Challenges and Opportunities in the Fight Against Corruption

Daniel Bruce

Evening everyone. A very warm welcome to Chatham House, on what is International Anticorruption Day 2019, and here we are for the Transparency International Annual Lecture. My name is Daniel Bruce. I am the Chief Executive of Transparency International UK. I’m going to kick off with a few of the usual housekeeping points, very briefly. Firstly, for the avoidance of doubt, please note that this evening’s proceedings are on the record. The evening is being filmed and livestreamed on the Chatham House website, our website, and on the usual social medial channels. You are encouraged to take part in the conversation. If you are active on social media, there are a range of hashtags that you can use: #IACD2019 for International Anticorruption Day, the rather natty #TILEC2019 for the lecture, which I think is on the screen, to the side of me here and #CHEvents, which references our venue here at Chatham House, and on which I would like to offer my very sincere thanks to Chatham House and their team for hosting us and supporting us with the event here this evening.

I would also like to observe that there is a lot of synergy, I think, between the interests of Chatham House and Transparency International, when it comes to the world of anticorruption. Chatham House has been doing some very interesting work around social norms and cultural norms and their relationship with corruption in West Africa, which I think will be particularly pertinent to our conversation. But before I formally turn to introduce tonight’s annual lecture speaker to you, just a few headlines on the work of Transparency International, over the course of 2019.

You’ll all be perfectly aware that this has been a year where corruption and allegations of corruption have never been particularly far from the headlines. Whether that’s allegations of money laundering, the purchasing of political access and influence, opaque defence contracts, or price fixing in the pharmaceuticals industry, I’m afraid the list goes on, as I’m sure you’re aware. And it’s for that reason that I believe the work of Transparency International and our partners is more important and urgent than it ever has been.

Just a couple of months ago, we produced a report entitled ‘At Your Service’, which examined really, forensically, for the first time, the extent to which the UK service industry had become embroiled in some of the most high profile corruption scandals of recent decades. We looked at 400 proven cases of corruption, involving some £325 billion of suspect funds. What we found was that nearly 600 UK companies and institutions had often inadvertently become embroiled in laundering the funds and reputations of some of the world’s most corrupt individuals. These are funds, which have touched the legal profession, estate agents, accountancy, higher education, private schools, interior designers, and architects, to name but a few. And what is really important to stress here is that none of these institutions, the majority of them, knew that this was happening to them, and most of them had not broken the law. But this is why this is such a big problem and it’s why Transparency International will continue to call for a strengthening of the UK’s defences against dirty money.

But why should it matter if these laundered funds end up here in the UK? Well, firstly, this country is obviously on a cusp of making significant decisions about its future relationship with the rest of the world, and there is a choice here. We can either commit ourselves to remaining a beacon of good governance and the rule of law, where there is no hiding place for corrupt capital, or, on the other hand, far more worryingly, we could see a backsliding of many of the commitments that have been made to tackle corruption. And to borrow from the words of my predecessor, Robert Barrington, allow the UK to become a buccaneer, floating off the shores of Europe. And of course this matters, as I’m sure everyone in this room knows tonight, because the proceeds of corruption are so often those which have been stolen from the public purse in low and middle income countries, therefore depriving some of the poorest and vulnerable in global society of access to the most essential services that they need the opportunity to prosper and to live their lives with dignity and independence.

Also, this year, we produced a study on our Global Health Programme called ‘The Ignored Pandemic’, which looked at the extent to which corruption has infected the global healthcare delivery system. The statistics are grim. 140,000 children die every year, as a result of corruption in global healthcare. $500 billion, that’s around 7% of global spend on health is lost every year to corruption, and it’s worth noting here that the World Health Organization estimates it would only take $370 billion to achieve the Sustainable Development Goals for health. This simply cannot go on and we must be able to redouble our efforts collectively, to tackle the connective tissue of corruption.

Now, some of you will know that I have only been in this post for a couple of months, and a great privilege it has been so far. However, I’m already starting to lose count of the number of occasions why I’m having to explain to our earnest stakeholders why we don’t have the resources yet to open up another seam of work on another pernicious area of corruption, of which there are many. So, I thank you all for your support and interest here tonight, and I hope that you will consider how you might deepen that support, over the coming months and years, as we journey on from here together.

Now it’s my great privilege moreover to be the warmup act for somebody who needs little, by the way, of introduction, but as a quick refresher, as I may, as I introduce the Transparency International Annual Lecture Speaker for tonight. This is an Author, a Politician, a former Diplomat; a man whose penchant for walking has taken him on foot across the likes of Afghanistan, Iran and Pakistan and elsewhere, a former Minister of State of various portfolios, the former Secretary of State for International Development, the most recent Member of Parliament for Penrith and The Border, and now an Independent Candidate for the London Mayoral race in 2020. Will you please give a very warm welcome to Rory Stewart OBE [applause].

Rory Stewart OBE

I’m going to try, rather incompetently, to operate this whiteboard. Can you hear me clearly, being the first question? So, can I just begin by trying to frame this conversation a little bit? How many people in this room, please stick your hands up if you consider yourself a specialist on the subject of corruption? Okay, so we’re looking at about a third of the room. Okay and how many of you feel that you don’t have very clear ideas about what corruption is at all? Okay, very good. Okay, let’s start a little bit with this, then I want to get into three or four case studies. So I’m going to try to touch a little bit on Iraq, I’m going to try to touch on Britain, and I’m going to touch a little bit on South Sudan. But can we start, please, with somebody suggesting a decent operating definition of corruption, somebody? Yes, so stick their hand up. Give me a definition of corruption.

Member

Any tax in governments for the private sector that is packed and it’s trying to cover the – looking good to the customer or the government suppliers.

Rory Stewart OBE

Right, so it’s abusing the client or not performing the correct function. Somebody else. So it’s a question of incorrect performance, yeah. Someone else want to give me a stab here? Go on, let’s have a corruption specialist here, go on, yeah.

Member

There’s the classic George Mooney Stewart’s definition, which I think was something like the perversion of public finance for private gain.

Rory Stewart OBE

Very good. Or a public role for private gain, potentially, yeah. Okay, let’s have one more. One more, somebody. Yeah, go on, sir.

Member

Distortion of an outcome through undue influence for a school or there can be bullying, so it’s a distortion of outcome.

Rory Stewart OBE

So, undue influence, leading to the distortion of an outcome. Okay and finally, I’m going to just quickly, for those of you in the room who are not specialists, just give you the forward, the 65-page UN Convention Against Corruption of 2006. So, the United Nations, in this grand document, 65-page document says, “Corruption is an insidious plague that has wide range of corrosive effects on societies. It undermines democracy,” I’m going to come back to these words, “and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life,” I’m not going to put quality of life up, “and allows organised crime, terrorism and other threats to human security to flourish.”

Now, the first thing I think that strikes one, when one puts that up on the board, is a sense of grand abstraction. It’s a sense that when one’s struggling with this word ‘corruption’ there is a challenge of specificity, a challenge of being local and particular, a challenge of trying to frame exactly what this thing is, which isn’t helped particularly by words like ‘markets, terrorism, rule of law, democracy, and human rights, all of which are in there own ways, enormous great bland abstractions, floating over the world, right?

So, let me just try to talk through a couple of examples of corruption, in order to try to get to get to the bottom of some of these issues. We heard a little bit from the wonderful Chief Executive, Transparency International, around the issue of healthcare. So let me give you two examples from two countries in Africa. Two programmes, each funded by the UK Department for International Development. Each of them, I think, £27 million a year. Each of them funding rural health clinics. Rural health clinics designed to see about 20,000 patients a year. Turn up to visit one of these clinics and you walk in and you see a very flourishing world. Great community engagement, fantastic medical records, some very dedicated Doctors, and indeed, almost 30,000 patients a year pumping through the clinic.

Turn up in country B, funded through the same programme, with the same amount of money, you find yourself in a clinic in which there are no medicines on the shelves, no sheets on the beds, human excrement on the floor, a fan on the ceiling, but no electricity within ten miles, with which to power the fan, no running water, and no patients insane enough to go anywhere near this clinic, right? Let me just pause for that for a second. So we have the same programme from the UK Department for International Development, we have the same quantity of money, we have the same model, we have the same objective, and we have two very different outcomes, right?

Anyone want to suggest what’s gone wrong in the second case? What’s gone wrong in the second case? So a hand up, please.

Member

Corruption.

Rory Stewart OBE

Corruption, hooray. Okay, alright. Okay, alright, and let’s keep going on this thing, because this is what I want to try to get at. We’ve got this word ‘corruption’. What does it mean? How does it work? How has this thing, the big ‘C’ word led to this problem in this clinic, right, somebody like to suggest? What might be going on, yeah?

Member

Embezzled funds.

Rory Stewart OBE

Embezzled funds, right, let’s pause for a second. A theory on the embezzled funds, how were they embezzled? Where were they embezzled? Where did they go? So, your theory is what, roughly? Your theory is that let’s say a million pounds was allocated to this particular clinic, but what happened? 70% of the money was taken, 10% of the money was taken, 50% of the money was taken, who took the money? Where was it taken? Somebody want to sketch this out, a theory on what happened, yeah?

Member

Central government took their cut, then the federal government took their cut, and the local Chief said, “Oh, this is my land, so if you’re likely to build this clinic on my land, then you probably need to provide me something with it, or I can help you, but you’ll need to use these people, who I also own. So we’ll overcharge you, so I can take the money off the top, so I can pay my brother to do X, Y, or Z.” Then…

Rory Stewart OBE

Okay, very good. Pause, pause, pause, pause, pause. Okay, very good. That’s very good. Very good. No, no, we’re going to go. We’re going to – no, I’m going to come back to you, ‘cause it’s very good, but you’ve got to pause. Keep your microphone. Okay, alright. What’s happening at the central government level? How is that money being taken? How are they getting hold of this money from the UK Department for International Development? What’s actually happening here? Because, of course, the UK Department for International Development must, itself, believe – forget – oh, sorry, I don’t want you to slander DFID. Imagine it’s some other international agency, right? The international agency, itself, will believe that it has transparent predictable and accountable financial processes. It will have an amazing reporting mechanism, it will have a whole number of Fraud Officers, a huge amount will be invested, everything will be published on the website, everybody will be very confident that when the 0.7% of GDP from the UK taxpayer is transferred to that country, the money hasn’t gone missing. So, what might have happened here at the central government? Somebody give me an example. Can you, perhaps? How might the money have been stolen?

Member

Bribes and kickbacks.

Rory Stewart OBE

Sorry, bribes and kickbacks. Possibly. I think unlikely, maybe. Although let’s talk about that. What could the bribe or the kickback be? Where could the bribe be going? Who said bribes and kickbacks? Who’s bribing who?

Member

Politicians.

Rory Stewart OBE

Right, and why are you bribing a Politician, for what?

Member

To award the contract.

Rory Stewart OBE

To award the contract. Okay, so the money has been given. Let’s say it’s come from the UK Department of International Development. It’s gone to the Nigerian Government and this money is now supposed to be finding its way down from the central government down to the clinic. So where’s the money going on awarding a contract? Why is that happening? It’s sitting with the Nigerian Ministry of Health, this money, right? Or probably with the World Bank that’s somehow in a partnership with the Nigerian Ministry of Health, where’s the money going? Where’s it leaking? Hmmm?

Member

The Health Minister.

Rory Stewart OBE

The Health Minister, right. What is the Health Minister using the money for?

Member

Probably Harrods’ shopping.

Member

A Rolls Royce

Rory Stewart OBE

Okay, could be Harrods’ shopping, could be a Rolls Royce, but probably not, actually. Probably something more interesting is going on.

Member

Other direct health requirements.

Rory Stewart OBE

Other direct health requirements, very good. Do you want to develop that a little bit for other people?

Member

Do you want an example?

Rory Stewart OBE

Please, with the microphone, yeah.

Member

Oh, sorry. So, I mean, you could be looking at fantastic to have a clinic, which maybe perhaps our government’s expectation of what is required in-country, but the Health Minister might actually have a more burning issue of getting vaccinations, maybe maternity care, or whatever, which it’s actually shaving the money off, to go and actually try and meet a need in-country.

Rory Stewart OBE

Absolutely. So, he may have a totally different strategic health vision, right? He may be focusing on vaccinations, rather than rural health clinics. He may simply have a perfectly sensible, logistical problem. He may just have no staff in his Ministry and no way of financing the basic staff in his Ministry. Nobody to operate the photocopier and nobody to open the door, nobody to man the security desk, nobody to do any of that stuff. In which case, he will begin allocating money from this project to try to cover the core costs of his Ministry, right?

So one of those was a strategic challenge, the other is a pure operational challenge. Okay, let’s think of something else that maybe ignoble and illegal, but it’s not about buying himself a Rolls Royce. What other thing actually, typically, does a Politician want money for?

Member

Buying votes.

Rory Stewart OBE

Votes, very good. Okay, thank you. So, he needs to use this money in order to fund his party machine, take himself into an election. That may be actually giving a bottle of Guinness to a voter. That may be printing your electoral literature. That may be hiring a van or a bus to drive around, trying to get the stuff out. Okay, very good.

Now we get down to the local level. Okay, anyone want to have any ideas on the local level, what might be happening on the local level? Almost certainly I would suggest all the same kind of movements. Now the District Local Health Officer, I’ve got rather a lot of priorities and I can’t really fund my health system. The whole thing’s creaking. It’s not really working. This money’s arrived, 20-30% less than I anticipated to receive has now arrived and I need to think what to do.

Right, then we have this very good idea about problems about the land, problems about the people. Why are there no medicines on the shelves? What’s going on, on the medicines on the shelves? Why no medicines on the shelves, anyone suggest?

Member

They resell them.

Rory Stewart OBE

Very good. Very good. Okay. There are two possible theories for why there are no medicines on the shelves. One of them is simply that you have awarded a contract to somebody to deliver the medicines and they haven’t delivered those medicines. So, you’ve gone to somebody in, I don’t know, somebody in Lagos, who’s going to make sure that the medicines are delivered, a contract’s been signed, money’s exchanged hands, it isn’t quite being delivered, you’re not quite sure why it’s not being delivered, but the individual concerned may be politically connected, so it maybe rather difficult to put pressure on them to try to resolve it.

More straightforwardly though, the person running the pharmacy in the clinic has their own private pharmacy half a mile down the road, into which the medicines go, so that the medicines can be sold right out of the pharmacy. Right, now, how on earth do you find any of this out? Right, imagine you are a curious DFID official. You notice that this clinic is a total catastrophe, how do you actually reconstruct this whole story?

Member

The independent auditors.

Rory Stewart OBE

Independent auditors, possibly, but how do they do their job? Anyone want to guess? How are the independent auditors going to find their way to working out whether the Health Minister used the money to pay off people in his office, or put ‘em into his electoral thing or bought a Rolls Royce, and whether the medicines have been stolen for this, that, or the other, or where is the contract from? How do you do this?

Member

Funds for analysis.

Rory Stewart OBE

So, sorry, sorry. A microphone here. A microphone here and then we’re coming back. This gentleman first. This gentleman first, then to you, sir, yeah, yeah. Go on.

Member

Funds for analysis and data analytics.

Rory Stewart OBE

Okay, talk more, sir.

Member

So, it seems, I suppose, you’ve got access to bank records, so that’s a challenge for a consultancy firm, but you know, bank statements, understanding ownership structures. And a lot of this information they’re going to get, I suppose, from interviews, if you’ve got the right people that are prepared to be candid.

Rory Stewart OBE

Okay, next, sir, yeah.

Member

Are you referring to the national chapter at TI or some other civil society organisation, which is focusing on corruption, because I submit that you’re making very heavy weather of this. The ways in which these funds will be collected and distributed is well known. There will be many people who know this. It doesn’t require PwC to be hired to carry out an audit. This is a well known system, which it won’t be very difficult to penetrate.

Rory Stewart OBE

Expand on that a little bit. It’s very interesting. Why’s it not very difficult to penetrate? Why’s it easy to know that the medicine’s being resold in the local clinic or that the Chief owned the land or that money’s going off to the party system or that other bits are being used?

Member

Well, for a case in medicine, because it will be well established that the person who is the Director of the Clinic has a close relationship with somebody else, who’s operating in the private sector for the sale and distribution of pharmaceuticals.

Rory Stewart OBE

Somebody want to disagree with that, yeah, come back?

Member

And they have barcodes and they can find out that this code is made and resold somewhere else.

Rory Stewart OBE

Okay.

Member

Track and trace.

Rory Stewart OBE

Track and trace, okay.

Member

Track and trace doesn’t work in a country that has its infrastructure that exists around the barcodes.

Rory Stewart OBE

Okay, very good. Okay, okay, okay, right. Now let me now jump forward. Let me now jump forward to my final case. Right.

Member

By the way, are you seriously saying DFID will only get its [inaudible – 23:47] down there?

Rory Stewart OBE

Sorry, am I seriously saying?

Member

Are you seriously saying DFID will only get this [inaudible – 23:52]?

Rory Stewart OBE

I’m not making a direct allegation against DFID. I certainly wouldn’t make a direct allegation against DFID. But I do think that yeah, certainly I have seen with USAD projects in Afghanistan, I have seen with Swedish projects in Afghanistan, I’ve seen with Danish projects in Afghanistan, and I have seen with DFID projects around the world, frequent examples of turning up to visit projects, with staff, and discovering that none of what they thought they paid for was actually there. There are many schools that have no roofs. There are schools where there is no school. There are lavatory blocks that are meant to be built for a community, built in the village Chief’s back garden. There are many examples of fans on ceilings where the electricity isn’t within ten miles, and it’s very, very difficult, actually, to get to grips with this, because of some of the problems we’re going to come on to.

Okay, let me just now jump to South Sudan, and before I get into South Sudan, how many people in the audience have been to South Sudan and know South Sudan? Okay, very good. Okay, four or five people. So I apologise to four or five people. Those of you who don’t know South Sudan very well, very quickly, right, South Sudan found itself embroiled in a series of very, very messy conflicts, from the late 194os onwards. Finally, really driven by initiatives, which were backed strongly by the United States, found itself, in the early 2000s, moving on a path towards independence, leading to a referendum, where they finally voted for independence from Sudan, with 99% of people voting for independence. At the moment of independence there were reasons for people to be optimistic, right? Reasons for the US administration and the international community to be optimistic.

For example, South Sudan had an enormous amount of oil. In fact, it went almost overnight it became a middle income country, with $2 billion a year of revenue. Relatively rapidly, however, that situation collapsed. It collapsed into a standoff in particular between after the death of John Garang, who’d been the leader, into a standoff, eventually, between Salva Kiir, who’s the current President, and Riek Machar, who was then the Vice President, and this represented itself in an ethnic division, largely in a conflict between Dinka and Nuer peoples, which then brought in many other peoples in South Sudan, of whom there are more than a 100 different ethnic groups, leading to approximately 380,000 people losing their lives, so it’s quite difficult to count, and a situation quite rapidly in which you saw Salva Kiir, for example, allocating 25% of the shares, in the major construction company bidding for government contracts, to his 11-year-old son.

Another Minister taking out $30 million in a month to cover office equipment, right? And in all of this, the question then is how the international community engages. So I want to try to move from my rather gloomy picture of that clinic, to the question on what can be done? What is it the international community really can do when it engages in a country like South Sudan? This was encapsulated in the South Sudan Development Plan, first draft 2005, second draft 2011, extended again in 2016, essentially a document written under the auspices of the South Sudan Ministry of Finance. But in practice, written by officials from the World Bank, USAID, DFID, the IMF, and indeed, International Consultants, coming in and producing this document, which is a couple of 100 pages long, and which focuses very, very strongly on the elimination of corruption.

So, in this document, various statements are made, and the first guiding statement, right, is that it’s important to address the root causes of South Sudan’s instability. And very rapidly, corruption is identified as being one of the fundamental things that’s making it impossible to run a state. Thereafter, on almost every page of the document are a series of commitments made by the Government of South Sudan, towards transparent, accountable and predictable financial processes. Again and again and page after page, they describe how the local government level, in a place like Malakal, they’re going to setup a system where it is going to be possible for the local government to do an equitable and transparent distribution of finances. It’s the word ‘governance’ appears again and again.

There is a commitment to a zero tolerance attitude to corruption. And in the whole document perhaps most striking is the words which don’t appear. So, in this entire document the word ‘Nuer’, the word ‘Dinka’ don’t appear. The word ‘gun’ appears twice, but the word ‘governance’ appears 146 times, okay? The word ‘church’ appears twice, and that’s quite an important instrument, ‘cause actually, it’s the Catholic Church that’s running most of these services in South Sudan. But the word ‘transparency’ appears over 100 times. The word ‘sustainability’ appears about 150 times, right? So, again and again the document is reciting these concepts.

The people writing this document would’ve been able to say to you, Amnesty International, as if you’d had dinner with them in Juba, and a Lebanese restaurant in Juba, and talked to them the night before they went in to write the document, they would have told you that the Cabinet of South Sudan was almost entirely composed of people who had been Militia Commanders. Who were directly responsible for the murders of many, many thousands of people, who had themselves removed probably eight or $9 billion out of the country, in a relatively short period, to bank accounts outside South Sudan, or invested in oxen inside South Sudan. And yet, they turn up the next morning and they produce this document.

Now this document it’s not an irrelevant document. This document is the fundamental funnel through which all the international funds are supposed to flow. Entire co-ordination mechanisms organised huge amount of pressure is put on the international community, to say that in the interests of co-ordination, you mustn’t create parallel processes. The money is supposed to run through the state, right? If you create parallel processes, in other words you just write cheques to Oxfam and Save the Children, how are you supposed to get the South Sudanese state off the ground?

Right, the South Sudanese state is supposed to have the legitimate monopoly on the use of violence. The South Sudanese state is supposed to control the distribution of the funds. The South Sudanese state democratically elected and accountable to its people, is supposed to define the strategic priorities to that country. The international money is then supposed to come in behind the strategic plan, right, this document of almost 200 pages, and then the money is supposed to go out through a series of very specific headings, agreed between the international community and the Government of South Sudan, in order to deliver on the ground.

Three years into this process I visited. So three years after this plan was published, I visited the town of Malakal in South Sudan. It’s in the North. It’s the second largest city in South Sudan. A city of 130,000 people. When I drove through Malakal, I had a glimpse of what London probably looked like after the Roman legions withdrew. The city had gone from 130,000 people down to a population of about 3,000. You’re driving up a highway in which every single building has been burnt out. Every roof has been stripped. Almost all the population is now huddling around the edge of a UN protection of civilians camp, a few miles outside the city, and even that is not much protection. Militias are charging into that camp, burning that camp, killing and raping people in that camp.

The fundamental request made to you by the Governor of Malakal, made to me as the Development Minister by the Governor of Malakal, is could I please rebuild the central government building in Malakal? However, I know that this building was originally built with money from the US Government. Was then burnt down by a militia group. Was rebuilt with money by the Japanese Government and had just been burnt down again by the government armed forces, connected to the Governor, who’s now asking me to put DFID money into rebuilding this building, right?

Now, let me now come to you. I am somebody sitting in Juba who knows all this. I’m somebody who’s sitting at a table, having a drink with you, telling you about the reality of what’s going on, on the ground. How come, the next morning, I turn up and I start writing a document that produces the word ‘governance’ 100s of times, the word ‘transparency’, the word ‘accountability’, the word ‘rule of law’, the word ‘corruption’ and keeps making statements about the zero tolerance attitude to corruption, the transparency down to the most local level, when essentially, I’m describing a country where even Juba itself isn’t capable of administration. What’s going on? And then why does the international community then pump 100s of millions of dollars through the medium of this document? Why does the UN accept this document? Why does the World Bank accept this document? Why is this document presented to Parliaments? Why is it presented to voters? What is this document? How does this document relate to South Sudan? Right, anyone want to suggest, then?

The reason that it’s important is that this is a microcosm of a problem repeated across the world, right? If you read the Interim Afghan National Development Strategy, exactly the same thing will be true. The word ‘Sharia’ doesn’t appear. The word ‘Islam’ doesn’t appear. The word ‘communist’ doesn’t appear. The word ‘Tadgit’ doesn’t appear, but words like ‘governance, accountability, transparency, corruption, the rule of law’ appear again and again and again, and the document commits itself to a gender-sensitive, multi-ethnic centralised state, based on democracy, human rights, rule of law, right? Okay, so what is going on? What is this document? Why do we…?

Member

It’s a comfort blanket.

Rory Stewart OBE

It’s a…

Member

Comfort blanket.

Rory Stewart OBE

…comfort blanket. Okay, explain a little bit why it’s comforting.

Member

Right, so, we’re interpreting where we feel comfortable about putting our public purse and our money and our investment or a charitable dollars, or whatever, we want to hear what we would normally consider are the – both the language of a state, the language that offers us the confidence that our money will get through to where we would like it to have an impact. It seems irrelevant to actually what’s going on, on the ground. Its audience is not on the ground. Its audience is here.

Rory Stewart OBE

Okay. Okay, it’s a very, very, very good insight. In fact, I’m going to make him do the lecture, rather than me. Okay, so, in essence, probably the biggest driving phenomenon here is that this document is not actually an attempt to describe the conditions on the ground in South Sudan at all. This is a document designed to reassure people back home. Specifically reassure Civil Servants, reassure the Treasury, which is allocating money to this project, reassure the Politicians in the West, who are backing this project, reassure the media in the West, that is putting money behind it.

As a thought experiment, imagine if you described what is actually happening in South Sudan and what you’re really trying to achieve with your money. So, imagine if I said to you, I am taking £100 million of your taxpayers’ money and I’m taking it to South Sudan, and I hope that I may be able to prevent some people from starving on the outskirts of the UN protection civilian camp. It is true that when I take the food into the country, quite a lot of the food is going to be seized by the government and the local militia. Nevertheless, I’m confident that 80-90% of the food will go through.

There is nothing sustainable about this at all. No systems are in place. No structures are in place. When I stop feeding these people, they’ll starve. So I have to keep feeding them almost indefinitely. The situation is so chaotic and violent I may have to shutdown my feeding programme almost immediately, to get all my staff out. I have no guarantee whatsoever that I’m able to demonstrate equitable access to gender, to disability. I’m not really able to assure you that I can really be confident that I’m being ethnically fair in my distribution of these assets, because it’s so dangerous, actually, on the ground in these areas, that the British soldiers in the UN camp are not actually even leaving the fence to visit the refugee community, or meet the internally displaced community. Meanwhile, the internally displaced community, with no support from the UN because they don’t want them on the edge of this fence, are essentially living in sewage. There’s no functioning drainage. There’s no support. They’re living under the tinned roofs that they’ve stolen from Malakal, and I’m going to keep doing this.

I’m not going to be able to eliminate corruption. I’m not going to be able to bring peace, so I’m not going to be able to bring security. I’m not going to be able to establish a rule of law. I’m not going to be able to have a functioning state. This is a sticking plaster, but if I don’t put the sticking plaster on, the blood’s going to come out and I’m going to have to keep putting the sticking plaster on year-after-year. A response from anybody. Thoughts? How does this play with the public? How does this play with the Daily Mail? How does this play with the Treasury? How does this play with the voter? Right? Not very well and yet, in South Sudan, to some extent in Somalia, certainly in many parts of DRC, certainly in the Central African Republic, almost certainly in Burundi, and in many parts of Afghanistan that is exactly what you are doing. Right, that’s what you’re doing. In Yemen, right?

Anyone in this room like to guess how many British – I used to stand up in the House of Commons all the time and my colleagues on the other side and my colleagues on my side would pay tribute to the very brave British Diplomats and aid workers – British Diplomats and DFID employees on the ground in Yemen. Anyone like to guess how many British Diplomats and DFID employees we have on the ground in Yemen?

Member

None.

Rory Stewart OBE

Zero. Right, we’ve had zero and we’ve had zero for about the last seven years. Nonetheless, we spend, right, 100-£150 million a year in Yemen, so how do we actually know what’s going on in Yemen? And we don’t really know what’s going on in Yemen, we just hope that by putting the money in, that we’re going to do a little bit more good than harm, right? Someone want to pushback on how we know what’s happening in Yemen? No? No, comments? Okay, so – go on then, yeah.

Member

We work through trusted partners.

Rory Stewart OBE

Okay, so how do you know what the trusted partners are doing? How do you check up on the trusted partners?

Member

Well, through lots of conversations and yes, as you imagine, reports, yeah.

Rory Stewart OBE

Okay, so what happens when the World Food Programme – so the Head of the World Food Programme comes and says that he believes that the Houthi in Sanur are helping themselves to 50% of the income from the food distribution in Sanur. How do we know whether this is true or not? WFP’s reporting this, but we’ve been providing food to Sanur for the previous three years. How do we make sense of suddenly this figure that 50% of it is stolen and we haven’t known about it for three years? How do we know? How do we follow the data at a street level in Sanur? We don’t, right? We don’t really know. We have no way. I mean, when – actually, this is a true story, right? Head of WFP made this claim about how much food was being stolen in Sanur. It was literally impossible for our system to evaluate whether this was true or was not true. I guessed it wasn’t true, right, other people thought it was true.

David Beazley insisted it was true. I thought it wasn’t. How do we really know? He’s not on the ground in Sanur, I’m on the ground in Sanur and it’s extremely difficult to work out what the Houthi actually do with the food, once they take it off the truck. Okay, this means, I think, right, that I’m now going to open up to questions, right? This thinks – means, I think, that we need to think about the way in which we structure our interventions in the world, and the way in which we think about the context in which a conversation about the rule of law or corruption makes sense, and the context in which it doesn’t, right?

I would suggest, roughly speaking, it is important to distinguish between a state like Jordan, for example, right, or potentially, a state like Myanmar. States that are on the edge of middle income. States that have relatively high educational figures, with relatively good poverty and health outcomes, and the conversations you might have there, right? So you could have a conversation potentially, in fact we have, with the central government in Nakodar about how the Ministry of Finance could extract more money from the taxation and budgetary process and potentially, increase the revenue of the Government of Yangon by 1.2 billion, through a better approach to taxation collection?

In the middle might be conversations about countries like Iraq. Countries that are relatively unstable, but still have a relatively educated population, a very strong revenue base, and the beginnings of the functioning of a state, and then at the final extreme, my example from South Sudan. Where I would suggest there isn’t actually a great deal of point in pretending that you’re going to have a very sensible conversation with Salva Kiir around the question of corruption. Nor much point indeed in running governance or anticorruption programmes at all, in the context of South Sudan, because it is very important, I think, in all of this, not to get focused too much on the issue of the root cause.

The central question in these emergencies is not what is the underlying root cause, which is driving this problem. The central question is, what can we do about it, right? There may well be things, in all these countries, which are underlying root causes: extreme violence, corruption, which it is very, very difficult, in certain contexts, for us to do much about. And where it may be much more sensible to focus on delivering basic humanitarian programmes, getting food to someone, or in a slightly more developed state, perhaps running an immunisation programme, or perhaps thinking about the delivery of primary education. And then later, beginning to identify those countries, where a programme on the rule of law and corruption make sense, but what I haven’t got yet, out of the international analysis, is a clear matrix for people analysing where governance programmes make sense and where they don’t. And this is very difficult to do.

The governance experts themselves do not have much interest in telling you that the governance programme they’re running in country X or Y is a complete waste of time. Nor does the government that has put money into governance programmes in those countries, have much incentive in admitting that their governance programmes have failed and they haven’t got anywhere. It’s, therefore, in practice, extremely difficult to have a conversation, with the international community, about where you shut down an anticorruption programme and where you increase. And do you, to return to my first two examples, do you invest more in the country whose health clinic I described was totally non-functioning because the corruption was so endemic, it was impossible to get a single pill on the shelf? Or do you invest more in the country with the specialist functioning health clinic, where your pound of investment is likely to go much further? And what kind of metrics do we use to make those decisions?

Well, we don’t do them. What we end up doing, in my experience, is allocating exactly the same sum of money to both cases, right? You could make a perfectly honourable case that you want to put more money into the basket case, you could paint a perfectly honourable case that you want to put more money into the success story, instead of which, we simply spread, with no real theory, around the question not of ought, but the question of can. So, to conclude, right? We began with a sense of the dangers of corruption, the risks of corruption. I talked a little bit about this UN Declaration and its statements, quite rightly, about the connection of corruption to issues as the rule of law, to human rights, to terrorism, right?

We talked a little bit about the complexity and the operation of corruption in a particular context, a health clinic. I then moved on to the extreme case of South Sudan, where it was very difficult to understand how any of this conversation was going to make any sense, within the context of the emergency at all. And I wanted to finish with the framing question, which is how is it, in international development, we actually make sensible decisions on where things work and where they don’t work? How do we actually make this function? How do we get round the problem that if you actually read the document on South Sudan and compare it to the document on Botswana, it is almost impossible to tell the difference between the two documents.

In fact, you sometimes suspect that the World Bank Consultant may have turned up with the document of Botswana and done a replace all running all the way through the document, despite the fact that we know that everything that is going to determine the success or failure of a governance programme, a rule of law programme, a anticorruption programme, is entirely specific to the cultural and conflicts and political context of the country in which you’re operating. In other words, the knowledge that is relevant to the delivery of a good governance programme, is not primarily knowledge of corruption in the abstract or governance in the abstract, but knowledge of the politics of Kaduna province in Nigeria, or knowledge of exactly what is happening in Malakal, or some sense exactly on what is going on within the Education Department in Jordan.

On that note, I’m going to finish with my single summing up, summing up all of this, which is ought implies can. We do not have a moral obligation to do what we cannot do, and I’m going to go to questions. Thank you very much, indeed [applause].

Daniel Bruce

Thank you. Thank you again, Rory, for delivering the annual lecture for us this evening. A couple of quick housekeeping points on questions. Please raise your hand high, so that we can see them. Always appreciate it if you can say who you are and where you are from. We have about ten minutes for this, so please keep your questions brief, and please do ensure that there is a question mark at the end of them. Thank you.

Now, and just while you’re gathering your thoughts, Rory, I’d – there’s one thing I would like to mention, I think, which is really important in the context of local knowledge, which is that the – I couldn’t agree more, and I think the Transparency International Movement would concur with that. We are – TI UK is one of 114 chapters around the world, and therein lies a huge amount of that contextualised local knowledge around the challenge of anticorruption, but often in those most vulnerable contexts. We’re talking about a small handful of people who find themselves in an incredibly challenging situation, and I think there’s a role for us to play in supporting them with their mission.

You came into DFID as a Minister, I think, and the weeks after or around the time of the 2016 Anticorruption Summit. In the context of everything that you’ve described tonight, how effective do you feel the outcomes of that summit and that moment in time where corruption was much higher on, at least the UK political agenda, than it might be today? How effective was that summit in driving change? What would be your advice to our new government at the end of this week?

Rory Stewart OBE

I don’t think it was very effective and I think it wasn’t effective because I don’t think that David Cameron had got the fundamental insight here. I think he had convinced himself that the underlying problem for international development was corruption, and therefore, all one had to do was tackle corruption and one would deal with all the other problems that would come from it. Now, this is very, very common in international development, right? Equally, you could have a conference on gender, right, where everybody would determine that the fundamental problem in international development is that not enough resources are allocated to women, right?

20 years ago, perhaps not today, but 20 years ago you could have a conference on democracy, where you could argue that the fundamental problem in development is that these countries are not democratic and therefore, we need to work on democracy. If you are a compos Judge in Britain, you would say the fundamental problem is the rule of law, right, and what we need to do establish the rule of law. If you are a DFID Economist, you would say the fundamental problem in these countries is poverty, right? And what you need to do is address poverty, but potentially, even through cash transfer programmes where you simply make someone less poor by giving them cash, right? A very popular programme at the moment, right?

The fundamental problem with this way of thinking about this is of course, these are incredibly complex systems, in which the observation that corruption is a problem, lack of democracy is a problem, lack of the rule of law is the problem, the treatment of women is a problem, poverty is a problem, all this is true. But it doesn’t really help you towards solving the problem. I mean, we’ve been working in Malawi for 60 years. An incredible amount of money has gone into Malawi. An incredible amount of very, very bright people have worked in Malawi. How many people in this room have worked in Malawi? Well, okay, five, six people have worked in Malawi, right? There is no shortage of brains going into Malawi. There’s no shortage of money going into Malawi. The truth of the matter is that at the end of the 60 years, the average person in Malawi is slightly worse off than they were 60 years ago, right? Sum total of the entire engagement of the international community.

In DRC, the Democratic Republic of the Congo, literacy and education rates today are now significantly lower than they were in 1963. Employment rates are significantly lower than they were in 1963. None of this is a conceptual problem, right? One of the problems in politics is people imagine that what you need to do is read something type paper that somehow the latest publication of the World Bank is suddenly going to reveal something, which will allow you to suddenly unlock Malawi, unlock DRC. And I think the problem for David Cameron is that he didn’t actually have enough of a feeling for the local contexts of these countries. So he didn’t actually understand what he meant by corruption. I’m not even sure he knew really, how corruption operated in a specific health clinic, in a particular place. He just had a sense that these people were corrupt and if they weren’t corrupt, everything would be okay, yeah.

Daniel Bruce

Right, on that bombshell, let’s – I have – I’m going to take these one at a time, and let’s keep them really brief. So the lady with her arm raised here, thank you.

Jackie Peace

Thank you. I’m Jackie Peace from DFID, in the interests of declaring conflicts of interest. Thank you. I was going to say, thank you, Minister. Thank you very much for reminding us about this really important distinction between ought and can. I think you’re wrong about the effectiveness of the Anticorruption Summit because I think actually, there was a very fundamental insight behind that, which was that while we maybe can’t change what happens in South Sudan or in Malawi, what we can do is, we can stop facilitating and enabling that, through actions here in the UK, as a centre for global money laundering often, and through changing international rules. That won’t necessarily stop or tackle the root problem in the developing country, but it will mean that we are not facilitating and making it easier for those people in Malawi or South Sudan, through things like ending the use of secret companies.

Rory Stewart OBE

Pushback. Pushback for a second, okay? I mean, I can see that from a moral point of view that’s right, we shouldn’t be facilitating it. But is there any empirical evidence whatsoever that anything that we did to stop money laundering in the UK, had any impact in South Sudan? I mean, has anyone done any research on this or do we just assume that it had an impact? How do we know the money doesn’t just go to Dubai, for example?

Jackie Peace

There is absolutely a danger that the money gets diverted and that’s why the UK Government has currently got an international campaign to work with others, to make sure that things like ending abusive secret companies becomes a new global norm and that other countries follow the example.

Rory Stewart OBE

But is there evidence that this work has had a tangible impact in South Sudan and Somalia?

Jackie Peace

There are examples from the Century and others who’ve been able to track down money, say, from South Sudan that’s gone into Kenya, and there are examples of how this kind of transparency can make it easier for them to track down that money. So what I’m saying is, it’s not necessarily going to stop that happening, but it is something that’s in our gift to be able to do something, which will stop us facilitating and encouraging it.

Rory Stewart OBE

So, let me take this as – yeah, yeah, okay, let me take this as an important stepping off point. So, look, there is something there, which is important, and intuitively correct, right? Which is that if we are laundering money from these countries, we are facilitating crime in these countries. The main reason we shouldn’t be doing this is that it is morally wrong to do this. I am less convinced that this is making a tangible and significant impact on corruption on those countries, and I think that’s probably where the more idealistic people involved in the conference believed they were going. I think it makes absolute sense for Britain to say we don’t want to do this. I’m still very confident that that money is going to find its way to Dubai, it’s going to find its way to Cypress, it’s going to find its way to Nairobi, and I cannot see – I don’t know whether anybody in the room has done any research on this. I would be very surprised if somebody is producing papers, showing that this has had a tangible impact on local corruption on the ground.

Is it having an impact on corruption in China? Is it having an im – I don’t think so, but I would be interested. I think the reason to do it is a moral reason, not a pragmatic impact on those countries.

Daniel Bruce

So, I would encourage us all to look at the summit tracking work that Transparency International has produced, which looks at the pledges and the kind of programmes in individual countries. There is – there are bods of strong anecdotal evidence in some countries where there is a kind of collective effort nationally, to put different pieces of the puzzle together post to the summit, but they are in the minority at the moment.

Another quick question, please, and yes, the gentleman who caught my eye right at the back there. Thank you.

James Spencer

James Spencer, Member of Chatham House. I just wondered whether you’d care to distinguish between corruption in conflict environments and non-conflict environments. So, for instance, Yemen is very clearly, so is Libya, in a war economy, where corruption is the norm, whereas in many other places – oh, and you’ve also got the guns involved, which means that corruption can go down to pretty much the person swinging the gun. Whereas in many other places, you have to have at least access to the state, in order to use that.

Rory Stewart OBE

Yeah, I think this is a very, very – really, really important distinction. I think within an extreme conflict situation, within a situation of civil war, the nature of the corruption is quite different. So, you can see in Afghanistan a huge shift from the mid-1990s, so during the civil war period what we mean by corruption is that there were 58 checkpoints between Kabul and Kandahar, where you were handing over cash every time you crossed the checkpoint, right? Once the Taliban took over those checkpoints and disappeared, authority was exercised from the centre. By 2003-2004, what you meant by corruption was quite different. What you meant by corruption then was the decision by the central government to allocate the Shia poor land, owned by the Ministry of Defence, to key Cabinet Ministers so they could build their villas. What was meant by corruption then was international money, trying to get oil into the country, then being allocated to contractors related to the governing family. What was meant by corruption then was the purchase of, for example, in Helmand province you could buy the role of Police Chief for about $135,000, and the income from this role is, in fact, about $300 a month, right, which you can purchase this role. These are forms of corruption, which are not possible, until you get a state.

In fact, the amount of corruption, the actual amount of money swilling around corruptly in Afghanistan was almost certainly considerably higher when the international community were in a quasi-supervisory role than was the case under the Taliban. And probably considerably higher than was the case under the civil war. The creation of state structures can itself accelerate the progress of corruption.

Corruption in China is a very interesting thing to look at, because in many ways, China has many of the formal structures that cheer up Development Economists. It’s performing in a way that Development Economists generally like. It’s growing quickly. It’s taken 100s of millions of people out of poverty. It has, in many ways, a functioning legal system. It has an extremely skilful well informed effective Civil Service. It invests in human capital. It’s good at primary education. It has good financial administration and yet, it has an enormous amount of corruption. So, this story is a very, very complicated story and its connection to development is very difficult to identify.

Daniel Bruce

Those in considerably higher authority than I have told me we have time for one more question. So I’m sorry if I don’t get the opportunity to come to you. I would like to come to, actually, to the lady right at the back here, with her hand raised. As brief as you can be, thank you.

Member

Thank you so much. You spoke about, you know, all the bad things that happen in the world, with or without UK Government involvement, and that argument is used often for arms sales, as well, right? If we don’t sell, then, like, the Russians will sell or the Chinese, etc. But surely, especially when it comes to arms sales, there can be a direct link between the role that a country like the UK can play in how other countries develop or the levels of corruption, like in Yemen, for example. And surely, in Yemen, with, you know, arms sales to Saudi Arabia, there was a direct link to how, you know, with the wellbeing of the population Yemen is looking like right now, with a proxy war that’s, you know, kind of, happening with an international community that’s at least complacent. So, within that context, what do you think is the responsibility of the UK and other, you know, similar countries in reducing corruption and conflict?

Rory Stewart OBE

Well, on the subject of arms sales, quite clearly this is another example of the same thing. I mean, both things can be true. You can have a moral responsibility not to facilitate a murderous war, while, at the same time, acknowledging that if you don’t facilitate it someone else may. I mean, these aren’t – these don’t need to be in contradiction. I think it makes a lot of sense, and this is the same point I was trying to make with my DFID colleague around the issue of money laundering, it makes a lot of sense, from a moral point of view, to say these are things that Britain doesn’t want to get involved in. That is different from saying that Britain’s non-involvement is likely solve them. The same is true around climate change, right?

Certainly it’s true that Britain should be doing a lot on climate change. It’s unlikely that by doing this on its own it’s going to make an enormous difference to what China is likely to be doing, in terms of carbon emissions.

Now, let me move to the conclusion, though, which is where I, sort of, wanted to wrap up. I think the main thing that seems to me to be necessary in this field, and it’s just this that I want to end on, because this subject is so morally abhorrent, right, because we hate the idea of corruption, because we’re all against corruption, because we can all see the damage that corruption does, it can lead to easy comfortable thinking about the subject, right? It’s very important to understand that it is particularly in cases where we all agree that we need to be most vigilant in asking what on earth we are actually doing, right? Because we all agree that corruption is a bad thing, because we all can put on a document that we have a zero tolerance attitude towards corruption, because we can get taxpayers to fund that quite easily and ministries to get behind this quite easily, because that’s going to appeal to everybody in the world, it creates an environment in which there is often very unlikely to be a critical debate. It’s very unlikely to create a situation where there are going to be many people standing up and challenging your programmes, because if they challenge your programmes, right, it’s going to be too easy for people to say, “Who on earth is this nasty person? What’s he doing slagging off my anticorruption programme?” Right, “Is this guy corrupt? Is he in favour of corruption?” Right, “Does he like poverty? Does he like conflict? Does he like terrorists? Does he like human rights abuses? What’s he doing?” Right, okay.

But if we are to achieve anything in difficult countries, we will only achieve it by being much, much better at calling out bullshit. We need to get much, much better at pointing out what does and doesn’t work, and I don’t mean by that running comforting situations, believing that we have fantastic metrics, we have fantastic partners, we have fantastic assessment systems. The truth of the matter is, there is almost no country on earth that you can go to where you cannot see absolute nonsense, absolute nonsense. And that needn’t be admitting that, needn’t be something that makes you give up. It makes you focus. It makes you do better. It make you choose the countries in which you want to operate. Choose the programmes that you wish to drive forward, choose the people you want to work with, and be absolutely ruthless on shutting down the programmes that aren’t working.

So, if I finish on something, it’s this. We all agree that corruption is a horrible thing, but the way that we are going to work together to make an impact and reduce significantly, over the next decade the amount of corruption in the world, is by challenging anticorruption programmes relentlessly. Thank you very much indeed [applause].

Fiona Thompson

So, good evening, everyone. I’m Fiona Thompson. I’m the Chair of Transparency International in the UK. So, I would like to add my thanks to Rory for a very challenging annual lecture. Something that’s challenged us, as anticorruption specialists, and amongst all of the things you’ve said, there are several challenges, I think, that we are going to be having to go back and reflect on. One of them the difficulty that we have, as an organisation, actually, defining contrib – what corruption is and therefore, how we design our programmes to address that definition of corruption.

Secondly, right at the end, and asking us to really think about how we measure the impact of the things that we do. So we will need to work more on thinking about what exactly we want to achieve and how we can demonstrate that we’ve achieved it. And I suppose, thirdly, a question that we do challenge ourselves all the time about, which is how do we tackle corruption in the places where it’s most severe and has the most severe effect, in that it’s all very well talking to a community like this, where we can all agree that corruption is a really bad thing, but, in many parts of the world, those norms may be different? And how do we go about challenging ourselves to go after the places where corruption really means most to the daily lives of people who suffer from it? So, thanks for those challenges and it’s a good corrective to be asked to think about this.

So, I also want to say thank you to those who’ve made this evening possible, and there are several members of our team here, who’ve done a lot – a great deal of work behind this, and so that’s Naomi, Mallary, Jo, Jon, Harvey and Amirah, in particular, but there are also several of our other team members here, who volunteered on the night, so thank you very much for all that you’ve done for this [applause]. It’s also great to see so many people here at this lecture. It gives us a boost to see that corruption as an issue is important to so many of you, as we do our work. And, as you’ve heard, corruption is not just an abstract concept encompassing many more abstract concepts like democracy and those kind of things, but it – and it’s not a victimless crime. It has real impact on people’s lives. It deprives them of vital services. It adds to mistrust instability around the world, and we can see that in – coming up in many of these political movements that are currently around the world. And so we, at TI UK, we work with governments, we work with businesses, and we work with civil society to challenge these corruption issues, and try to – wherever Britain operates or has a role, how we can work to improve the way that, as a country, we can prevent corruption.

But we’re a charity and we rely on the support of people like yourselves, the public. So, thank you very much for being here tonight, but we would hope that you would wish to continue to support us, so that we can continue to do the advocacy and research that’s essential. As Rory was saying, we need much more research on how corruption affects people’s lives, and to put on events like this, which – and which we can all think about the issues that corruption actually challenges us with. So, if you wish to continue to support us, there’s some information in the programme that’s in front of you. So, I hope you will take advantage of that. So, I’m conscious that I’m between you and drinks upstairs. So, on the first floor, as you came in, the drinks will be served up there. So, thank you very much for coming. Thank you again to Rory for giving us a very insightful and challenging lecture and look forward to seeing you upstairs, and thanks for coming [applause].