A squeaky-clean reputation for business and government is usually an excellent guide to a country’s prosperity and economic openness. The Apec Business Advisory Council has put the fight against corruption at the top of its list of key issues.

Representatives of the 21-member council, known as Abac, have been in Auckland this week discussing their recommendations for the annual Apec leaders’ summit, to be held in Santiago, Chile, in November. For some delegates this must be an uncomfortable task, as corruption is rife among many Asia Pacific nations. Poverty is a good indicator and it is also welcome to see major international agencies have taken up the cause. Until recently, these agencies – which include the UN and the World Bank – have turned a blind eye to corruption to allay political sensibilities. No longer. The UN is set to adopt a convention against corruption at a conference in Mexico at the end of the year. The backers point out corruption impacts most heavily on the poor, as it illegally diverts state funds from essential public services such as health, education, transport and policing. At its worst, bribery is an integral part of setting up or doing business, and therefore is a heavy cost on all citizens.

Although the UN has been late on the scene, the World Bank has been at the forefront of the anti-corruption campaign since 1996.

Its then president, Australian economist James Wolfensohn, said “cancer of corruption” was the main obstacle to development and urged a zero tolerance policy. This initially brought an outcry of “political” interference from the anti-globalists as well as the guilty parties.

Since then, by its own account, it has launched more than 600 anti-corruption programmes in 100 countries. It has lent an average of $US5 billion a year to help countries build efficient and accountable public sector institutions.

The well-known US public intellectual, Francis Fukuyama, has identified this as the key element in “state building,” which lies at the core of the fight against terrorism and the countries that fuel it.

The World Bank estimates the corruption cuts around 4% off the world’s economic wealth each year, worth about $US1 trillion a year.

While much of the campaign has targeted the public sector in the developing world, through making loans more accountable and insisting on judicial reform, businesses have also become an essential element. Western countries have begun to move against companies being allowed to claim bribes as deductible commission payments. The bank itself lists individuals and companies who have broken its guidelines.

While we are not yet privy to the Abac recommendations, it is to be hoped they back the measures recommended by the World Bank and give substance to any UN moves in a world where acceptance of corruption is far more favoured than opposition to it.

National Business Review, August 20, 2004