Examination of Witnesses (Questions 100
TUESDAY 14 NOVEMBER 2000
100. Thank you very much. I think all those
points will actually come up during the course of the questions
which we would like you to probe and discuss in more detail. Perhaps
I can ask the first question. How does such a corrupt system become
established? We are referring to your special study of Bangladesh,
(which I know has been carried out at great risk, from talking
to Mr Hasan) by Transparency International in Bangladesh. As that
review shows, corruption has very serious effects on all aspects
of life in Bangladesh. You find it particularly in securitythat
is to say, the police and armed forces, presumably, justice, health
care, education, basic utilities and business opportunities. I
remember, Mr Hasan, you telling me that somebody wishing to pay
their electricity bill early had to pay an additional fee to the
clerk in the electricity office. Is that correct?
(Mr Hasan) It is correct, and it is not just confined
to someone trying to pay their bills early but even when they
want to pay their bills on time. When they get their bills they
have a lot of problems in terms of paying because the person who
is receiving the money will not receive it if a percentage is
not given to that person. Another thing which is brought out by
our survey is that there can be a colluding kind of relationship
or arrangement whereby a customer may not have to pay the full
amount if a certain percentage is paid on the side to the person
who is receiving the bill or to a middle person. Therefore, the
state or a companymostly state-owned companiesis
deprived of revenue. This is certainly happening and this is what
I would say could be described as petty corruption. However, petty
corruption which happens on a very wide scale can become quite
grand. So I suppose, in a way, it is very difficult to put it
in terms of petty and grand because where petty ends grand can
start. So it is really very much intertwined, and both the state
and the ordinary people are affected by this. So I would say that
one has to be very careful when looking at the situation in Bangladesh
to look at both the pictures that we find: at micro level petty
but endemic and which translates into a very grand type of corruption,
at the end of the day.
101. So how does such a corrupt system become
established? Is such corruption simply a product of greed, or
is there an economic need which corruption attempts to meet? What
economic relationship is there between petty and grand corruption?
You began to talk about that. In fact, has grand corruption, in
terms of paying electricity bills, come from the Government itself
which does not pay its electricity bills either on time, if at
all, I believe? That is true in Bangladesh as it is elsewhere.
Also, of course, big private companies do not pay their electricity
bills. So there is, as you say, a relationship. To what extent
do corrupt payments intrude on the works of NGOs and donors in
(Mr Hasan) I have touched on that in my submission.
One of the sectors that I have looked at is the energy sector,
and it is page 1 of the written submission entitled Bangladesh
Power Development Board and on page 2 I have talked about the
genesis of corruption. We see, again, from that study that at
one level you have the petty corruption which is taking place,
but then it becomes quite grand when it comes to procurement.
So this situation has developed over a long period of time. Again,
I look at the history and say that it has really been something
which has developed, I would say, at a very fast rate since 1971.
It has been reinforced over the years
102. 1971, you say? Why 1971?
(Mr Hasan) That is the year of the independence of
Bangladesh. Prior to that it was part of Pakistan and known as
East Pakistan. So I start from that point and see that as a kind
of dividing line and assess the development of this. It started,
I would say, with the human resource that we had. There was a
massive vacuum in terms of people who were involved in these sectors.
Then junior officers were promoted and went up to higher levels
but did not know how to do their job and did not have the training
or qualifications. Really, the governance of these institutions
started to fall apart, at the same time, I would say, with the
intervention of politicians meddling in the affairs of these organisations,
which has made the situation worse. What we find now is that,
for example, there is a huge system loss within the energy sector
which varies from 25 to 40 per cent. By "system loss"
we are talking about, basically, theft of electricity from the
grid. If this money could be saved, according to one calculation
that I have put in my submission, we could actually deal with
the energy shortage of the capital city, Dhaka, and in a couple
of years we could probably tackle the whole of the country's energy
shortage, if just the governance of these organisations could
be addressed. I think there you have a direct relationship in
terms of aid money which is going in, how it is being used and
the fact that we still have this problem. Precious, scarce resources
going into some of these sectors are not being utilised properly,
and this is something of great concern to the citizens of Bangladesh,
organisations working in this sector and, also, donor agencies.
Chairman: It has massive repercussions.
It is very important.
103. It has been argued that, for example, in
India the change from an elitist suburb to a much more widespread
catchment area has been facilitated by the fact that substantial
numbers of Members of Parliament expect not only to recoup the
costs of getting elected but, also, to improve their standard
of living through corruption. I just wondered to what extent you
see the expense of elections and the consequences of that as fuelling
(Mr Hasan) I would say that this is a very significant
factor within the context of Bangladesh. If you look at the composition
of the Parliament you will find that a huge percentageI
would say around 70 per centof people are from business
and trading communities, whereas before 1971 (and I use that date
because it is a convenient watershed) they were predominantly
people from the professionslawyers, teachers and others.
What we also find is that since that change in composition Parliament
is seen as a place where people can go to and spend money to get
elected and recoup that money, and not just that money which has
been spent in terms of election expenditure but a lot more than
what they have spent for election campaigning. This is certainly
a major factor, I would say, in terms of the corruption and patronage
which politicians provide when it comes to these corrupt institutions
that we have talked aboutfor example energy. There are
many more, and I have referred to those other institutions just
as a sample in my submission. This is evidence we have collected
and first-hand research that Transparency International-Bangladesh
has done. So I would say that is a very, very significant factor.
An election is very much seen as a one-day exercisefor
people to be electedand then totally divorced from the
people; people's participation is not there. As you say, it is
more or less a business for many of these politicians.
Mr Rowe: It sounds deeply alluring!
104. My question is a simple one. We have had
some trouble getting people to talk to us about corruption because
people work immersed in the system which you have described; therefore,
they are"tainted" is the wrong word, but they
have to work and live within the system as it exists, not as they
might wish it to be. This is not a question designed to embarrass
you, but here is the TI in Bangladesh working. If you want to
pay your electricity bill do you have to pay an extra bribe as
well? Is that the way it works? Or can one stand above it? Can
one resist? For instance, we have just heard of a colleague having
to wait months and months for a telephone if you do not pay extra
money to get it within a week. How does it work for you?
(Mr Hasan) You do not have to pay, but if you do not
pay the cost of that is that you wait, and that is exactly what
we have to do. When we, for example, wanted our telephone line
at the Transparency International-Bangladesh office we had to
105. How long?
(Mr Hasan) For about three months before we got our
telephone line. For the second telephone line we had to wait for
something like nine months, and the reason was that, obviously,
we cannot pay. So you can do your job but what it will mean is
that you have to wait, and when it comes to businesses they cannot
afford to. They think they cannot afford to and they think that
the cost of getting that telephone line in a day or in seven days
is pretty negligible in terms of the kind of return that they
would get if they had that telephone line. So people, in a way,
are put in a very difficult situation; you either pay (and it
is not a huge amount of money) and get your line, do your job
and get the business rolling and make a profit, or you just wait.
So that is the choice that people have. I think when we say that
people are very tolerant, I think one has to also remember that
they are tolerant because, in a way, they do not have any choicethey
do not have an exit. If there were private telephone companies
(and there are now mobile telephones coming in) people would not
have to wait for that government telephone line; they can go for
a mobile telephone and do their job. So the situation is improving
because there is an exit route. From what I have read in the papers,
the telephone organisation will be privatised; they are about
to sign a contract with Singapore Telecommunications. I think
that is probably the way forwardto give people the choice
in terms of where they can go, and that undermines the position
of these individuals who hold public posts.
106. Mr Cockcroft, do you draw some more general
conclusions from the experience of Bangladesh?
(Mr Cockcroft) Yes, I think, as you have already implied,
Chairman, and as the questioners have implied, this is a recognised
phenomenon, unfortunately, in very many countries. It also relates
to the question of people taking a stand. I know it is extremely
easy to say that, from one's kind of UK perspective, but what
I would like to say, in addition to what Mr Hasan has said, is
that there is some evidence that people who take a stand are recognised
as such and can get results. So I would take the view that this
is partly a question of the attitude of the person from whom the
bribe is being solicited. However, of course, this also interfaces
with the question of facilitation payments in relation to international
businesswhich, I have no doubt, you will want to come on
to later. The question of whether or not a large corporate player
really needs to make these payments in order to do business, I
think, is a rather different question. I would like to suggest
we might compartmentalise that, but I expect you will want to
return to that.
107. Can you tell me about Transparency International?
You say you have got 80 branches in various parts of the world.
Who actually funds Transparency International?
(Mr Cockcroft) I would like to stress that we are
a network of international chapters and each international chapter
is self-standinga self-standing legal entitywhich
raises its own funds from whatever local resources it is able
to raise. In the south and in transition economies there is often
an involvement from donors, and that is also true in the north
to a large extent. There is, in order to make all this network
function, an international secretariat in Berlin which has an
annual budget of about $5 million and which employs about 25 peopleof
which the sources of funding are roughly one-third bilateral donors,
one-third foundations and one-third the private sector.
108. Would that be the same in the UK?
(Mr Cockcroft) In the UK our annual budget is about
£35,000, of which half comes from the DFID and half from
about 17 large, UK-based companies.
109. How many work for Transparency International
in the UK?
(Mr Cockcroft) Two-thirds of a person who is in front
of you here.
110. Two-thirds of you. Where does the other
(Mr Cockcroft) We are in a voluntary organisation
and everybody in TI-UK, other than our Co-ordinator, who puts
in a inordinate amount of personal time, does so on a voluntary
111. I have just been looking at your opening
statement. You make the point that where corruption is endemic
and the Government which is in receipt of aid displays no real
willingness to confront it, intergovernmental aid should be suspended.
Would that include humanitarian aid?
(Mr Cockcroft) I would say no, because that statement
goes on to say that in those cases we believe that an increasing
proportion of aid should be channelled through NGOs and civil
society. Of course, these days, by far the largest proportion
of humanitarian aid is channelled through NGOs anyway, so that
would not really affect that particular point.
112. Like most of us, you probably saw the two
programmes on Africa last Sunday and the Sunday before.
(Mr Cockcroft) I was in Africa at the time, so I am
afraid I did not.
113. Probably some of your staff have seen it.
(Mr Cockcroft) Sure. We have discussed it.
114. What was your view of that?
(Mr Cockcroft) In our text we do, as it were, identify
and underline the problem that in some civil conflict situationsin
Africa and elsewherethe continuation of food relief has,
in some cases, been used to sustain conflicts, especially where
that relief is being diverted. Angola and Southern Sudan are examples
of that which are fairly well-documented.
115. My wife teaches international students
from all over the world and I hear all the time that the NGOs
themselves are not corrupt but they are corrupting. For example,
they will come into an area and simply denude the local NGOs of
staff because they pay too much and they have brand new vehicles
which they are extraordinarily protective of and will not allow
local people to use. It seems to me that although that is a different
form of corruption from what our inquiry is about today, it puts
a question mark over the wisdom of channelling aid through NGOs
rather than through civil society.
(Mr Cockcroft) I think, as your question implies,
one has to break down both the NGO community and civil society.
In our text we do offer a breakdown of different kinds of civil
society organisations. In relation to a breakdown between the
NGO world, clearly one has to make a difference between the large
international NGOslike World Vision, CARE, Oxfam and so
onand the indigenous, local organisations. From the TI
perspective, our interest is in indigenous NGOs and, again, at
an international level one has to make a distinction between an
organisation like Christian Aid, which works through 350 indigenous
local NGOs and the big players like World Vision, which works,
basically, through its own staff in the field. I think it is the
latter case in which there is a real risk of local NGOs being
denuded of staff in support of larger organisations. In practice,
this is obviously a very delicate balance, and if one is talking
about channelling quite significant sums of money through the
NGO sector then, obviously, that requires a great deal of thought,
and the mechanism by which that is done would have to be very
carefully defined. Maybe it could be done through a trust fund
which was directed by a board of trustees selected both locally
116. There is another point that you make in
your opening statement which I would like to raise with you, and
that is about your own bribe payers index, conducted by Gallup
in 13 emerging market economies. It found that senior officials
polled stated that the civil construction and arms industries
in the major exporting countries were conspicuous in their willingness
to pay bribes. I notice the UK comes halfway down that list. Have
you any particular examples of the UK actually being guilty of
(Mr Cockcroft) The World Bank certainly thinks so.
Of the first 50 companies to be blacklisted by the World Bank
for behaving corruptly in relation to World Bank contracts, 38
have a UK domicile. I am well aware that one should not talk about
court cases as they are under way, but anybody who has read any
account of the case unfolding in the Maseru High Court in relation
to the Lesotho Highlands Water Project is aware that 16 international
companies have been indicted in relation to paying bribes in that
context. One can certainly say, because the ownership of some
of those companies is multinational, that several of them have
117. Would you say that petty corruption is
the same the world over, or does it manifest itself and affect
the poor differently in different places?
(Mr Cockcroft) I think it would be extremely dangerous
to say that it is the same everywhere. I think one would clearly
wish to avoid that. However, the kinds of information that the
TI-Bangladesh survey did throw up are instantly recognisable in,
for example, an African context. There is an organisation you
may be aware of called CIET which has done similar polling in
Tanzania and Uganda and come up with a remarkably similar set
of results. If one wants to avoid statistics, the Warioba report
in Tanzania, which is now four years old, is a very excellent
and moving description of the impact of corruption on the poor.
One can see, as it were, personalised illustrations of the statistics
which lie both behind the TI-Bangladesh survey and information
which comes out in a more structured way from CIET surveys. As
a matter of fact, as I am sure you are aware, the World Bank has
now commissioned this kind of survey in about 20 countries, which
does throw up obvious national distinctions but still, as it were,
portrays this picture in which poor people who might be expected
to have access to a public service for freeor, possibly,
for a structured feeare actually paying an informal, unstructured
fee to the individuals concerned. So there is, I think one can
safely say, an international pattern in a lot of countries.
118. Is the report to which you refer in Tanzania
by the Chief Justice?
(Mr Cockcroft) He is actually the former Prime Minister.
He is a Judge on the International Law Court, so he has international
credentials. He was Prime Minister in the mid-80s in Tanzania,
and is now working both in relation to the anti-corruption effort
in Tanzania at the request of the President, and at the International
119. His name is?
(Mr Cockcroft) Judge Warioba.