal success of a democratic and
friendly Ukraine, and the United States can do a great deal in
this regard. Thank you, Mr. Chairman.
Mr. Cardin. Thanks. Let me thank you very much for your
testimony. We've been joined by Senator Whitehouse--it's nice
to have him here--and Congressman Aderholt, who is vice
president of the parliamentary assembly. So it's good to have
our colleagues here, and I thank Senator Boozman for his being
here. I know he has the Veterans Committee that's meeting, so
thank you for your attention.
I want to comment first, Mr. Aslund, on your point about
Ukraine. I was at the Millennium Challenge Corporation's
celebration last night of its 10th anniversary. It's a
development assistance program that we have in the United
States which is pretty consequential. There's significant funds
that are made available to try to deal with poverty through
economic growth in countries around the world.
But a precondition is that the country must have in place
the mechanisms to deal with corruption and good governance. And
it's a competitive fund and the funds are not made available
unless we in fact move forward on that. And it has had great
success. It's known in our country as one of the most
transparent agencies in government. It's consistently ranked
number one in that regard.
I'd contrast that to what the United States has done in
Iraq. We made substantial funds available for economic growth
and saw so much of that siphoned off in corruption and corrupt
governance. So you've given a--I thought a very strong list of
benchmarks that must be achieved in Ukraine for it to be
successful, and that we all are very much engaged in stopping
Russia's incursions into Ukraine and doing what we can to help
the Ukrainian people be able to maintain an independent
country.
We are very much engaged in dealing with their economic
needs on the international front. But it seems to me that there
has to be a very open, transparent process in Ukraine, and
benchmarks and accountability. And that we're not doing the
people of the Ukraine any favor if the current changes end like
the Orange Revolution ended, without progress being made. So
how do we go about setting up that system of accountability and
benchmarks so that, in fact, Ukraine--the people of Ukraine at
the end of the day will not only have an independent country
that is safe from the incursions of Russia, but also one that
has good governance so that their people can share the wealth
of their country in a fair manner?
Mr. Aslund. Thank you. This is very much the key question,
Mr. Chairman. And my answer to this is what Ukraine needs to do
a lot from top down to, front-load the program, do all these
major things that can be done straightaway immediately. And to
this, we have a problem with the finances. Ukraine now is
running out of international reserves. The exchange rate is
plummeting. Inflation is rising. The banks are collapsing
because of that. At least half of the banks are in fact
bankrupt and need to be closed down or recapitalized.
So in this situation you really need to do away with
everything that is corrupt on the state budget--clean it out
altogether. Otherwise, Ukraine will be in a financial meltdown
within, say, four months. So it's really critical. So
therefore, Ukraine doesn't have time. The United States, as one
of the closest countries to Ukraine, needs to say: You do it
now, otherwise you are cooked.
Mr. Cardin. Dr. Yigitguden, can you tell us whether--how
you're working within Ukraine to deal with following up on some
of the points that Mr. Aslund mentioned?
Dr. Yigitguden. Mr. Chairman, we were continuously
contacting the Ukrainian delegation in Vienna at OSCE and
Ukraine authorities and our presence in Kiev. Finally, after
three visits to the site, meeting with the authorities with the
ministry of justice, ministry of interior and the financial
intelligence units, we could design a program to work with the
Ukrainian authorities. I must say, we are very thankful for the
United States; the different agencies from the United States
are working closely with the Ukrainian authorities on asset
recovery issues. This is very helpful for the government.
And we designed upon their request a project on anti-money
laundering and combatting financing of terrorism field. With
our presence in Ukraine, we will be assisting the state
financial monitoring service of Ukraine--this is their
financial intelligence unit--in designing and launching a
national system for national risk assessments. This system
would assist the Ukrainian financial intelligence unit and
other relevant government agencies in identifying, assessing
and understanding money laundering risks and enhanced
capacities for the implementation and the development of
national anti-money-laundering and counterterrorism financing
regime.
The project will gather national and international experts,
forming an expert group that will collect and analyze data for
the national risk assessment, covering main financial sectors
of the national economy like banking, insurance, stock
exchange, et cetera. It will also review, analyze and provide
recommendations to design and amend relevant laws, regulations
and set parameters to enforce measures to mitigate money
laundering and terrorism financing risks.
Key beneficiaries of this project will be the state
financial monitoring service of Ukraine and the state training
institution for experts on financing monitoring. This morning I
received an email that we got a request from Ukrainian side.
They want to study the system in Lithuania. So from 1st till
5th of December, we will bring them together with the Ukrainian
authorities to work on this field, to learn from their
experiences. And we will continue next year to work with the
Ukrainian authorities.
Mr. Cardin. I think that's very helpful. And I applaud your
efforts. I think it would be very useful for you to make
available to the OSCE community the progress that Ukraine is
making on the points that were brought out in Mr. Aslund's
testimony. What are they doing about regulatory reforms? What
are they doing about procurement and state-owned enterprises,
the independence of a judiciary free of corruption? What are
they doing about energy sector reform? What are they doing
about their tax system?
I think all those are obvious areas that breed corruption.
And the solutions may be difficult to achieve politically, but
we know that they need to progress toward doing that. So I
think the more transparency that we show on that, I could just
tell you that, speaking as this senator, we're going to help
the Ukrainian people, but we're not going to provide funds that
are being used for corruption. And sometimes you have to make
some tough decisions if the money isn't getting to where it's
intended. So advertising the progress on these fronts, I think,
would be extremely helpful to us.
I want to ask one other question if I might, to Ms.
Beyerle. You mentioned civil societies, which I think are
critically important here, and how we finance civil societies.
We have just completed the Berlin plus 10, dealing with anti-
Semitism. Ten years ago there was a conference in Berlin that
dealt with the challenges in anti-Semitism and an action plan
was developed. And as I understand it, the final statement by
the chair in office indicated that we must show more economic
and political support for civil societies in fighting
intolerance and anti-Semitism.
And it seems to me the same challenge is here in
corruption, that we do need to do a more effective job in
supporting the work done by civil societies. Do you have some
specific suggestions as to what the OSCE could do in adding to
the strength of the role of civil societies in fighting
corruption?
Ms. Beyerle. Thank you. I do know that the OSCE engages
with civil society and that various NGOs can be accredited to
be a part of some of the meetings with member state
participating countries. And I know that they interact with
civil society on the ground in countries and they conduct
things like integrity trainings for officials in countries. But
my recommendations are really simple, and not very expensive. I
would urge the missions on the ground to engage more actively
with civil society organizations that are not traditional NGOs,
to engage with civic groups that are mobilizing citizens
together, to involve them in activities that they do, to give
them access to meet with officials who are coming from the OSCE
itself, to monitor their status when they face harassment and
intimidation. These are the kinds of things that are helpful.
Other things that could be interesting--and Dr. Yigitguden
would be able to answer if it's possible within the parameters
of the OSCE, but I do think there is a way to do it--is to
encourage more civil society peer exchanges. For example, it
was mentioned that there is a plan to bring Ukrainian officials
to Lithuania to meet their counterparts at the government
level, to learn from their counterparts in Lithuania. That can
also be very important at the civil society level. Peer-to-peer
exchanges, bring people who are active--who are actively
fighting corruption on the ground together from different
countries within the OSCE and even with people who have
successfully impacted corruption outside the OSCE--to share
their experiences and insights.
So in addition, I would suggest--and again, this could be
something for the OSCE and other external actors--is to work
with civil society groups to produce anti-corruption
mechanisms--in which they have provided input. There is a
notion that we have in the people power realm of collective
responsibility. And we need to bring in to deliberations about
what should be done, for example, to reform government
ministries--to bring in voices from the citizenry can be very
important because they actually have the insights about how
corruption functions within a government ministry, or within a
government office. They actually have good ideas and good
suggestions about how to address it, how to disrupt it. And
they actually can play a role, for example, through monitoring
of activities that tend to be corrupt.
So I'll leave it at that and I would be happy to discuss it
further later.
Mr. Cardin. Well, thank you very much. Senator Whitehouse.
HON. SHELDON WHITEHOUSE, COMMISSIONER, COMMISSION ON SECURITY
AND COOPERATION IN EUROPE
Mr. Whitehouse. I'm a former prosecutor. I was the attorney
general of my state. And I was the United States attorney, the
federal prosecutor for my state. And in addition to the
importance of an independent and incorruptible judiciary, it's,
to me, equally important that there be prosecutive capabilities
so that the independent and honest judiciary have cases before
them to work on. That does not seem to be a skill set that has
been very well maintained in the Ukraine. It's a skill set that
doesn't last very well in corrupt political environments. It's
the antithesis, frankly, to a corrupt political environment.
So rebuilding that prosecutive capability seems to me
vital. In that regard, both the National Association of
Attorneys General and the National District Attorneys
Association and the United States Department of Justice have
very considerable assets of experience and capability in that
area. And I've spoken to those organizations about trying to
get more involved specifically in the Ukraine. I think they
offer a couple of things. The first they offer is added
resources, training, mentorship and so forth.
They also add a bit of a defense, I guess I'd say, against
efforts to have the corruption world intrude into and force its
effects into these types of decisions, not because--just to use
the example of the Ukraine--not just because the Ukrainian
prosecutors won't be as honest as any other prosecutor, but
because it gives them an additional tool in their arsenal to
say, well, you know, I just can't buckle on this because we've
got all these folks from out of the country watching and you
have to understand that that's just the way it is right now.
And I think that gives a boost from anticorruption efforts.
So I would urge that we continue to try to seek the support
of what's called NAAG, the National Association of Attorneys
General, the NDAA and the Department of Justice in putting that
kind of resources in place, on location, in the offices, both
to develop the capability and to provide a counterpoint, I
guess I'd say, to people who are saying quietly to somebody,
you know, you're getting too excited about this. This is, you
know, really something that you needn't be looking into so
much. And if you really want to protect your budget and your
people, you know, I think you'd be making a mistake to
concentrate so many of your resources in this case, blah, blah,
blah.
That's the way in which the corruption force works its will
against prosecutors. And if they're in a position to say, you
know, I appreciate that but I've got an office full of people
who are going to blow the whistle on it if we try. And it's--
don't blame me. This is just the situation we all live in. I
think that hardens up the prosecutive capability. So I'd love
to hear your thoughts on that and happy to support.
Rhode Island is one of the few states--there are three of
them--in which the attorney general is also the district
attorney. So we did all of the criminal prosecutions, all the
felony prosecutions, most of the misdemeanor prosecutors--
everything that wasn't a municipal offense. And so I'm one of
the rare people who has actually been a member of the NDAA and
the National Association of Attorney Generals and a former U.S.
attorney. So I'm very happy to work with you to try to make
sure we're steering the resources in that direction. I think
it's very important and I'd love to help. So your comments to
that.
Mr. Aslund. Thank you. I presume that's for me. Thank you
very much, Senator Whitehouse. I think that this is really
critical. As happens now in Ukraine, hardly any of the
Yanukovych gang has been properly prosecuted. Who is most easy
to pay off? You can guess. The prosecutors have massive power.
The best way for them to make money is not to pursue a case. Of
course, there might be something that is missing in the case,
we don't know, but it's very remarkable none of them has been
properly prosecuted.
Ukraine has 10,000 prosecutors, 20,000 judges. Probably
both numbers should be halved. It's a very large number if you
compare with any Western country. What's important is that they
become decent and honest, because this is a pervasively corrupt
institution. The top prosecutors appoint the lower prosecutors.
Since the top prosecutors have been corrupt for a long time,
they make sure that they don't get any unnecessarily honest
prosecutors around them.
So therefore, what you need to do is to take out the top.
This is what the governing is doing through the new law on
lustration. It has sacked approximately 100 top prosecutors.
That's where we need to start. Then what you said here, another
element is to get the international assistance in that you need
to have an international council that assesses prosecutors.
It's pretty easy to see if people are corrupt or not in these
cases.
This is what East Germany did. They went through all the
judges and all the prosecutors. They undertook a complete
lustration of the civil service. Ukraine needs to do that,
particularly in these two areas--prosecutors and judges. It's
not only technical assistance. You really need to have peer-
controlled over appointments. There are a lot of Ukrainian-
speaking judges in North America, in Canada and the United
States. This is a good resource the U.S. and Canada can draw
on.
And there are lots--there are thousands of young lawyers in
Ukraine who are disgusted by what they see. They have primarily
gone into the private sector, to commercial law, in order to
avoid being drawn into the dirty legal system. They know the
laws. They know how to work as lawyers. So there is a resource.
These are the people who should be brought in, but then, of
course, they have to be properly paid, and if you make them
much fewer, then you could get it done, and this is critical
that the United States can help with technical assistance in
this area.
Mr. Whitehouse. Well, thank you, and let me thank Chairman
Cardin for his leadership in this commission. He's very active,
and perhaps this is an issue we could put on our commission
docket as something to consider how we can encourage NAAG and
(DAA ?) and the Department of Justice to work together to help
support this kind of activity, particularly in the Ukraine, but
wherever it's a problem.
Mr. Cardin. Well, let me just thank Senator Whitehouse for
that suggestion. We make significant resources available here,
and I think perhaps one of the most valuable things we could do
is provide the technical assistance, but also the oversight for
accountability. I must tell you, we are not going to be too
patient on seeing progress made to deal with corruption, nor
will the people of Ukraine be too patient here. They have a
history of taking things into their own hands in the streets if
they're not satisfied about what is happening. So I think it's
important that we do that, and I think you're absolutely right.
We have the capacity to really help them understand what needs
to be done, but just as importantly, evaluate as progress is
being made as to whether they're achieving that or not.
Congressman Aderholt.
HON. ROBERT ADERHOLT, COMMISSIONER, COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
Mr. Aderholt. Thank you, Mr. Chairman. Mr. Aslund, let me
just go back to what you were saying about the number of
prosecutors and judges in Ukraine. That was--you said 10,000
prosecutors, 20,000 judges?
Mr. Aslund. Yeah.
Mr. Aderholt. Which you said, by Western standards, would
be quite high. What contributed to that, and were they given
out as just positions that just--sort of give you a little
history about that? How that happened or came about?
Mr. Aslund. Well, it's the old Soviet system. If you look
up on the police force, Ukraine has 300,000 policemen. Britain,
which is substantially larger, has 120,000 policemen. Part of
it is that the Soviet Union, as a share of the population, had
the largest number of jail mates--prisoners in the world. The
U.S. is also high in this regard, but the Soviet Union was
higher. And therefore, you had an overcapacity. The Soviet
Union had a murder rate that was the same as in the United
States--at the peak, around 1990, of eight, nine murders per
100,000 population. So it was very high, and it hasn't been
cleaned up. So this is largely a Soviet inheritance.
Mr. Aderholt. So it's a holdover from the Soviet days?
Mr. Aslund. Yeah.
Mr. Aderholt. Of course, as I'm sure you know, President
Poroshenko spoke at a joint session of Congress just a few
months ago here in Washington, and we very much appreciated his
coming and speaking to the joint session. One of the things
that would be interesting, as far as President Poroshenko and
the prime minister--you know, how committed, in your opinion--
and I'll open this up to any on the panel--do you think that
they truly are to fighting corruption?
Mr. Aslund. I do think that they are committed, but they
always have other interests. They are both highly competent,
and it was a wonderful speech that President Poroshenko gave
here to the joint session of Congress, but the truth of the
pudding is in the eating. We have to see that they really
deliver. In order to be in politics, you have to consider many
interests, and the question is how you manage to do it well.
Mr. Aderholt. You'd put them on a scale quite high as
their--you think they're committed to it. Of course, what
happens is another question, but as far as their commitment at
this point--you see as--you see them as quite committed?
Mr. Aslund. Knock wood, that's my view.
Mr. Aderholt. Yeah. Any assessment from the other----
Mr. Yigitguden. I would say there are two ways to fight
against corruption. One, to work closely to train prosecutors,
financial intelligence units, Ministry of Interior officials
and so on. On the other side, to make the legislation simple
and understandable for every citizen. Citizens, they don't
understand the complexity of legislations. Sometimes, they are,
I would say--may be exaggerated--happy to pay bribes to achieve
something, to get something, because it's sheer impossible for
them to go to--to this difficult legislation, so we should
encourage countries in this regard--EU should play a role to
simplify legislations in this region that the people can
understand, and it's no room for corruption there.
This will be a best way. We are trying to mainstream our
activities, not only working with the authorities fighting
against corruption and anti-money-laundering, but also in other
areas. We work in the field of customs and transportation trade
facilitation with our (booklet?); we organize trainings with
best practices from 200 best practices from all over the world.
How the customs procedures can be simplified that trade can be
facilitated much faster, and there is less space for corruption
in customs areas.
Similarly, in the environmental field environmental good
governance via the huge network of Aarhus centers, we are
increasing the awareness of the ordinary citizens how they can
access to the information in the environmental decision-making
process, whether the authorities there are corrupt and they
give, say, permission without consulting with the population. I
think we need to mainstream all activities in all areas that
the citizens are aware, first of all, about their rights, and
secondly, they have a simple legislation, simple rules that
they can understand, and there is no room for corruption. Thank
you.
Mr. Cardin. Thank you. Ms. Beyerle.
Ms. Beyerle. Thank you. I would second what my two co-
panelists said and provide an example. Ukraine and other
countries may now face the opportunity--and it's a good
opportunity--to change, revamp, reform laws on the books. And
laws can be complicated, as was mentioned, or they can be
simple. They can also be user-friendly to citizens, or they can
prevent or be obstacles to citizens using the laws. So a key
law--for example, is the right to information or freedom of
information, as we call it in the United States.
The laws can be convoluted, or they can be something that
anyone can use. And when it's something that anyone can use,
this becomes a tool, a weapon that society can use to fight
corruption. And these kinds of activities are what reinforce
the top-down efforts that have been described today. So, for
example, in India, the Right to Information Act was actually
developed through constitutional lawyers and legal experts from
civil society, and after a 10-year movement--social movement--
it was passed. It is one of the strongest freedoms of
information acts in the entire world, and there is now a
movement in India--the 5th Pillar movement--training and
encouraging citizens to use this on a daily basis to actually
thwart corruption that they face in their daily lives.
The corruption that's manifested from the activities that
the panelists have discussed--for example, corrupt judges,
corrupt judicial systems, corrupt bureaucracies; all go hand-
in-hand. Consultation with experts and grass-roots leaders from
civil society can provide a different perspective that can be
built into the top-down changes that are being developed.
Mr. Aslund. Sorry--may I add here, many laws have been
adopted recently in Ukraine. In the spring, there was the
adoption of freedom of information act. In October, last month,
a package of anti-corruption laws was adopted. That includes
electronic registers for all enterprises. Most big enterprises
in Ukraine are owned by anonymous offshore companies, so their
real owners are not formally known. That's also true of real
estate and property that you don't know actually who owns it,
and now they are demanding to have registers, electronic
registers that would be publicly available to everybody. The
very important law on prosecution was finally adopted. This was
what Viktor Yanukovych was not prepared to accept because in
the old Soviet system, the prosecutor was superior to the
judge, so the prosecutor could until now go in and change a
verdict of the court, which is just the old Soviet system.
And--let's see. What else? Yeah, and of course, law on
money laundering has also been adopted every much because of
demands from the international community. Also a law on an
anti-corruption bureau which has special rights to go after top
officials that appear to be corrupt, which several other post-
Communist countries have done to clean up because the
prosecutors cannot be trusted to deal with top officials. Thank
you.
Mr. Aderholt. Thank you, Mr. Chairman.
Mr. Cardin. Let me make an observation, and that is that
this hearing has been extremely helpful, and I thank all three
of our witnesses for their--for their testimony and more
importantly for your contributions to this--to this area. I
remember during the early days of our discussions on
trafficking in this commission, this commission took up this
issue many years ago. And we knew that every country needed to
improve, but there were some countries that were problematic in
dealing with trafficking. And it took a long time, but we were
able to obtain I think objective standards for evaluation. And
of course, the United States Congress passed the Trafficking in
Persons report, which evaluated the progress being made in
every country, including the United States, and pointed out
progress where it could be continued, but then established
different tiers with consequences if you don't at least reach
certain tiers of progress.
I think we need the same effort with corruption. I thought
the testimony today has laid out some fundamentals that are--
need to be in a country in order to have acceptable
institutional protections against corruption--the independent
judiciary and prosecutors, or laws on how government deals with
procurement, and there are others that may not be present in
Ukraine which are pretty clear are necessary in order to have
the protections against corruption. And as I said, every
country can improve, including the United States. We understand
that. So I think such an evaluation might be very, very
helpful.
Part of that, of course, is having an independent judiciary
and allowing investigative journalists. And once again, I
regret that Ms. Ismayilova is not here. Azerbaijan is a friend
of the United States. We have a very close relationship on many
issues. And I would just urge Azerbaijan to understand the
importance of protecting independent journalists and allow
independent journalists to be able to carry out their work, and
Azerbaijan will be a stronger country as a result of those
types of activities. I think that's an important point for us
to mention. We have the ministerial meeting coming up in
December in Basel. We'll have a transition between the Swiss
chair in office and the Serbian chair in office. And I just
hope that we would be more visionary as to how we want to
elevate the work on this subject, and we look forward to
working with you, doctor, as to how we can underscore that
importance and continued ability, the institutional presence in
that regard.
I've been informed by staff that Canada this week will be
considering a transparency issue in regards to extractive
minerals. As you know, we passed a transparency provision here
in the United States. Europe has also acted on transparency.
When Ms. Beyerle, you mentioned the sources of corruption, we
know that trafficking is a source of funds for corruption in
organized crime. We know that corruption on the use of the
minerals of a country and supporting a corrupt government's
sources of corruption, we know illicit drugs and illicit arms,
all these are sources that fund corruption. And as Mr. Aslund's
pointed out, unfortunately, public service in some countries is
a source of corruption.
So I think all this gives us a way to really elevate this
issue to a much more important area. And bottom line, it deals
with the same principles of Helsinki, OSCE, the security of our
country is based upon stable countries around the world, and
you can't have stable countries if you don't have good
governance; you can't have good governance if you have
corruption.
Senator Whitehouse.
Mr. Whitehouse. I'm good.
Mr. Cardin. Thank you all very much for your contribution.
Mr. Whitehouse. Appreciate this very much.
Mr. Cardin. Appreciate it very much.
A P P E N D I X
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Prepared Statements
----------
Prepared Statement of Hon. Benjamin L. Cardin, Chairman, Commission on
Security and Cooperation in Europe
Good morning and welcome to this hearing of the Commission on
Security and Cooperation in Europe. We have a panel of distinguished
witnesses with us today to discuss combating corruption in the OSCE
Region and the link between security and good governance.
Combating corruption may be the most important task we face today.
Democratic societies function based on a high level of trust in
each other and the institutions that underpin democracies. Corruption
undermines that trust, and thus undermines the very foundation of
democracies. Research has shown a high level of correlation between
failed states and endemic corruption.
That's not to say we don't have corruption in democracies. We do.
But the level of corruption is not as high and having strong
institutions such as an independent judiciary and an independent media
are integral to keeping corruption in check.
The upheaval and turmoil that we have witnessed over the past
couple of years is surely one of the most convincing pieces of evidence
that we have to show the link between corruption and security. The
spark that lit the fire in Tunisia was a street vendor sick of paying
bribes to the police.
In Ukraine, the corruption which has plagued that country for
decades only intensified during the regime of Viktor Yanukovych. A
major component of the Euro-Maidan protests--the ``revolution for
dignity''--was the people's disgust with pervasive governmental
corruption. With the election of President Poroshenko in May and a new,
pro-European parliament elected last month, Ukraine has a real
opportunity. While it is not an easy environment given Russia's
aggression and de-facto control of parts of Ukraine, some steps have
already been taken, but much more needs to be done.
In Russia, corruption and consolidation of power at the center has
allowed Putin's government to undermine the legitimacy of its
judiciary, silence independent journalists and systematically deprive
NGOs of the ability to operate freely.
In Hungary, the U.S. recently announced that six Hungarians were
determined to be ineligible to enter the United States under the
authority of Presidential Proclamation Number 7750 which makes
individuals excludable when there is credible information that those
individuals are either engaging in or benefiting from corruption. The
head of the Hungarian Tax Authority has publicly stated she is one of
the six.
This is clearly an exceptional measure and I'm sure not undertaken
lightly. On the contrary, I believe, this reflects on other
developments which have made it more difficult for civil society and
independent media to report on and combat corruption. This includes the
expansion of criminal penalties for defamation using ``emergency''
parliamentary procedures and the subsequent threat to use those
provisions against those raising concerns about the Tax Authority and
the National Bank.
I'd like to turn now to our witnesses for their contribution.
Unfortunately Khadija Ismayilova, an investigative journalist with
Radio Free Europe/Radio Liberty in Baku, was not able to join us today
because of a travel ban imposed on her by the Government of Azerbaijan.
She has provided a written statement and copies have been distributed.
We regret that she is not able to join us here for the hearing.
I'd like to welcome Dr. Halil Yurdakul Yigitguden, who has been the
Co-ordinator of OSCE Economic and Environmental Activities since
February 2013. He is a former senior Turkish diplomat with extensive
experience in the energy sector.
Next is Ms. Shaazka Beyerle, who is a visiting scholar at the
Center for Transatlantic Relations at the School of Advanced
International Studies at Johns Hopkins University. She is also a Senior
Advisor with the International Center on Nonviolent Conflict. This year
she published a book, ``Curtailing Corruption: People Power for
Accountability and Justice.''
Finally, Mr. Anders Aslund is Senior Fellow at the Peterson
Institute for International Economics. He is an expert on economic
policies in Russia, Ukraine, and Eastern Europe, and he focuses on the
broader implications of economic transition.
Prepared Statement of Hon. Christopher Smith, Co-Chairman, Commission
on Security and Cooperation in Europe
Thank you, Mr. Chairman, and to everyone joining us this morning.
Combating corruption has been a priority of this Commission almost
since its inception, and I am delighted that we are spending some time
today with the OSCE Economic Coordinator and our other witnesses to
further our understanding of this important topic.
Corruption in the public sector fuels many of the ills that plague
OSCE states--among them is certainly trafficking in human beings. In
case after case after case, we have seen examples that show corruption
was responsible for the border guard turning a blind eye to the victim,
and was responsible for police colluding with traffickers to thwart a
rescue, and was responsible for the prosecutor refusing to bring
charges against a trafficker.
I have been fighting human trafficking for over fifteen years and
am the author of the landmark United States' Trafficking Victims
Protection Act of 2000, and its 2003 and 2005 reauthorizations. These
laws created a bold new strategy that included sheltering, asylum and
other protections for the victims, long jail sentences and asset
confiscation for the traffickers, and tough sanctions for governments
that fail to meet minimum standards. They also created the annual
Trafficking in Persons Report, which evaluates nearly every country's
progress toward achieving the minimums standards to eliminate
trafficking over the previous year.
We have seen enormous progress in so many countries, but fighting
corruption remains one of the most difficult--and critical--aspects of
combatting human trafficking. Victims need to know that if they come
forward, or if they share their stories with prosecutors after rescue,
they will be safe and justice will be done. Corrupt government
officials need to know that no one is above the law and that their
crime of exploiting those they are supposed to protect will not go
unpunished.
No country is immune to corruption, including our own. Just this
year in Washington, D.C., two policemen were caught in separate
instances of human trafficking. One, sadly, took his own life before
trial. The other was sentenced to 7 years in prison, with 10 years of
supervision after release.
While we all hope that our governments and law enforcement are free
of corruption, a lack of prosecutions for corruption can be a bad sign.
Ukraine is at a turning point in many respects, not the least of which
is whether it will ensure that its public servants are in office to
serve the country, rather than their own prurient interests. Ukraine is
to be commended for making anti-corruption legislation, which was
adopted in October, a priority for the new parliament.
As Dr. Mark Galeotti's \1\ research has recently indicated, Russian
criminal networks have moved in to take advantage of Crimean port of
Sevastopol and the influx of $4.5 billion in development funds from
Russia. Many are concerned that Crimea will become an international
center of organized crime. While we must do nothing that implies
recognition of Russia's illegal occupation of Crimea, we should do
everything we can to hold Russia responsible for any smuggling and
trafficking in Crimea--and anything we can to stop it.
---------------------------------------------------------------------------
\1\ Professor of Global Affairs at New York University's School of
Professional Studies--Center for Global Affairs (http://www.vice.com/
en_ca/read/how-the-invasion-of-ukraine-is-shaking-up-the-global-crime-
scene-1106.
Prepared Statement of Anders Aslund
Mr. Chairman, I would like to thank you for this opportunity to
speak on an important topic, how the new Ukrainian government can fight
corruption. At present, Ukraine faces three imminent threats. The
greatest threat is of course Russian military aggression. As a
consequence of this war, Ukraine is in a horrendous financial crisis,
but it also needs to deal with its old internal enemy, corruption. All
these three threats need to be fought at once, and Ukraine needs all
the international support it can get.
Ukraine is pervasively corrupt. Transparency International ranks
Ukraine 144 out of 177 countries on its corruption-perception index.
Corruption was at the heart of popular discontent with the deposed
regime of former President Viktor Yanukovych, and widespread graft
helps explain why the economy stalled in 2012 and 2013. Kiev must
tackle this problem urgently.
The scale of the alleged graft under the previous administration is
breathtaking. Prime Minister Arseniy Yatsenyuk has accused the
Yanukovych regime of stealing $37 billion from the state--equal to one-
fifth of Ukraine's GDP in 2013--during its four years in power. The
ouster of Yanukovych in February has created an opportunity to confront
corruption in Ukraine.
The fight against corruption must start from the top. Politics must
come first. Ukraine's political institutions have been thoroughly
corrupted. Oleh Rybachuk, the chief of staff to former-president Viktor
Yushchenko, runs a nongovernmental organization that has examined the
apparent expenditures and legally declared incomes of the 450 members
of parliament who sat from 2007 to 2012. Mr. Rybachuk's NGO found that
only a handful of these members could have plausibly claimed to live
solely off their official incomes.
Political cleansing at the top is the necessary precondition for
Ukraine combating corruption. This process has started. On October 26,
Ukraine carried out free and fair parliamentary elections. Out of the
423 deputies, a majority has never been parliamentarians before and a
large number of anti-corruption activists were elected. They are not
likely to be bribed or silenced. The new parliament is soon to convene
and a new coalition government needs to be formed swiftly and start
acting to fight both the financial crisis and corruption.
Next comes the cleansing of the state. Ukraine's public service is
widely considered pervasively corrupt, as many people who have tried to
secure a business license could attest. Cleansing Ukraine of its
corruption will require several interrelated measures. Estonia and
Georgia have shown the way. To begin with, the state needs to limit its
regulatory role by abolishing or merging many state agencies. Deputy
Prime Minister Volodymyr Groisman has stated that Ukraine has ``80
different inspectorates, controlling organs, and control departments in
ministries.'' He argued that at least 60 should be closed and a maximum
of 20 remain.\2\ Minimizing state interference in the economy--whether
by privatizing state-owned assets or cutting regulations--reduces
opportunities for corruption.
---------------------------------------------------------------------------
\2\ ``Iz 80 inspektsii i kontrol'nykh organov dolzhno ostat'sya
maksim 20--Vladimir Groisman,'' Pravitel'stvennyi Portal, July 30,
2014, Available at http://www.kmu.gov.ua/ (accessed on July 31, 2014).
---------------------------------------------------------------------------
In October, Ukraine adopted a law on lustration, which scrutinizes
or ousts officials who have served in high positions in corrupt
agencies. This entails the creation of an independent commission
scrutinizing all the top judges and prosecutors in Ukraine and
dismissing those found to have engaged in graft.
Since the early 1990s, the truly rich in Ukraine have made their
fortunes on trade with natural gas, imported from Russia or produced in
Ukraine. At present, the domestic price of natural gas produced by
state-owned companies is a paltry $30 per 1,000 cubic meters, while the
market price is twelve times higher. Deputy Prime Minister Volodymyr
Groysman has said that gas worth $2.5 billion a year was sold this way
under Yanukovych.\3\ The obvious resolution of this problem is to unify
the energy prices at a market level. Then this corruption would finally
be eliminated. The deregulation of gas and electricity prices in this
case must be seen as a matter of combating corruption, not as a social
issue. Poor households could be fully compensated with a minor share of
the current budget cost.
---------------------------------------------------------------------------
\3\ Ekonomichna Pravda, September 11, 2014.
---------------------------------------------------------------------------
Another major source of corruption is public procurement. Under
Yanukovych, kickbacks of 50 percent were considered normal. One of the
new government officials claimed that the total embezzlement of
procurements amounted to only one-fifth.\4\ Public procurement must be
made open and competitive. Ukraine has recently adopted a law on public
procurement requiring open public tenders, and voters should demand
their leaders follow that law to the letter. Considering that total
public procurement in Ukraine is about $12 billion a year, and 2
percent of GDP could be kept away from corrupt operators through better
procurement this would be a great gain of $2.4 billion.
---------------------------------------------------------------------------
\4\ ``Pervy zamministra kabmina Parakyda; Na goszakupkakh
vorovalas' kazhdaya pyataya grivna (First Deputy Minister of the
Cabinet of Ministers Parakuda: In State Procurement Every Fifth Hryvnia
Was Stolen),'' Focus, October 20, 2014.
---------------------------------------------------------------------------
The new government should also cut public expenditures, and
corrupted subsidies must be eliminated. The tax system also needs to be
simplified and the tax police abolished, to shield taxpayers from
lawless persecution.
In October, Ukraine also promulgated a package of anti-corruption
laws. These laws aimed at a more appropriate definition of corruption,
greater transparency, and the creation of a new independent
investigating organ, the Anti-Corruption Bureau for the investigation
of top level officials suspect of corruption. At the same time, Ukraine
tightened its legislation against money laundering.
By signing the Association Agreement with the European Union,
Ukraine has committed itself to adopting hundreds of reform laws, while
the European Union has committed itself to providing substantial
technical assistance in drawing up new laws and reorganizing state
agencies. The Ukrainian people have made a choice for Europe. If they
stick with it and pursue reform with determination, they will have
their best chance to clean out the Augean stables of a long-corrupt
system.
The other major international organization that plays a major role
in Ukraine is the International Monetary Fund, in which the United
States plays a key role in the as its biggest shareholder. The United
States also engages directly in Ukraine through bilateral assistance
through USAID. It rightly engages in Ukraine's energy reforms which
will be crucial not only for state finances and energy efficiency but
also for the improvement of governance in Ukraine. The United States
has a major interest in the economic and legal success of a democratic
and friendly Ukraine.
Mr. Aslund is a senior fellow at the Peterson Institute for
International Economics and author of ``How Ukraine Became a Market
Economy and Democracy'' (Peterson Institute, 2009). He is currently
completing a book ``Ukraine: What Went Wrong and How to Fix It.''
Prepared Statement of Dr. Halil Yurdakul Yigitguden
Mr. Chairman, today I testify in front of you in my capacity of the
Co-ordinator of OSCE Economic and Environmental Activities. Economic
and environmental matters represent an important element of the OSCE's
approach to security. To tackle challenges in this area, my team co-
operates on the ground with our current 15 OSCE Field Operations,
organizes an annual Economic and Environmental Forum and holds a yearly
Implementation Meeting to assess progress and identify future
priorities. The Office works closely with the Organization's
Chairmanship and performs under the guidance of the Economic and
Environmental Committee, a body of representatives of the OSCE's
participating States, and the Secretary General. Our activities include
anti-money laundering, transport and security, gender-sensitive labour
migration, border and customs policies, water management, controlling
dangerous waste through to sustainable energy, climate change, and
involving the public in decisions affecting the environment. With other
international partners, the OSCE is also an active member of the
Environment and Security Initiative. Today I will concentrate my speech
on our work in the area of good governance and combating corruption.
Global political and economic challenges call for additional
efforts in the area of good governance, including measures aimed at
increasing transparency, accountability, integrity and sound financial
management. Good governance and transparency affect economic efficiency
and growth, and thus remain among key priorities of the elements of the
OSCE's comprehensive approach to security.
The increasing importance of good governance issues requires
continuous dialogue. Therefore, adopted in Dublin in 2012 by all
participating States of the OSCE, the Declaration on Strengthening Good
Governance and Combating Corruption, Money-Laundering and the Financing
of Terrorism provides the OSCE and my Office with a strong mandate to
promote good governance principles. The Declaration emphasizes that --I
quote--``good governance at all levels is fundamental to economic
growth, political stability, and security''--end of quote. The document
calls upon the OSCE--I quote--``to continue providing valuable
assistance to participating States upon their request, also in sharing
among themselves, through the OSCE platform for dialogue, national
experiences gained and good practices''--end of quote.
The need to enhance efficiency and transparency of public
institutions, implement higher standards of integrity and improve asset
declaration systems to identify possible corrupt activities in the OSCE
area remains, and we have and will continue working in these areas. I
am pleased to note that the OSCE supported training activities to
develop increased awareness, professional capacity and knowledge in
prevention and repression of corruption and money laundering produced
results in 2014. For example, with the assistance of the OSCE,
Krygysrtan was removed from the Financial Action Task Group (FATF)'s
`grey list'. The OSCE has been selected to chair the newly established
Anti-Corruption Working Group in Tajikistan to lead coordination
efforts engaging civil society and other public bodies in anti-
corruption issues and initiatives. In partnership with the World Bank,
we rendered components of technical support towards money laundering
and terrorism National Risk Assessments in Croatia, Montenegro and the
former Yugoslav Republic of Macedonia.
Distinguished members of the Commission, money laundering and
corruption are intertwined, and oversight and law enforcement
authorities must have adequate skills and resources to conduct
investigations and prosecutions of these phenomena. Contemporary crimes
do not stop at national borders and cross-border exchange of
information becomes essential. Therefore, one of our flagship events
this year was a workshop on Cross-border Co-operation Against
Corruption and Money Laundering for government officials from Central
Asia, South Caucasus and Eastern Europe that took place in Vienna in
early October. The event, co-organized with the United Nations Office
on Drugs and Crime (UNODC), and Eurasian Group on Combating Money
Laundering and Financing of Terrorism (EAG) brought together 50
participants from financial intelligence units, anti-corruption and law
enforcement agencies, financial institutions and specialized
international organizations. Participants and experts discussed links
between corruption and money laundering, ways to counter cross-border
movements of proceeds of corruption, domestic coordination in
identifying, tracing and recovering illicit assets, use of legal
persons and other legal arrangements to conceal criminal assets.
Participants were also introduced to good practices for the drafting of
Mutual Legal Assistance requests as well as the use of regional
networks to facilitate co-operation in asset forfeiture and recovery. I
would like to express my gratitude to the government of the United
States for providing financial support to this event.
The acknowledgement of the negative effects of the lack of
appropriate economic governance by the political leaders and policy-
makers can be seen in numerous developments in the OSCE area.
Therefore, participating States should take advantage of the platform
the OSCE offers and its capacity to produce results similar to those
mentioned above. There is a need to continue fostering trans-national
co-operation among participating States as well as other international
actors in the area of good governance offering best practices and
opportunities to share experiences. We remain convinced that the
enhanced efforts should be supported to develop and deliver tailor made
capacity building activities, to deploy anti-corruption measures,
strengthen national financial intelligence units, and build additional
corruption prevention mechanisms.
Most of our work benefits from close co-operation with OSCE Field
Operations. Their presence on the ground enables them to collaborate
with governmental and non-governmental stakeholders thus assisting
their host countries in implementing their commitments in the OSCE's
second dimension, thus providing an invaluable contribution to our
joint work.
Mr. Chairman, by 2015 my Office also plans to publish OSCE Guide on
Combating Corruption. It will consist of five parts and 21 chapters
with inputs provided by more than 40 contributors. This OSCE
publication is being prepared in close co-operation with ODIHR, Office
of the Special Representative for the Freedom of the Media and major
actors in the anti-corruption area such as the UNODC, OECD and Council
of Europe's Group of States against corruption (GRECO) and Basel
Institute of Governance. The topics covered by the Guide will stretch
from anti-corruption strategies and bodies, conflict of interest and
public procurement regulations to the role of the media, lobbying,
mutual legal assistance requests and investigations.
In conclusion, let me assure you that my Office jointly with the
OSCE network of Field Operations and partners will continue conducting
targeted regional and national awareness-raising and training
activities. We will also endeavour to mainstream good governance in our
other economic and environmental activities by incorporating
transparency and anti-corruption elements wherever relevant.
Thank you very much again for the opportunity to serve as a witness
at this hearing today. I very much look forward to our discussion and
also to our continued co-operation.
Thank you.
Information Note on the Implementation of the 2012 Dublin Declaration
on Strengthening Good Governance and Combatting Corruption, Money-
Laundering and the Financing of Terrorism
Introduction
The Ministerial Council Declaration on Strengthening Good
Governance and Combatting Corruption, Money-Laundering and the
Financing of Terrorism adopted in Dublin in 2012--MC.DOC/2/12 (Dublin
Declaration) reiterates that ``good governance at all levels is
fundamental to economic growth, political stability, and security. Good
public and corporate governance, rule of law and strong institutions
are essential foundations for a sound economy, which can enable
participating States to reduce poverty and inequality, to increase
social integration and opportunities for all, to attract investment and
to protect the environment''.
The document enlists commitments of participating States (pS) aimed
at enhancing their capacities and strengthening co-operation in
combating corruption, money laundering and the financing of terrorism
and calls upon the OSCE and its network of Field Operations ``to
continue providing valuable assistance to participating States upon
their request, also in sharing among themselves, through the OSCE
platform for dialogue, national experiences gained and good
practices''.
Since the adoption of the Dublin Declaration, the Office of the Co-
ordinator of OSCE Economic and Environmental Activities (OCEEA) and the
OSCE Field Operations, in co-operation with partner organizations, have
assisted pS in implementing relevant commitments stemming from a number
of OSCE Ministerial Council and Permanent Council Decisions, as well as
on the OSCE Strategy Document for the Economic and Environmental
Dimension. Activities have included support in implementation of the
United Nations Convention against Corruption (UNCAC), prevention of
corruption, promoting integrity in public service, regulatory reform,
preventing conflict of interest, national risk assessments in anti-
money laundering and countering the financing of terrorism (AML/CFT),
leveraging AML to combat trafficking in human beings, implementing the
Financial Action Task Force (FATF) recommendations and standards, asset
disclosure by public officials, engagement of civil society and the
public sector in combating corruption, and others.
These activities have often been cross-dimensional in nature and
engaged the OSCE Office for Democratic Institutions and Human Rights,
the OSCE Transnational Threats Department and its relevant units, and
other offices of the Organization.
Tasked by the Swiss 2014 OSCE Chairmanship, this Note, structured
on main components of the Dublin Declaration, is designed to reflect on
the OCEEA and the Field Operations activities, while discussing
remaining challenges and achieved successes.
Good governance and transparency
challenges
Citizens expect a State to protect legitimate economic activities
from corruption, money laundering and other illegal and criminal
practices by establishing clear rules and regulations to govern the
economic relationships and consistently enforcing them. The quality of
and adherence to these rules have an impact on internal markets, as
well as on fostering trust in public and democratic institutions, and
attracting foreign investment. Good public and corporate governance are
key factors of sustainable economic growth and economic development,
thus contributing to national and regional stability and security. In
the face of the current global economic difficulties, stronger efforts
towards enhanced good governance are particularly needed in the OSCE
region and beyond.
It is worth underlining that good governance is not about making
`correct' decisions; it is about promoting the respect for key
principles in the decision-making process that includes accountability,
transparency, participation, respect of the rule of law,
responsiveness, equity and inclusiveness, as well as effectiveness and
efficiency.
Increasing transparency of public expenditure and budget making
procedures, legislative reform, audits and public procurement
procedures, are important measures towards garnering participation of
citizenry in government and improving trust. However, these
transparency measures are ineffective if not made in such a way that
they may be understandable and easily accessible to the public.
Improving the efficiency of public administration, combined with
greater transparency in the public sector and higher standards of
integrity in the behaviour of public servants, is essential in
strengthening corruption prevention capacities and mitigating
corruption-related risks.
The ``soft-law'' tool of introducing codes of conduct and ethical
principles of behaviour for public servants is widely used throughout
the OSCE area. In particular, asset declarations, receipt of gifts and
employment opportunities prior to, during and after leaving public
service--are usually covered in codes of conduct to prevent conflicts
of interest.
In September 2014, the Open-ended Intergovernmental Working Group
on the Prevention of Corruption of the Conference of the States Parties
to the UNCAC encouraged the States Parties ``to establish and
strengthen asset declaration systems applicable to public officials,
aimed at the identification and resolution of conflicts of
interest''.\5\
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\5\ UN Conference of the States Parties to the United Nations
Convention against Corruption, Open-ended Intergovernmental Working
Group on the Prevention of Corruption, Fifth session, Vienna, 8-10
September 2014, https://www.unodc.org/documents/treaties/UNCAC/
WorkingGroups/workinggroup4/2014-September-8-10/V1404178e.pdf.
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Asset and private interest disclosure by decision makers remains
among the essential tools for effectively managing conflict of
interest. According to the Organisation for Economic Co-operation and
Development (OECD), among the 34 member countries of the Organisation,
of which 27 states are the OSCE pS, 86 percent require their top
decision makers in executive and legislative structures to disclose
their private assets.\6\ However, less than half of the OECD Member
States perform internal audits of the submitted information for
accuracy.\7\
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\6\ Transparency International, Setting a high bar for conduct,
http://blog.transparency.org/2012/07/19/codes-of-conduct-a-tool-to-
clean-up-government/.
\7\ OECD, Government at a Glance 2013, 2013, http://
www.keepeek.com/Digital-Asset-Management/oecd/governance/government-at-
a-glance-2013_gov_glance-2013-en#page3.
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Yet, many pS have introduced income- and asset-disclosure systems
for public officials. In order for these systems to be effective they
first need to contain high risk categories of public officials as well
as their family members. Also, oversight authorities and law
enforcement must have adequate skills and resources to conduct audits
and investigations. Moreover, it is important for countries to engage
in cross-border exchange of information on politically exposed persons
(PEPs) and for banks to make logical connections between PEPs and known
business associates. An asset disclosure system whose accuracy cannot
be verified is ineffective.
Conflict of interest legislation still remains underdeveloped in
many countries and it may not regulate abuse of authority of public
officials in such areas as influence peddling or procedures for
awarding public procurement contracts. For instance, business relations
or political party affiliations between members of public procurement
award selection panels of contracting entities and bidders are often
overlooked. Indeed, public procurement is an area particularly prone to
corruption, especially in sectors like construction, maintenance
services and waste management, owing to deficient control mechanisms
and risk management.
Corruption in public procurement procedures siphons off scarce
public resources, often results in shoddy public works and erodes the
trust of citizens and businesses in government. The level to which a
state's public sector is held accountable through the rule of law and
procedures and decisions are made transparent to its citizens,
correlates highly with the degree of citizens' trust, and in turn, the
level of stability and security. Public procurement has been identified
by the OECD and UNODC as a main risk area sector of significant
concern.
A transparent and fair public procurement system is perhaps the
most visible measure of a government's public accountability. In the
absence of a transparent and fair system of using public funds,
particularly in times of economic downturn, citizens' trust in
government wains and the perception that government funds are being
misused or misappropriated dangerously grows.
OCEEA activities in good governance and transparency since 2013:
The OCEEA and several OSCE Field Operations, often in co-operation
with the UNODC, have supported efforts to raise awareness and
facilitate the implementation of the UNCAC. The below listed workshops
were designed and conducted for relevant public officials, civil
society and private sector representatives and intended to assist
states in preparing for review under the UNCAC. They included, inter
alia, components dedicated to asset disclosure mechanisms, codes of
conducts for civil servants, transparency in public procurement,
whistle-blower protection, conflicts of interest and international co-
operation.
In April 2013 in Astana, the OSCE, UNODC and OECD co-organised a
regional workshop entitled Sharing Good Practices and Lessons Learned
from Development and Implementation of Anti-Corruption Preventive
Policies.
In April 2013 in Ashgabat, the OCEEA and the UNODC co-organised a
national training on Mechanisms to Increase Integrity in Public Service
and Prevent Corruption and the Laundering of its Proceeds.
In June 2013, in Jurmala, Latvia, the OCEEA, the OECD Anti-
Corruption Network for Eastern Europe and Central Asia and the UNDP co-
organised an expert seminar on Prevention of Corruption, Effective
Measures and Their Practical Implementation: Institutional and
Sectorial Approaches. The seminar was followed by a separate workshop
for representatives of Central Asian countries on income and asset
declaration systems and conflict of interest legislation as tools for
preventing corruption.
In September 2013 in Tashkent, the OSCE and UNODC co-organised a
two-day national training workshop on Mechanisms to Increase Integrity
in Public Service and Prevent Corruption.
In March 2014, in Dushanbe, the OCEEA participated in and
contributed to a workshop on Anti-corruption prevention measures--
Progress made, future priorities and the role of civil society in the
prevention of corruption in Tajikistan co-organised by the OSCE Office
in Tajikistan and the UNODC.
In June 2014, in Tirana, the OCEEA, the OECD, the OSCE Presence in
Albania, the UNDP and the UNODC co-organised a regional expert seminar
on Prevention of Corruption--Main Trends and Examples of Successful
Practice in Eastern Europe and Central Asia.
In October 2014, in Vienna, the OCEEA, the UNODC and the EAG held a
regional training on Cross-border Co-operation Against Corruption and
Money Laundering.
successes: good governance and transparency
Regulatory reform in Armenia
In 2012, Armenia's National Center for Legislative Regulation,
supported by the OSCE Office in Yerevan and several other donors,
launched a 2-year Rapid Regulatory Simplification Project which aimed
at reviewing and streamlining regulations and increasing transparency
in 17 sectors of the Armenian economy. Known as the ``regulatory
guillotine'', the reform makes use of best international practices to
assess and streamline the national regulatory frameworks affecting
business activity and the daily lives of citizens. By the end of 2013,
7 priority sectors had been reviewed and legislation streamlined to
reduce ``red tapes'' on businesses and citizens. The overall estimated
impact on the Armenian economy is calculated to represent the
equivalent to 0.5 percent of national GDP. The project is being
continued in its second phase.
OSCE supported Good Governance Resource Centre in Turkmenistan
The OSCE Centre in Ashgabat, in partnership with the Government of
Turkmenistan, supported the establishment of a Good Governance Resource
Centre that was officially opened on 1 May 2014 in Ashgabat. Located at
the premises of the Ministry of Finance, the Centre offers diversified
information, conducts educational events and provides expert
information on good governance. It also offers access to a library and
specialized databases and periodicals. In addition, the Centre works
with relevant government authorities on developing national legal acts
and regulations on AML/CTF measures in compliance with FATF standards.
Following recommendations identified on 2 September 2014 at a round
table in Ashgabat, a report with recommendations to enhance good
governance practices will be submitted to the Ministry of Finance and
the Parliament of Turkmenistan later this year. The Centre is an
innovative initiative within the OSCE context as it provides a long-
term approach towards the promotion of good governance practices in
Turkmenistan.
Manual on the Role of Responsible Authorities in Preventing Conflict of
Interest developed in Albania
In 2013, with the support of the OSCE Presence in Albania, the High
Inspectorate for Declaration and Audit of Assets and Conflict of
Interest (HIDAACI) of Albania developed and published a Manual on the
Role of Responsible Authorities in Preventing and Controlling Conflict
of Interest. The Manual aims to assist 580 responsible authorities in
all the central and local public institutions to more effectively
detect, prevent and resolve cases of conflict of interest. The
publication is intended to be a reference tool for officials, civil
society, business community, law students and researchers. It is
available on the HIDAACI website and it is being used by its staff for
training purposes.
Ukraine goes digital in combating corruption
The OSCE Project Co-ordinator in Ukraine assisted local self-
government authorities in one of the regions to develop and launch a
digitized public service provision system. In 24/7 mode, service
recipients (citizens and the private sector) can download the necessary
forms and keep track of service requests that have been submitted to a
virtual government office. The system makes public service provision
more transparent and efficient and thereby significantly reduces
corruption risks.
Combating corruption, money laundering and the financing of terrorism
challenges
The EU Anti-Corruption Report issued in February 2014 identifies
corruption as a phenomenon which impinges on good governance, sound
management of public money and competitive markets, and, in extreme
cases, undermines the trust of citizens in democratic institutions and
processes. According to the Report, corruption costs the European
economy approximately 120 billion euros per year. Eurobarometer survey
results show that 76 percent of EU citizens believe that corruption is
widespread and 56 percent think that the level of corruption in their
country has increased since 2011.\8\
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\8\ European Commission, Report from the Commission to the Council
and the European Parliament, EU Anti-Corruption Report, Brussels,
3.2.2014, COM(2014) 38 final, http://ec.europa.eu/dgs/home-affairs/e-
library/documents/policies/organized-crime-and-human-trafficking/
corruption/docs/acr_2014_en.pdf.
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Only twenty OSCE participating States scored 60 or above and ten
even had a score of less than 30 on the latest Transparency
International Corruption Perception Index where 0 is for ``high
corruption'' perception and 100 is for ``low corruption''. The average
score among the assessed OSCE participating States is approximately
54.4.\9\
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\9\ Based on statistics provided by the ``Corruption perceptions
index'' which measures the perceived levels of public sector corruption
in 177 countries and territories, http://cpi.transparency.org/cpi2013/.
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As indicated by the UNODC in September 2014, the importance of
preventing corruption through the promotion of good governance has
``increasingly come to the fore, notably in the ongoing dialogue on the
post-2015 development agenda''.\10\ Yet, despite relevant obligations
in line with international instruments,\11\ prevention of corruption
has been mostly understood as part of law enforcement activities. This
creates a major challenge for the implementation of corruption
prevention measures and implementation of the good governance reforms
as per the UNCAC and highlighted in the Dublin Declaration.
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\10\ UNODC Executive Director Yury Fedotov's statement at the third
International Conference on Small Island Developing States (SIDS),
http://www.unodc.org/unodc/en/frontpage/2014/August/unodc-warns-of-
small-island-states-vulnerability-to-corruption-during-global-meeting-
in-samoa.html
\11\ Notably the UNCAC, Council of Europe anti-corruption legal
instruments, including the Resolution (97) 24 on 20 Guiding Principles
for the fight against corruption and the recommendations No. R (2000)
10 on codes of conduct for public officials and No. R (2003)4 on common
rules against corruption in the funding of political parties and
electoral campaigns.
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Fifty six OSCE participating States have ratified or acceded to the
UNCAC. Fifty six are members of the Egmont Group of Financial
Intelligence Units and all 57 are members of the Financial Action Task
Force (FATF) and FATF-style regional bodies.
Although repressive measures alone are not sufficient to tackle
corruption in an effective manner, the ability of a judicial system to
impose dissuasive criminal sanctions plays a major deterrent role and
is a clear sign that corruption is not tolerated. Indeed, several
factors can influence the efficiency of law enforcement and prosecution
forces in investigating corruption, such as the estimated extent and
nature of corruption they must address, the balance with preventive
measures, the capacity and resources at their disposal, the potential
obstacles to investigations, including the effectiveness of the
judiciary. In particular, judicial independence, as well as proper
funding of investigative and judicial authorities, is imperative in
establishing effective anti-corruption and AML/CTF measures.
Ensuring the rule of law requires drafting and implementing
legislation that regulates selection and promotion procedures,
independent oversight, and independent budgets for the judiciary.
Investments in judicial and investigative bodies quickly bring returns
which is evident in functioning assets seizure and forfeiture systems.
Asset recovery represents one of the major challenges for the OSCE
pS in the good governance area. Chapter V of the UNCAC reaffirms that
asset recovery, that includes tracing, freezing, confiscation, and
repatriation of crime and corruption proceeds stored in foreign
jurisdictions is an international priority in the fight against
corruption. Modern advancements of financial, transportation and
communication infrastructures allow corrupt `politically exposed
persons', among others, to conceal massive amounts of stolen wealth
overseas by using differences in legal systems and bank secrecy in some
recipient countries.
According to the Report of the Conference of the States Parties to
the UNCAC in 2013, ``all efforts should be made to conduct a financial
investigation into assets illegally acquired and to recover such assets
through domestic confiscation proceedings, international cooperation
for purposes of confiscation or appropriate direct recovery measures.''
\12\
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\12\ UNODC, UN Convention against Corruption: Progress report 2013,
25 November 2013, http://www.transparency.org/whatwedo/pub/
un_convention_against_corruption_progress_ report_2013.
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A report by the Parliamentary Assembly of the Council of Europe on
corruption and tax heavens \13\ refers to the Stolen Asset Recovery
Initiative of the World Bank (StAR) \14\ and the UNODC that analysed
150 grand corruption cases and found a direct link between large-scale
corruption by high-level public officials and the concealment of stolen
assets through opaque shell companies, foundations and trusts. The
report highlights the root problems concerning tax havens, such as
(fiscal) bank secrecy, lack of transparency and effective public
oversight, regulatory dumping, predatory tax arrangements and abusive
accounting techniques inside multinational enterprises.
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\13\ Parliamentary Assembly of the Council of Europe, Promoting an
appropriate policy on tax heavens, 5 April 2012, http://
assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=18151 &lang=EN.
\14\ The World Bank and the UNODC, The Stolen Asset Recovery
Initiative (StAR), http://star.worldbank.org/star/.
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Successful conviction of corruption cases, money laundering and
terrorism financing crimes--from identification through prosecution,
sentencing and finally stolen asset recovery--requires a multi-layered,
multi-disciplinary and multi-national approach calling for effective
national legislative frameworks, compliant with international
standards, as well as co-operation among investigative and financial
oversight authorities at national and international levels among
Financial Intelligence Units (FIUs), law enforcement and prosecutors.
In addition, improved international co-operation requires further
engagement by pS to sign bilateral and multilateral treaties and
agreements on assets recovery and co-operation in criminal matters. In
this respect, the recent adoption of a directive on the freezing and
confiscation of proceeds of crime in the EU is a promising signal.\15\
The directive aims to make it easier for national authorities to
confiscate and recover the profits made from cross-border and organised
crime.
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\15\ EU, Directive of the European Parliament and of the Council on
the freezing and confiscation of instrumentalities and proceeds of
crime in the European Union, PE-CONS 121/13, 5 March 2014, http://
register.consilium.europa.eu/doc/srv?l=EN&f=PE%20121%202013%20INIT.
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Whistle-blowers' protection in public and the private sectors is
also necessary to encourage individuals to come forward with
information on corruption. Guarantees must be put in place that a
person who discloses to relevant authorities allegations of corruption
suffers no retaliation. The Council of Europe has issued the
Recommendation no. CM/Rec(2014)7 of the Committee of Ministers to
member States on the protection of whistle-blowers,\16\ including a
series of principles to guide member States when reviewing their
national laws or when introducing legislation and regulations or making
amendments as may be necessary and appropriate in the context of their
legal systems.
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\16\ Council of Europe, European Committee on Legal Co-operation
(CDCJ), Recommendation CM/Rec(2014)7 of the Committee of Ministers to
member States on the protection of whistle-blowers, https://
wcd.coe.int/ViewDoc.jsp?Ref=CM/Rec(2014)7&Language=lanEnglish&Site=CM
&BackColorInternet=C3C3C3&BackColorIntranet=EDB021&BackColorLogged=F5D38
3.
OCEEA activities in combating corruption, money laundering and
terrorism financing since 2013:
In the area of anti-corruption, anti-money laundering and combating
the financing of terrorism, the OCEEA has worked on assisting pS in the
implementation of the main international instruments, in particular the
UNCAC, 40 + 9 FATF Recommendations, the UN Convention for the
Suppression of the Financing of Terrorism, the UN Convention against
the Illicit Traffic in Narcotic Drugs and Psychotropic Substances and
the 3rd EU Directive on Combating Money Laundering. The Office has
closely co-operated with the UNODC, World Bank, the OECD, the Egmont
Group, the Council of Europe, the EAG, Basel Institute on Good
Governance and others.
In December 2012, the OCEEA launched the ``OSCE Handbook on Data
Collection in support of Money Laundering and Terrorism Financing
National Risk Assessments''. A Russian language version has been
released in October 2014. The Handbook provides guidelines on improving
data collection in an effort to combat money laundering and the
financing of terrorism. It is also intended to inspire further dialogue
and co-operation among national authorities and other stakeholders to
stimulate an exchange of experiences and good practices among states in
the OSCE region and to raise awareness of the importance of
comprehensive data collection for informed decision-making.
In August 2014, the OCEEA jointly with the OSCE Office of the
Special Representative and Co-ordinator for Combating Trafficking in
Human Beings, and the OSCE Transnational Threats Department/Strategic
Police Matters Unit released a research paper on ``Leveraging Anti-
Money Laundering Regimes to Combat Trafficking in Human Beings''. The
paper, which combines research findings from various publications and
seminars from 2008 to the present, focuses on trafficking in human
beings as a specific type of transnational crime that also gives rise
to corruption practices.
From 2013 to date, the OCEEA has supported efforts of the OSCE
Field Operations aimed at promoting and offering training based on the
``OSCE Handbook on Data Collection in support of Money Laundering and
Terrorism Financing National Risk Assessments''.
In partnership with the World Bank, the OCEEA has also rendered
components of technical support towards National Risk Assessments
(NRAs) in Kyrgyzstan (May 2013), Croatia (March 2014), Montenegro
(March 2014) and the former Yugoslav Republic of Macedonia (May 2014).
A NRA is a process by which countries identify the threat of money
laundering activity in their jurisdiction, the vulnerability of the
country in terms of its ability to prevent and intercept specific types
of illicit financial activity and its resulting impact.
In addition, the following training and capacity building events
were organised for relevant officials from Financial Intelligence
Units, the Prosecutor's Office, Ministry of Interior/law enforcement
officials, the banking sector and others.
In March 2013, in Tashkent, the OCEEA and the OSCE Project Co-
ordinator in Uzbekistan, held an international training on the revised
FATF International Standards on Combating Money Laundering and the
Financing of Terrorism & Proliferation.
In April 2013, in Borovoe, Kazakhstan, the OCEEA in co-operation
with the World Bank and Kazakhstan's Committee for Financial
Monitoring, the OSCE Centre in Astana, and the US Embassy in Kazakhstan
held a two-day national workshop on the revised FATF international
standards.
In May 2013, in Bishkek, the OCEEA supported a workshop on Money
laundering risks in Kyrgyzstan which was jointly organised by the OSCE,
the World Bank and Kyrgyzstan's State Financial Intelligence Service.
In May 2013, in Podgorica, a series of meetings were held with the
OCEEA's participation to further advance the draft of the National
Action Plan to Prevent and Suppress Terrorism, Money Laundering and
Terrorism Financing.
In October 2013, in Durres, Albania, a regional conference on
Strengthening Co-operation on AML/CFT and Fighting Corruption in South
Eastern Europe was organised together with the OSCE Presence in
Albania, and the Albanian General Directorate for the Prevention of
Money Laundering.
In November 2013, in Ashgabat, the OCEEA jointly with the OSCE
Centre in Ashgabat organised a national training workshop on Mechanisms
to prevent money laundering.
In December 2013, in Athens, the OCEEA together with the OSCE
Mission to Serbia and the Financial Intelligence Unit of Greece held a
working meeting of practitioners from Serbia and Greece to share
challenges and good practices in linking anti-money laundering and
anti-corruption efforts.
successes: combating corruption, money laundering and the financing of
terrorism
OSCE Guide on Combating Corruption
The OCEEA has established close links with experts from
organizations such as the UNODC, OECD, Council of Europe/GRECO,
UNCITRAL, Basel Institute on Governance/International Centre for Asset
Recovery, the European Commission and International Anti-Corruption
Academy as well as with ODIHR and FoM in developing the OSCE Guide on
Combating Corruption. The topics covered by the Guide will stretch from
international and regional initiatives, anti-corruption strategies and
bodies, conflict of interest and public procurement to role of the
media, lobbying, mutual legal assistance, investigation, AML and asset
recovery. The Guide is expected to be finalized in 2014.
OSCE/OCEEA partnership frameworks in the area of anti-corruption and
AML-CFT
Since 2005, the OSCE has the observer status to the Organisation
for Economic Co-operation and Development (OECD) Anti-Corruption
Network for Eastern Europe and Central Asia (under the Istanbul Anti-
Corruption Action Plan).
Since 2006, the OSCE has the observer status to the Eurasian Group
on Combatting Money Laundering and Financing of Terrorism (EAG).
Since 2008, the OSCE has the observer status to the Council of
Europe's Committee of Experts on the Evaluation of Anti-Money
Laundering Measures and the Financing of Terrorism (MONEYVAL).
Since 2011, on a bi-annual basis, the OSCE and the UNODC issue
Joint Action Plans.
In March 2011 the OSCE and the International Anti-Corruption
Academy concluded a Memorandum of Understanding concerning co-
operation.
Since 2012, the OSCE has the observer status to the Egmont Group of
Financial Intelligence Units.
Since 2013, the OSCE has the observer status to the Financial
Action Task Force (FATF).
In October 2013, the OSCE and the UN Development Programme (UNDP)
concluded a Memorandum of Understanding.
Improving public procurement transparency and the prosecution of
corruption in Serbia
Since 2013 the OSCE Mission to Serbia has continued to focus on
assisting the host country with creating a transparent and efficient
public procurement system and training law enforcement and prosecutors
on investigating alleged violations. The Mission has moderated peer-to-
peer meetings among public procurement bodies and law enforcement and
prosecutors on enhancing co-operation on identifying risks and sharing
timely information on alleged corruption with criminal investigators.
The Mission has trained 20 prosecutors in charge of public procurement
corruption through specially developed case studies based on past
alleged corruption in public procurement in Serbia. In 2014 the Mission
has provided support to the development of a NGO-run public procurement
transparency website that contains information on tenders, awarded
contracts, procurement selection boards and bidders to allow citizens
and journalists to track how public funds are spent and potentially
identify alleged breaches of conflict of interest.
Monitoring assets disclosures of public officials and AML/CFT: the
Greek model
The Hellenic Anti-money Laundering and Counter-terrorist Financing
and Source of Funds Investigation Authority serves both as Greece's
Financial Intelligence Unit (FIU) as well as its monitoring body of
public officials' assets and income disclosures. The Authority is
staffed by seconded officials from various ministries and law
enforcement agencies and is headed by an independent prosecutor.
According to this set-up, the authority can investigate bank accounts
and determine whether officials have accurately disclosed their income
and assets. In this way corruption and money laundering investigations
are handled within the same institution.
Kyrgyzstan removed from the FATF `grey list' in 2014
Following the OSCE Centre in Bishkek assistance, in July 2014,
Kyrgyzstan was removed from the FATF's `grey list' and would no longer
be subject to the FATF's monitoring process under its ongoing global
process of compliance with requirements on AML/CFT. The decision was
announced at the third FATF Plenary meeting in June 2014 in Paris
certifying Kyrgyzstan's ``demonstrated significant progress'' in
addressing the strategic AML/CFT deficiencies identified in their
mutual evaluation reports and the action plans agreed with the FATF.
The OSCE has been assisting Kyrgyzstan in increasing the capacity of
the country's financial bodies to adopt modern investigative and
countering methods, and implement legislation that addresses the
recommendations of the FATF. Moreover, in March 2013, the OSCE Centre
in Bishkek opened a new Training Centre of the State Financial
Intelligence Service, and held several training courses for officers
from the Service. More than 400 officers from various ministries and
agencies have been trained on modern methods of AML.
Civil society and private sector
challenges for civil society
Effective anti-corruption measures require a participatory approach
among governments, civil society, business communities and academia to
foster citizens' trust and create a social consensus on non-tolerance
of corruption. Monitoring the implementation of reforms, engaging in
the development of new policies and regulations, evaluating the
effectiveness of those already in place, and providing a barometer of
public opinion for the government are the main fields of action for
civil society actors in corruption prevention. However, non-government
organizations across the entire OSCE region still face significant
challenges in building a sustainable and balanced dialogue with the
government and acquiring access to government information. This
prevents civil society to fully play its monitoring and evaluating role
vis-a-vis government institutions.
Moreover, it is critical to mainstream a gender-balanced approach
when promoting good governance measures as all-inclusive and requiring
accountability from state institutions. Persistent gender disparities
limit women's ability to fully participate in the decision-making
processes in social, economic, and political life. Such gender-based
exclusion compromises the prospects for good governance, as well as
economic growth and prosperity. Therefore, if not already launched,
legal reforms are required to promote gender equality that would enable
women, individually or collectively, to participate in the decision-
making processes thus contributing to building more equal and inclusive
societies. Women participation in civil society activities is an
essential component to ensure civic engagement, participatory
development and good governance.
Further training of civil society on such issues as conducting
statistical surveys, public awareness campaigns, issuing `shadow
reports' and participating in budget making processes is needed to make
it a viable and constructive partner to government. Also, many
governments require further support in identifying ways in which civil
society, the private sector and the public may contribute to their
anti-corruption policy measures. Public-private partnerships should be
further developed on environmental, humanitarian and other issues,
including trade and investment policies. Moreover, business
communities, academia and civil society may be involved in awareness
raising campaigns and surveys on ease of doing business matters and
economic growth policies.
challenges for private sector
According to the OECD Istanbul Anti-Corruption Action Plan that
includes Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan,
Tajikistan, Ukraine and Uzbekistan, ``legal gaps remain in many
countries with regard to bribery and trading in influence''.\17\ In
addition, ``business integrity'' is a relatively new issue in the
region. The governments are yet to implement systematic measures to
promote business integrity while the private sector has a potential to
become a strong participant in the fight against corruption.
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\17\ http://www.oecd.org/corruption/acn/istanbulactionplan/
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Bribery, as a basic form of corporate corruption, has detrimental
effects on political, economic, social and environmental areas. To
address bribery more effectively, legislation should include provisions
of criminal liability for bribing public officials, corporate liability
for failure to prevent bribery, differentiation between notions of
offering, promising, giving, requesting, agreeing to receive and
accepting a bribe, as well as envisaging a requirement for corporate
entities concerning implementation of ``adequate procedures'' in order
to prevent bribery.
There are many useful resources available to help businesses manage
internal and external corruption risks and implementing anti-corruption
policies, including Transparency International's Business Principles
and the International Chamber of Commerce's Rules of Conduct. A number
of industry sectors have also developed sector specific guides,
specialist codes of practice and transparent procurement agreements. In
addition specialized anti-corruption risk management frameworks have
been established to help mitigate against bribe solicitation and
demands for `facilitation payments', including international
initiatives such as RESIST (Resisting Extortion and Solicitation in
International Transactions) and international legal instruments such as
the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions.
successes: civil society and the private sector
Civil society and government partnership in Kazakhstan
In 2012, the OSCE Centre in Astana, in co-operation with the
Ministry of Transport and Communications, the NGO ``Azamatyk Kuryltay''
(People's Convention), as well as with construction companies, local
authorities, the World Bank office and Soros Foundation in Kazakhstan
began supporting civil society participation in the national and local
Transparency and Sustainable Development Expert Councils (TSDECs) for
monitoring the ``Western Europe--Western China'' international road
construction project, which crosses five of Kazakhstan's regions and
connects Europe and Asia. Through this project, in 2013 a platform for
dialogue and co-operation was created for stakeholders involved in or
affected by the construction works along the road. This work helped
build the foundations of permanent, self-sustainable TSDEC multi-
stakeholders' structures in the five regions. In 2014 TSDECs were
introduced in two additional regions where new road construction
projects are envisaged.
OSCE supports anti-corruption efforts in Tajikistan
The OSCE Office in Tajikistan brought together international
expertise, key state representatives and civil society to increase
knowledge of international anti-corruption standards needed to
strengthen economic growth and security. The Office conducted workshops
on the essentials of the UNCAC and worked with Transparency
International to further support state representatives and civil
society organizations. Under the Development Co-ordination Council,
which is composed of international organizations and donors in
Tajikistan, the Office has been selected to chair the newly established
Anti-Corruption Working Group. The goals of this Working Group are to:
(i) support the integration of anti-corruption measures in joint
development initiatives between development partners and the
government, (ii) provide forum to engage in dialogue between the
international community and the government on progress towards meeting
the obligations of international anti-corruption treaties and
initiatives to which Tajikistan is committed, including, but not
limited to UNCAC, FATF, the OECD Istanbul Action Plan, (ii) provide
structured coordination mechanism with civil society and other public
bodies on anti-corruption issues and initiatives.
working together for progress
There is still a strong need in the OSCE region for technical
support in drafting and revising current normative frameworks that
complies with international standards on anti-corruption, AML and CFT.
Capacity building measures are also needed to allow the effective
enforcement of such standards and norms as well as enhance co-operation
at national and international levels.
It is paramount to avoid fragmentation of efforts in preventive and
repressive measures to combat corruption, money laundering and the
financing of terrorism. In particular, there is a strong need to
enhance trans-national co-operation among participating States as well
as other international actors, as well as co-ordinate at national level
between relevant agencies, central and local authorities.
The OSCE/OCEEA and the OSCE Field Operations have pursued co-
ordinated efforts aimed at delivering training activities, raising
awareness through national, regional and international events, and
providing technical advice and support to drafting and implementing
legislation in line with the Dublin Declaration principles. The
challenge is to avoid duplication and complement the mandates and on-
going activities of other international actors, through joint
programming, agreements, and collaborations. Indeed the field presence
and the long-standing OSCE confidence-building expertise and platform
will continue representing the added value of the Organization vis-a-
vis its current and future partners, such as the UN, OECD, Council of
Europe, World Bank and others.
Particular attention will be devoted to the promotion of national
risk assessment mechanisms among pS to identify vulnerabilities and
threats of money-laundering (ML) and financing of terrorism (FT) and
strengthen the capacities of Financial Intelligence Units to undertake
financial crime investigations on ML/FT and corruption. The OSCE/OCEEA
will also continue supporting training activities to develop increased
awareness, professional capacity and knowledge in prevention and
repression of corruption and ML/FT. The training activities will be
designed for public officials and representatives of the private sector
and the civil society.
The OCEEA will also continue supporting its partner organizations
in awareness raising activities and delivery of training programmes,
building upon established contacts, local presence and relevant
expertise.
Furthermore, the OCEEA will endeavour to mainstream good governance
in its economic and environmental activities by incorporating
transparency, anti-corruption and AML/CFT elements where relevant. Good
governance aspects, already introduced in the field of cross-border
trade and transport facilitation and border management, will also be
available in the areas of gender-sensitive labour migration and women
economic empowerment. The OCEEA will also devote particular
programmatic attention to the activities in the area of corruption
prevention, thus also recognizing the importance of the Chapter II of
UNCAC on ``Preventive Measures''.
Also, the OCEEA will continue to work with the OSCE's 15 Field
Operations as the latter support their host countries in implementing
their good governance commitments, including rendering support in
developing anti-corruption and anti-money laundering legislation and
guidance.
Prepared Statement of Khadija Ismayilova
Dear Mr. Chairman, I am grateful to the U.S. Helsinki Commission
for holding this very important hearing and for giving me the
opportunity to speak about corruption in Azerbaijan.
I am a contributor to Radio Free Europe/Radio Liberty, which is a
leading source for independent news for Azerbaijanis, despite being
banned on local broadcast frequencies in Azerbaijan. The radio has the
leading role in uncovering corruption in the country.
Azerbaijan has joined the Open Government Partnership, initiated by
U.S. President Obama and Brazilian President Rousseff in 2012. In a
letter of intent in October 2011, Azeri Foreign Minister Mammadyarov
informed his American counterpart U.S. Secretary of State Hillary
Clinton about Azerbaijan's long history of combatting corruption.
Azerbaijan has undertaken number of commitments within the context of
its participation in OGP, including access to information. However, in
the very same 2012, Azerbaijan has changed its legislation to restrict
access to information.
Since June 2012, when the laws ``On state registration and state
registry of legal entities'' and ``On commercial secrets'' have been
amended, information about the founders of commercial legal entities
and their shares in the charter capital is considered confidential.
With the same legislative move the law ``On the right to obtain
information'' had been changed. The new version of the law states that
information deemed contrary to the purposes of the protection of
political, economic, military, financial and credit and monetary
interests of the Republic of Azerbaijan, to the protection of public
order, health and morality, protection of rights and freedoms,
commercial and other economic interests of other individuals, ensuring
the prestige and impartiality of the court, shall not be released even
following information requests.
These legislative actions were the government's response to a
series of journalistic investigations revealing high level corruption
and conflicts of interest, including involving the president's family.
The facts cited in those investigations show that the families of
the Azerbaijani president and several ministers are beneficiaries of
monopolies in most of the non-oil sector of the economy. Thus, the
president's daughters control more than 70 percent of mobile
communications and one of two backbone internet providers, control
assets in the three biggest holding companies (AzEnCo, Pasha Holding
and Ata Holding) and several banks. The holdings and companies
controlled or linked to the president's family enjoy biggest public
contracts. In most of the cases the ownership of the companies has been
hidden behind a chain of offshore companies registered in Panama and
British Virgin Islands.
Most high-profile visitors to Baku, including members and staffers
of the U.S. Congress, stay in the Four Seasons Hotel, which is part of
the president's family's company. Over 30 architectural sites,
including part of the ancient city wall, were destroyed during the
construction of the hotel. This and several other business endeavors of
the president's family have cost many ordinary Azerbaijanis their
property. The citizens have failed to restore their property rights in
the courts of Azerbaijan. Those whom the government has failed to
intimidate have sought justice in the European Court of Human Rights.
Even the construction of the National Flag square, which was
presented as a symbol of pride for Azerbaijanis, has become an
unfortunate example of corrupt practices. The government allocated 30
million AZN ($38,5 millions) to build ``the highest flagpole in the
world.'' The 162 meter-high flagpole kept its supremacy only for
several months, as Tajikistan, another OSCE member country also leading
in corrupt listings, has built one that is higher by two meters. The
contract for building the flag square was granted to AzEnCo, a company
owned by President Aliyev's daughters.
Azerbaijan is a part of the Extractive Industry Transparency
Initiative since 2004. As in many other global initiatives, the
Azerbaijani government uses the membership as an argument against
criticisms of corruption. The country is currently under scrutiny by
EITI, as one of the main parts of the Initiative--civil society--is
paralyzed and cannot serve as a watchdog. In non-oil extractive
industries government-linked monopolies have a huge stake. In 2007 the
government of Azerbaijan signed a contract to develop six gold and
copper mines with a consortium that is co-owned by President Aliyev's
daughters.
The oil-related extractive industry is partly under oligarchic
control as well. Offshore companies, hiding Azerbaijani names and
linked to the State Oil Company's management or the president's
family's businesses, appear as partners in joint ventures, winning oil
production and trade contracts.
Investigations also reveal that the transportation minister's son
and his business partners enjoy exclusive opportunities in the public
transportation sector of Azerbaijan. The money, the source of which is
highly questionable, is being invested by Mr. Anar Mammadov in lobbying
activities in the United States through the Azerbaijan-America
Alliance. The lobbying events are attended by number of the U.S.
Congress.
Unlike U.S. officials and members of Congress, Azerbaijani
officials and members of parliament do not file asset declarations. The
Azerbaijani president signed a decree requiring to do so, but none of
the officials, including the president himself, has ever filed a
declaration, referring to the fact that the Cabinet of Ministers has
neglected to create a template for such a document.
The candidates for the presidency and parliament are required to
fill in a form declaring their assets, however, this information is not
provided. I sued the Central Election Commission for refusing to
provide this information.
Investigations reveal that some members of the Azerbaijani
parliament own businesses. A constitutional requirement to stop their
mandate in case of a conflict of interest is neglected.
Corruption in Azerbaijan undermines not only the well-being of the
country's citizens but also endangers the country's independence.
Corruption in education and healthcare puts people's lives at risk, and
as a solution, they seek remedy in neighboring countries.
You might have heard many times from Azerbaijani interlocutors that
the country exists in very difficult geography: it is sandwiched
between Russia and Iran. These are the two main destinations for people
who fail to find healthcare and jobs in Azerbaijan. Monopolies and
corruption in Azerbaijan have created a huge problem with the
availability of basic services. According to WHO data, Azerbaijanis pay
70 percent of their healthcare expenses, even though the country claims
to provide medical care for free.
The country has failed to establish an insurance system. The Soviet
style healthcare management is corrupt, and the failure of the
education system and drug monopolies make it impossible for
Azerbaijanis to receive even basic medical services in the country. The
solution is right there, next door, in Iran. Azerbaijani citizens enjoy
healthcare services there at far more affordable prices than in their
own country. Iranian government and private clinics attract more
Azerbaijanis by providing special promotion packages. According to the
Iranian embassy in Baku, every year 800,000 citizens out of a
population of ten million Azerbaijanis travel to Iran for healthcare.
Millions of Azerbaijanis still depend on remittances coming from
guest workers in Russia--those Azerbaijanis who could not find
opportunities in their own oil-rich country and have left to earn their
living on the territory of their northern neighbor.
Azerbaijanis will feel the full impact of corruption and
mismanagement when the oil money runs out. A devastated economy and
environment, in addition to the lack of savings for the future, may
become a cause of societal unrest in foreseeable future. Seventy
percent of Azerbaijan's budget comes from oil production. Oil is the
main commodity of Azerbaijan, making up 92 percent of its exports.
Oil fuels corrupt construction projects, which create temporary
employment. The so-called ``white elephant'' projects like the concert
halls for Eurovision or stadiums for the Euro Olympics will hardly
return investments and help Azerbaijanis earn a living in the post-oil
period.
The state procurement system has become more transparent in the
past two years, however it still fails to allow access to information
enabling citizens to monitor procurement procedures. Even with minimum
access to information, using public sources, journalists have revealed
facts of corruption.
Azerbaijani journalists and NGOs combatting corruption pay a
personal price for these efforts. The country's broadcast media is
under state control, Azadliq newspaper, the only newspaper that
publishes investigative reports about the president's family, is barred
from nationwide distribution and faces financial difficulties, and RFE/
RL, BBC and VOA are banned on local broadcast frequencies. Online
penetration is not good enough for the internet to become a substitute
for TV. Weekly satellite TV programs from abroad are being jammed. The
individual journalists who investigate corruption are being punished by
intrusion into their privacy and smear campaigns in pro-government and
the ruling party's media, and they are labeled enemies of the state. In
some cases the journalists are being subject to enormous libel fines,
even in cases when their story was not libelous.
The latest wave of pressure on NGOs has targeted the remnants of
the research centers and media support institutions. The bank accounts
of those NGOs are frozen, and leaders have had to leave the country or
hide.
With the downgrading of the OSCE's mandate inside the country, most
of the projects related to media and combatting corruption have
stopped. The government of Azerbaijan has not approved any of the
media-related proposals of the Baku project coordinator's office.
Investigative journalists in Azerbaijan have done their best to
show the government where the problems are. In fact, the system of
corruption in Azerbaijan is managed from the top, and top government
officials are the main beneficiaries of corruption. Recent reforms made
the corruption even more centralized, leaving less room for low-level
officials to participate in corruption schemes.
And here I want to mention a positive part of the story. I want to
single out the partial reform of the public service, in particular the
establishment of so-called ASAN (easy) services. ASAN is an agency of
the Azerbaijani government which provides a variety of public services
to citizens. Services are made available at public service halls
throughout the country. Currently, ASAN endeavors to provide over 50
services at the main location in Baku.
These islands of good governance show that the Byzantine style of
business is not a destiny for Azerbaijanis, and that public servants
can be professional and effective when they wish. Although there are
some open questions related to ASAN procurements, the agency has
decreased petty corruption in many areas of service. However, the
service is yet to become a nationwide provider of public services and
lacks authority in key areas like custom clearances, NGO registration,
etc.
Even these islands of good governance though cannot reduce all the
risks. Does the Azerbaijani government understand the risks of
corruption? It probably does, although the overall system is based on
every citizen's contribution to corruption and lies. As Alexander
Solzhenitsyn has described in his essay, ``Live Not By Lies,'' the
system, designed by the Soviet KGB, depends on everyone's
participation. Azerbaijanis are tempted to pay bribes to ease their
lives on many occasions every day. The country has failed to complete
the land and property registry of the capital city, leaving up to
500,000 households outside the law. Doctors and teachers, who receive
$150 monthly salary, are forced to demand bribes. An analysis of cross-
border trade statistics of neighboring countries shows that Azerbaijani
customs have hid imported goods worth billions of dollars. The non-
registered goods end up in the black market and create illegal
businesses. Hundreds of thousands of Azerbaijanis have become forced
accomplices of the corrupt system, thus becoming vulnerable and silent,
making it easier for the government to suppress and rule.
Here I want to speak on how the global powers of the international
community can help Azerbaijanis to stop living by lies.
International institutions must pay more attention to the
development of investigative journalism. Bad guys know how important
investigative journalism is, and they invest a lot of money in buying
out the broadcasters and silencing journalists. Good guys should know
its importance as well.
The Azerbaijani government had been successful in jamming hour-long
satellite TV programs, but it will be impossible for them to jam 24/7
programming. Azerbaijanis should receive 24/7 TV broadcasts of
independent content which will not only inform the citizens on what is
going on inside the country, but also become an alternative source of
news to what is coming from Russia.
Azerbaijan needs to be held accountable to the Open Government
Partnership and fulfill its commitments by granting access to
information and by stopping harassment of journalists.
Prepared Statement of Shaazka Beyerle
Thank you Chairman Cardin and Co-Chairman Smith for your leadership
in drawing attention to the threats and injustice caused by corruption,
in particular in OSCE participating States. It's a deep honor to
participate in this hearing and a pleasure to share with you
conclusions and recommendations from new research on the positive role
of citizens in impacting corruption, including in the OSCE region.\18\
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\18\ My testimony is presented in a personal capacity. It does not
reflect the views of the entities to which I am professionally
affiliated.
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Today the U.S. Congress will commemorate the 25th anniversary of
the nonviolent Velvet Revolution and will honor the late Vaclav Havel
by unveiling a bust of him in the Freedom Foyer. Since the sound of
shaking keys rang through the air in Prague, citizens continue to fight
and impact impunity. Over the past 17 years, around the world and in
some OSCE countries, literally millions of people have wielded
nonviolent power to gain freedom--freedom from corruption.
During this testimony, I will cover three points: (1) the role of
citizens and civil society in the anti-corruption equation; (2)
recommendations on how the U.S., EU and the OSCE can assist
participating States to help create an enabling environment for civic
anti-corruption initiatives; and (3) what the broader anti-corruption
struggle in the OSCE region can learn from organized civic initiatives
targeting graft and impunity. I hope that this brief overview will
stimulate your interest and prompt questions.
The following testimony is based on an international, evidence-
based, research project I conducted to identify, document and distill
general lessons from organized, sustained civic initiatives wielding
people power to fight graft and abuse, gain accountability and win
rights and justice. It examined the skills, strategies, objectives and
demands of such civic initiatives, rather than the phenomenon of
corruption itself. The focus was on what civic actors and citizens--
together exerting their collective power--did or are doing to curb
corruption as they themselves define and experience it. Sixteen cases
were documented and analyzed in-depth from among the following
countries: Afghanistan, Bangladesh, Brazil, Egypt, Guatemala, India,
Indonesia, Kenya, Mexico, Philippines, South Korea, Uganda, and the
OSCE member countries, Bosnia and Herzegovina, Italy, Russia, and
Turkey. Please refer to the Appendix for a summary of the cases and
their outcomes.
The good news is that citizens--organized in nonviolent campaigns,
movements and community initiatives--are vital protagonists in
combatting corruption. As importantly, these are homegrown efforts that
do not involve huge financial outlays. Most don't seek financial
support from external sources. It's the ingenuity, courage, resources,
and voluntary participation of ordinary people that provide the
foundation for action. They have achieved notable outcomes, for example
in the OSCE region:
Resignation of Nedzad Brankovic, the Prime Minister of the
Federation of Bosnia and Herzegovina halfway through his term (2009);
Over 1000 businesses to date publicly refusing to pay extortion
money to the Cosa Nostra mafia in Palermo, Italy (ongoing);
Judicial investigations, trials and verdicts to undermine the links
between the state, organized crime, elements of the police, gladios
(paramilitary groups linked to state security institutions), and parts
of the private sector in Turkey (1997);
Targeting corruption and impunity in Russia to prevent the
bisection of an old-growth, state-protected woodland outside Moscow for
a large highway and illegal development involving the French firm,
Vinci (ongoing).
For your information, the latter Movement to Defend Khimki Forest
in Russia is employing both nonviolent action and legal measures. The
European Bank for Reconstruction and Development (EBRD) and the
European Investment Bank (EIB) pulled out of the project. In June 2013,
Sherpa, the French human rights lawyers' group, along with other
European NGOs, filed a formal complaint of corruption against Vinci
with the Paris Prosecutor. In October 2013, the Prosecutor announced
the opening of a preliminary enquiry into financial crimes. While it's
not possible at this juncture to know the outcome, as a result of this
movement, earlier this year most of the forest has not been destroyed
(1700 hectares out of 2000 hectares) and felling came to a standstill.
And recently in Hungary--thousands mobilized against a corrupt,
increasingly authoritarian government and an internet tax designed to
thwart the free flow of information.
During my research, I asked some civic actors what they needed from
external actors. Here are a few of their replies. First, the
international community (of course including the U.S., EU and OSCE)
should look beyond formal NGOs and pay attention to civil society
organizations and informal civic groups leading nonviolent campaigns
and movements against corruption. They have valuable input about top-
down efforts to combat corruption as well as insights about what is
actually happening on the ground. On a positive note, Evgenia
Chirikova, the leader of the Movement to Defend Khimki Forest, has
testified before the U.S. Congress and European Parliament.
Second, be open to engaging with civil society and homegrown
movements and campaigns in capital cities and diplomatic missions on
the ground (when such contact is sought by them). Grass-roots civil
society leaders can be included in government-sponsored international
forums and received in capitals, while embassies and missions can
genuinely interact with them.\19\ For example, the Czech Ministry of
Foreign Affairs created the ``Transformation Policy Unit'' to ``enable
embassies to support democratization, human rights and transition-
related projects in countries with repressive regimes.'' \20\
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\19\ Two excellent resources for such engagement are: A Diplomat's
Handbook for Democracy Development Support, 2nd ed. (Washington, DC:
Council for a Community of Democracies, 2010) Veronique Duduouet and
Howard Clark, Nonviolent Civic Action in Support of Human Rights and
Democracy (Brussels: Directorate-General for External Policies, Policy
Department, European Parliament, May 2009)
\20\ A Diplomat's Handbook for Democracy Development Support, 29.
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Third, civic anti-corruption actors implore the international
community to provide protection and solidarity (when they request it).
Threats and repression are the norm rather than the exception.
Moreover, there are wider strategic benefits to international attention
and condemnation of crackdowns. Protecting civic actors can potentially
empower many more citizens. Solidarity can make repression backfire. It
thwarts corruptors' objectives to paralyze civic dissent; create public
fear, despair and apathy; prevent unity among anti-corruption networks
and organizations; and obstruct alliances with other nonviolent
struggles, for example, for democracy, gender equality, minority
rights, and land rights.
Based on my research, allow me to also offer these additional
recommendations. Some are not new, but reinforce good practices already
under way. In cases where civil society initiatives seek external
funding, provide donor support for self-organization and capacity-
building in the civic realm that supports home-grown approaches and
taps pre-existing social networks and relationships. The worst thing
international actors can do is throw large sums of money at homegrown,
grass-roots civic initiatives and encourage their institutionalization
into formal, conventional NGOs. What can be of help in some
circumstances are flexible, small grants that enable experimentation,
pilot efforts, an expansion of outreach and activities, and peer-to-
peer learning exchanges among civil society actors in-country and
across borders.
When it is wanted, provide solidarity, legal and technical support,
and access to information that civil society may not be able to acquire
in-country. Information is often a critical asset for anti-corruption
civic initiatives. For example, attention from global personalities, as
well as legal measures and beneficial ownership investigations carried
out by international civil society organizations were invaluable for
the Movement to Defend Khimki Forest.
Amplify civil society voices through various outlets. For instance,
where in-country civic entities investigating corruption are blocked
from the media, and provide support for alternative modes of
communication, such as online civil society information and news
outlets, satellite television programming, and multi-lingual
international outlets such as Radio Free Europe/Radio Liberty and
Deutsche Welle. I understand there is hope for a bill to revamp RFE/RL
that cleared the House of Representatives and is now in the Senate.
Recognize that top-down multilateral instruments (including the
United Nations Convention Against Corruption) and democratic mechanisms
in third-party countries can both directly and indirectly support civil
society movements and campaigns targeting corruption and impunity. For
example, the Paris Prosecutor investigation of Vinci, hearings in
legislative bodies such as the one today and others in the European
Parliament, and decisions taken by multilateral institutions (including
the European Investment Bank and European Bank for Reconstruction and
Development) can disrupt and expose corruption targeted by grass-roots
civic initiatives, protect civil society, and undermine malfeasance.
Target global financial corruption. Legislative and institutional
measures to curb illicit financial transactions, money laundering and
the conversion of ill-gotten gains into legitimate businesses and
luxury properties can disrupt the overall system of corruption that
civil society is combatting in OSCE participating States. Voices from
civil society herald the Magnitsky Act. They call for the Act's
application to be rigorous and wish it would be extended both in terms
of scope and countries. I'd like to thank you, Senator Cardin, and also
Senator John McCain, for your efforts to extend the law's reach through
the Global Magnitsky Human Rights Accountability Act. I was present in
the hall when Sergei Magnitsky's mother, Natalia, received the 2011
Transparency International Integrity Award, given to her son
posthumously. I'll never forget the sorrow etched in her face, in spite
of her composure and dignity.
In conclusion, allow me to summarize what we can learn from grass-
roots, civil society campaigns and movements impacting corruption.
First, citizens can add extra-institutional pressure to push for
change--when powerholders are corrupt and/or unaccountable and
institutional channels are blocked or ineffective. Traditional top-down
approaches were based on a flawed assumption that once anti-corruption
structures are put in place, illicit practices will change. Those who
are benefitting from corruption are expected to be the ones to curb it.
This helps us to understand why, in spite of so many top-down efforts,
success is often elusive. Even when political will exists, it can be
thwarted, because too many people inside the corrupt system have a
stake in the crooked status quo.
Second, we can learn new strategies from citizen engagement and
action that go beyond the traditional carrot versus stick approach.
Graft and abuse function in systems. They are not simply a collection
of random dishonest transactions.\21\ I found that citizen movements
and campaigns developed strategies and actions that: (1) disrupted
systems of corruption (2) empowered and protected reformers and
integrity champions inside the state who inevitably faced corrupt,
often hostile, vested interests; (3) empowered honest individuals
caught in venal systems to say no, that is, to avoid engaging in
corruption. At the same time, these civil society initiatives often
pursued longer-term goals of changing behaviors, practices and general
norms regarding corruption.
---------------------------------------------------------------------------
\21\ My preferred definition of corruption is: a system of abuse of
entrusted power for private, collective, or political gain--often
involving a complex, intertwined set of relationships, some obvious,
others hidden, with established vested interests, that can operate
vertically within an institution or hortizontally cut across political,
economic and social spheres in a society or transnationally. This
systemic definition was developed by the author, who wishes to credit
for inspiration, points made by Maria Gonzalez de Asis, World Bank, in
an unpublished, working paper.
---------------------------------------------------------------------------
Third, top-down and bottom-up approaches are complementary (not
mutually exclusive). Both are needed and together, they create
synergies. Citizen engagement and action can:
Empower and protect honest powerholders and integrity
champions pursuing accountability, reform and change from
within the system;
Empower and protect honest state officials caught in a system
of corruption to refuse to go along with it, i.e.,
noncooperation with corruption;
Create political will to enact policies, laws and
administrative mechanisms to curb illicit financial flows and/
or to implement them;
Contribute to changing behaviors, practices and general norms
regarding corruption and, potentially, illicit financial flows.
Fourth, citizens do not fight corruption in the abstract. Rather,
it's linked to widely shared grievances and venal practices that
produce collective outrage or harm regular people in their everyday
lives. Fifth, citizen action targeting corruption is most often found
in societies enduring poor governance, poverty, low levels of literacy,
and severe repression, the latter perpetrated by the state,
paramilitary groups, or organized crime. This finding, corroborated by
research from the nonviolent resistance, democracy and development
realms, overturns the misconception that citizen engagement is
dependent on various conditions, such as civil liberties, a functioning
democracy, relatively sound levels of social and economic development,
political space for dissent, etc.
In conclusion, I'd like to honor the leaders, organizers and
regular citizens who are combatting corruption in spite of intimidation
and repression. They prove that while corruption brings out the worst
in people, fighting it can bring out the best. Thank you, Chairman
Cardin and Co-Chairman Smith.
RFE/RL's Coverage of Corruption in the OSCE Region
November 17, 2014
Azerbaijan
RFE/RL's Azerbaijan Service has a long history of exposing
corruption within the Azerbaijani government. RFE/RL reporter Nushabe
Fatullayeva teamed up with contributor and investigative reporter
Khadija Ismayilova on a series of investigative reports that linked
family members of President Ilham Aliyev to several massive financial
corruption schemes. Subsequently, Ismayilova has become a target of
smear campaigns and spurious legal investigations that, most recently,
have prevented her from testifying on corruption issues before the U.S.
Congress and in other international fora.
The Azerbaijani Service hosts a web portal, ``Korrupsiometr,'' that
provides information on the latest laws and regulations in the country,
lets Azeri lawyers respond to audience questions on anti-corruption
issues, and serves as a discussion forum for people impacted by
corruption.
Ukraine
The Ukrainian Service has launched a nationally-broadcast
television program, ``Schemes,'' that examines various deals and
allegations of corruption that helped spark the Euromaidan movement.
The program exposes the lavish lifestyles of former senior Ukrainian
officials and documents various government employees receiving gifts.
Widely-seen episodes have exposed financial misappropriations of
former minister Mykola Zlochevsky and excessively lavish lifestyles of
former oil and gas officials Serhiy Katsuba and Yevhen Bakulin.
Armenia
RFE/RL's Armenian Service routinely exposes corruption, conflict of
interest, abuse of power in the country. A Service journalist recently
uncovered a story about Armenian oligarchs exploiting local resources
for big gain while penalizing small farmers. Another story shed light
on the Yerevan city government's excessive--and ultimately wasted--
expenditures that inflamed environmental and anti-corruption activists
alike.
In October, an RFE/RL story exposed the potentially illegal income
of a top state Justice Ministry official, Mihran Poghosian, who has
been the source of public criticism for questionable accumulated wealth
while in state service.
Uzbekistan
The Uzbek Service worked with Sweden's SVT public television
broadcaster in 2013 to publicize documents that demonstrate alleged
links between Gulnara Karimova, the daughter of Uzbek President Islam
Karimov and Swedish telecoms giant TeliaSonera. In the documents,
TeliaSonera is asked to pay hefty bribes in exchange for protection
from government agencies and an infusion of new clients, and Karimova
appears to be personally dictating the terms of the negotiations.
Russia
RFE/RL's Russian Service helped uncover the massive corruption,
environmental damage, and toll on local residents and migrant workers
that surrounded Russia's preparations for the 2014 Winter Olympics in
Sochi, with its ``Sochi: Outside The Arena'' investigative report.
Belarus
RFE/RL's Belarus Service is the only media working in Belarus to
report on corruption cases in detail--in cities such as Homel, where
the mayor, two vice mayors and several top police officials have been
arrested on corruption charges, and in state-owned industries such as
the oil company ``Belneftekhim,'' a wood-processing factory in
Babruisk, and a food plant in Minsk.
Bosnia
RFE/RL's Sarajevo bureau launched a multimedia project that
investigated cases of failed privatizations of state-owned enterprises
in Sarajevo, Mostar, Banja Luka and other Bosnian cities.
A Balkan Service report also looked into the failed privatization
of the ``Aluminij'' plant in Mostar, one of Bosnia's biggest exporters.
The company, which once employed several thousand workers, now only has
several hundred employees and is facing closure.
Another report exposed a massive customs and tax fraud case in
Bosnia that has subsequently led to the arrest of Kemal Causevic, the
former director of the Bosnian Indirect Taxation Authority (UIO), along
with 39 others, mostly tax officials accused of abuse of power, tax
evasion and money laundering.
Kosovo
The Balkan Service has dedicated a web page, ``Monitor Corruptus'',
to its coverage of the fight against government corruption in Kosovo.
The page features a link that allows viewers to upload content directly
to the site, and provides a direct link to the Kosovo Anti-Corruption
Agency that enables users to report corruption cases directly to the
agency.
The Service is also working with the Center for Investigative
Journalism (CIN) on a series of reports on issues related to corruption
that have been featured on the Service's regional and national programs
and re-used by other media outlets throughout the region.
Macedonia
The Balkan Service's Macedonia Unit, in cooperation with local
NGO's, created a series of reports as well as a special web page on
corruption connected with the Macedonian government's ``Skopje 2014''
project. As a result, other media outlets in Macedonia have begun to
report on corruption linked to the Skopje 2014 project, and the
government has been forced to admit that the cost of the project
exceeds the amount previously reported.
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