From Iraqi American Chamber of Commerce & Industry

Business Ethics
Independent Anti-Corruption
By
Oct 3, 2003, 18:05

TI Source Book 2000

Chapter 11: Independent Anti-Corruption Agencies

There are several good protections against temptations, but the surest is cowardice.
-- Mark Twain, "Pudd'nhead Wilson's New Calendar," Following the Equator, 1897

As the corrupt grow more sophisticated, conventional law enforcementagencies are becoming less able to detect and prosecute complex corruptioncases. Furthermore, in a system in which corruption is endemic, conventionallaw enforcement mechanisms may themselves harbour corrupt officials.

In recent years, governments have sought to bolster detection efforts (or atleast to create the impression of their intention of doing so) byintroducing "independent" Anti-Corruption Agencies or Commissions.^[1]Indeed, the institution has become fashionable. But is it, and can it be,effective?

It is, of course, possible to combine such an Agency with the office of theconventional Ombudsman (as in Uganda and Papua New Guinea). Others wouldargue that there is a clear distinction between the two roles: that theOmbudsman is there to promote administrative fairness, and that this is bestachieved by winning the confidence of the bureaucracy. An Agency orCommssion which is also charged with the investigation and prosecution ofpublic servants is more likely to be feared than trusted.

It is important to understand from the outset why it is that the Hong Kongmodel has proved effective. This is not just because of the quality anddetermination of its staff, and of the excellent legal framework which hasfacilitated their work, but because the concepts of prevention andprosecution have both been functions of the Commission. Prevention has notbeen a last, single line--a draftsman's after-thought--in the lawestablishing their responsibilities. Prevention (and the community educationand aware-ness- raising that goes with it) has been a core activity of theHong Kong model, often informed by the revelations of investigators workingon the enforcement side. This enabled the Commission to develop a coherentand coordinated set of strategies, with results that are the envy of many.Those who have tried to copy the model have largely failed because they havelacked both this coherent approach and the resources necessary to carry itthrough.^[2]

It is also important from the outset, to assess whether such a new body isnecessary, and in particular, whether the costs of running a properly-fundedCommission can be assured. An underfunded exercise will be doomed tofailure. Some administrations provide their agencies with a"share" of what they recover, although this approach can lead tooverzealousness and abuse.

Where should the Agency be positioned?

Success in Singapore owes much to the determination of its former PrimeMinister and Head of Government, Lee Kuan Yew. Some writers have pointed tothe Agency's placement in the office of the Prime Minister as being animportant factor in its success.^[3]The positioning of the office was also a key factor in Hong Kong's highlysuccessful onslaught, where it was placed in the office of the Governor, butwhere at the same time it reports to the Legislature and its separatenessfrom the public service and its autonomy of operation were, and are,reflected in law and practice.

However, whether this particular feature is a model for others to followdepends very largely on whether appropriate accountability mechanisms are inplace.^[4]Such an Agency can itself be used corruptly by turning it--and itsformidable array of special powers--against political opponents. Theintroduction of any Agency must guard against this possibility. Continuingintegrity at the highest levels of government is certainly an asset, butshould not be assumed. The worst excesses of "grand corruption"can take place in and around the Office of the President. An Anti-CorruptionAgency placed in such an office is hardly in a position to tackle superiorsin the Office hierarchy unless it is supported by other accountabilitymechanisms. Thus, the Agency should be responsible to the Legislature and tothe courts, in much the same way as an Ombudsman. Citizens' advisorycommittees monitor the daily work of the Hong Kong Independent CommissionAgainst Corruption (ICAC), building added public confidence in theinstitution.

Conceptualising the framework of an Anti-Corruption Agency

To operate successfully, an Anti-Corruption Agency must possess the following:

committed political backing at the highest levels of government;
adequate resources to undertake its mission; ^[5]
political and operational independence to investigate even the highest levels of government;
adequate powers of access to documentation and for the questioning of witnesses;
"user-friendly" laws (including the criminalisation of "illicit enrichment"); and,
leadership which is seen as being of the highest integrity. ^[6]

It is also important that any special powers conferred on an Anti-CorruptionAgency conform to international human rights norms, and that the Agencyitself operates under the law and is accountable to the courts. In settingthe parameters for the establishment of an Anti-Corruption Agency, agovernment must ask itself if it is creating something that would beacceptable if it were an opposition party. Very often the answer changeswith perspective. The search should be for a formula which seems fair andworkable to everyone, whether in or out of government. Above all, it shouldallot appropriate powers of investigation, prosecution and, sometimes mostimportantly, prevention. It must be such that the Agency will survivechanges in power.

The following major considerations raise issues of appointment andaccountability and should be borne in mind:

an Anti-Corruption Commission may not be independent if it can come under political direction and be used as a weapon to attack critics; and,
the Agency can, itself, become an agency for extortion and corruption.

Appointing the head of an Anti-Corruption Agency

From the outset, the shape and independence of an Agency or Commission(however styled) may well be determined by how the officeholder is appointedor removed. If the appointing mechanism ensures consensus support for anappointee through Parliament, rather than government, and an accountabilitymechanism exists outside government (e.g., a Parliamentary Select Committeeon which all major parties are represented), the space for abuse ornon-partisan activities can be minimised.

A flaw in many legislative schemes involves giving a President (or anypolitical figure) too much control over the appointment and operations of anAnti-Corruption Agency. The President is the head of the Executive, andmembers of the Executive can also succumb to temptation. This could placethe President in the impossible position of deciding whether or not toprosecute close political colleagues. For example, Tanzania's legislationprovides that all reports be forwarded to the President in confidence, and,as a consequence, the Tanzanian anti-corruption system has not functionedwith any real effect and has completely lost public confidence.^[7]By contrast, surveys of the public in Hong Kong over the years haveconfirmed a confidence rating of its ICAC among the population of between 98and 99 per cent--well above that of any other agency of the administration.

It is therefore important that the appointment procedure be one whichrecognises that the task of the office holder will be to maintain a check onthe Executive and, in particular, the political party in power. If theExecutive or even the ruling party were to have a free hand in making theappointment, there would be an immediate loss of practical effectiveness andof public confidence. At best, appointees would risk being seen ashand-picked supporters who could be relied upon not to rock the boat. Atworst, they would be seen as the party's "hatchet men". It followsthat the appointment procedure must be one which involves a broader cast ofactors than those presently in power.

The precise appointment procedure will vary from country to country, buteach should address the issue of whether the proposed mechanism sufficientlyinsulates the appointment process. It must be one which ensures that anindependent person of integrity is likely to be appointed, and that such aperson is adequately protected while in office. The office-holder shouldalso be afforded the same rights of tenure of office as those enjoyed by asuperior court judge. Removal from office should never be at the discretionof the powers that be, but only in accordance with a prescribed and openprocedure, and only on the grounds of incompetence or misbehaviour.

Checks and balances in designing the framework

It is also worth considering whether the framework should provide for aprocedure to deal with the theoretical situation of the Anti-CorruptionAgency or Commission finding evidence that a President may have actedcorruptly. Although the likelihood of this happening may be remote,lawmakers must look ahead to unpredictable eventualities. They must alsoreflect on the issue of public distrust if the President is seen as beingoutside the scope of the Agency's effective jurisdiction. Even moresignificantly, a special provision will send the very important signal tothe public that the government and Parliament are serious about counteringcorruption and that no-one is exempt from the Rule of Law. It has also beensuggested that the public relations aspect of this provision alone warrantsits inclusion.

The head of an Anti-Corruption Agency cannot generally prosecute a Presidentwhile in office, as he or she is usually immune from suit or legal processunder the Constitution. Impeachment proceedings will generally follow theStanding Orders of the Legislature or Parliament, with the Speaker presidingover the proceedings. This immunity gap can be closed if the anti-corruptionlegislation allows the head of the Anti-Corruption Agency to report thematter in full to the Speaker of the Parliament where:

there are reasonable grounds to believe that the President has committed an offence against the Act; and
there is prima facie evidence of this which would be admissible in a court of law.

Thereafter, it would be the responsibility of the Speaker to proceed inaccordance with Standing Orders. An alternative is to provide for a SpecialProsecutor, along the lines of the United States legislation.

Powers of suspension are rightly written into legislation. Where there isreasonable cause to believe that powers are being misused, it makes sense tobe able to suspend officials while investigations are taking place. However,these powers can easily be abused. In one African country, for example, ahigh profile political figure was kept in jail simply because the regime hadnot appointed a judge to the Supreme Court.^[8]One can imagine a scenario in which the head of an Anti-Corruption Agencymight be suspended by some President in the future, simply because he wasinvestigating allegations which might be politically embarrassing. Theremust always be an appropriate check.

Is there a role for a Cabinet Minister in such a system of checks andbalances, and if so, what should it be? For example, an Anti-Corruption Billin Malawi stated that the Director or Head of the Anti-Corruption Agency"shall be subject to the direction and control of the [relevant]Minister on all matters of policy, but otherwise not be subject to thecontrol or direction of any person in the performance of his professionalduties".^[9]

But what does this actually mean? Where does "policy" end and"professional duties" begin? Would it be a matter of"policy" to decide not to investigate, for example, otherMinisters? And why is this provision needed at all? Would it not be betterthat all instructions from the Minister to the head of the Agency be inwriting and tabled in Parliament to ensure that the relationship istransparent? Or that the head of the Agency be equated to the Ombudsman: anindependent officer reporting through the elected representatives to thepeople on a matter of common concern?^[10]

In the customary African model, the report of an Anti-Corruption Agency orCommission investigating the allegedly corrupt conduct of any publicofficial must generally go directly to the President or to the Minister.However, where a Commission has been placed wholly in a President's Office(without the support of other separate accountability mechanisms), and soreports only to the President, it has generally been conspicuouslyunsuccessful in tackling high-level corruption.^[11]In South Africa, where the "Heath Commission" required theapproval of the Minister of Justice before it could act on a particularcomplaint, the working relationship collapsed on a change of Minister in1999.

The relationship between the Anti-Corruption Agency and the Director ofPublic Prosecutions (DPP) is also a critical one. What use is evidence ifthe suspect cannot be prosecuted? Generally a DPP is given, under theConstitution, sole oversight for all prosecutions and is empowered tointervene in any criminal proceedings initiated by any other person orauthority. However, in assessing the independence and the likelyeffectiveness of the Anti-Corruption Agency, the question arises whether,under the Constitution, the DPP enjoys sufficient independence in exercisingthe discretion to prosecute so as to ensure that there will be little scopefor political interference after investigations by the Agency have beencompleted.

The Agency's relationship with the public is also critical to success. SomeAgencies, such as the highly-successful Hong Kong ICAC, have establishedformal arrangements whereby public participation in policy formulation isensured. By providing for such an arrangement, which could take the form ofa committee chaired by the Minister of Justice, the anti-corruptionframework encourages public accountability.

The relationship with the public is also important in laying the foundationfor the "prevention" function of an Anti-Corruption Agency. Theframework must provide for the involvement of a wide range of people andinterests in the formulation of prevention policies and their execution. Inthis way, various stakeholders become involved in the prevention process,and their own institutions--both within government and in the privatesector--can be mobilised in support of the Agency's efforts. Anotherimportant factor is how the Agency can, in practice, change corruptpractices without expanding its powers beyond its mandate to includeenforcement.

It would be misleading to think that all recommendations from an Agency orCommission will always be relevant and practical. It might, therefore, becounterproductive to give an Agency the power to require that specificchanges be made. It may be better for the head of the administration todirect departments to cooperate with the Agency, and for the Agency to sitdown with a department's line management and work out practical andacceptable changes to the system under review. Solutions thus worked outtogether should be implemented by the department. If not, the departmentshould owe an explanation to both the head of the administration and to theAgency. There may, for example, be some change of conditions that renders arecommended reform no longer appropriate.

Nevertheless, some countries have found that a public service can ignore ananti-corruption body's recommendations. What is the answer? Can Parliament,perhaps through the Agency's annual report or otherwise, be used as a forumin which departments who fail to cooperate can be questioned and held toaccount for any such failure to revise bad practices?

Another important factor to be considered in establishing the legalframework for an Anti-Corruption Agency or Commission is that adequatepowers are given to access documentation and to question witnesses. In somecountries, efforts are made to restrict the access of an Agency toinformation. However, there is no reason, in theory or in practice, why anAgency ought not to enjoy, as the Ombudsman does, all the rights of lawenforcement officers and full access to government documents and publicservants.

Should a new law be retrospective?

A new Anti-Corruption Agency is usually established in a situation wherecorruption has become out of control. There will be a large number ofoutstanding cases requiring attention, and at the same time, urgently neededreforms in official practices and procedures. There will also be a scepticalpublic, unsure as to whether the anti-corruption efforts are genuine. Insuch circumstances it is easy for a new Agency to be swamped by old cases,and quickly take on the appearance of being just another ineffectual body.How can these dangers be avoided?

It is generally most constructive for the legislative framework to providethat a new Agency or Commission will focus on the future, rather than beforced to deal with outstanding and perhaps crippling caseloads inheritedfrom the police. Such a burdensome state of affairs could quickly overwhelmthe new Agency with enforcement obligations at the expense of otheressential tasks of prevention and containment. The Hong Kong ICAC,acknowledged as one of the most successful anti-corruption bodies yet to beestablished, overcame this through legislation which stated that:

Notwithstanding section 12 (jurisdiction), the Commissioner shall not act asrequired by paragraphs (a), (b) and (c) of that section in respect ofalleged or suspected offences committed before 1 January 1977 except inrelation to:
(a) persons not in Hong Kong or against whom a warrant of arrest was outstanding on 5 November 1977; (b) any person who before 5 November 1977 had been interviewed by an officer and to whom allegations had been put that he had committed an offence; and (c) an offence which the Governor considers sufficiently heinous to warrant action. ^[12]

Such legislation leaves existing offences to be dealt with in the ordinaryway (by the police) and under the existing law. However, it also allowsflexibility with respect to those cases which occurred in the past but whicha Head of Government deems in the public interest to be important enough tobe investigated by the Commission. Including this kind of provision in thelegislative framework helps a Commission begin on a "freshfooting" and allays any possible fears about witch-hunts over pastevents. It also makes the whole idea of putting the past aside morepalatable.

Freezing assets, seizing travel documents, protecting informers, professional privilege

It is important that the Anti-Corruption Agency or Commission have the powerto freeze those assets which it reasonably suspects may be held on behalf ofpeople under investigation. It should be able to do so prior to getting acourt order when speed is of the essence. Without this power, bankers couldsimply transfer money electronically in a matter of minutes. There shouldalso be a corresponding right of application to the High Court where a thirdparty feels aggrieved.

It is also usual for an Agency to have the power to seize and impound traveldocuments to prevent a person from fleeing the country, perhaps in emergencycases even to do so temporarily without having to wait for a court order.This is needed as the Agency's power of arrest generally arises only whenthere is reasonable cause to believe that an offence has been committed.

It is also customary that the Agency have the power to protect informers. Insome cases, informers may be junior government officials who complain aboutthe corrupt activities of their supervisors. (They cannot be expected tocomplain if they risk losing their jobs or other forms of harassment.)

Not only should there be legislative protection for informers, but physicalprotection should also be available--extending, where necessary, to safehouses and, in exceptional cases, sanctuaries in other countries.

In the context of protecting all informants, the relevant provisions inBotswana's legislation read as follows:

45.

(1) In any trial in respect of an offence under Part IV, a witness shall not be obliged to disclose the name or address of any informer, or state any matter which might lead to his discovery.

(2) Where any books, documents or papers which are in evidence (contain his name, etc.) the court...shall cause all such passages to be concealed from view or to be obliterated so far as may be necessary...

(3) If in any such proceedings...the court, after full inquiry into the case, is satisfied that the informer wilfully made a material statement which he knew or believed to be false or did not believe to be true, or if in any other proceedings a court is of the opinion that justice cannot be fully done between the parties thereto without disclosure of the name of the informer...the court may permit inquiry and require full disclosure... ^[13]

Legislation should also ensure that legal practitioners, accountants and auditors can allbe required to disclose certain information about their clients' affairs notwithstandingprofessional privilege.

Monitoring assets and incomes of public sector decision-makers

A useful tool for the prevention of corruption, the prime purpose of any Agency or Commission,is a well thought-out, strictly limited and effective system for the monitoring of theassets, income, liabilities and life-styles of certain public decision-makers and public serviceofficials. In designing this, particular attention should be paid to respecting legitimate aspectsof personal privacy.

Monitoring should be applied to those who hold positions where they transact with the publicor are otherwise well-placed to extract bribes, for example, in the area of revenue assessmentand collection and of the exercise of discretionary powers. Given that such a systemshould be implemented effectively, it must be decided whether the Agency should haveresponsibility for the random policing of income tax returns in respect of the officials whoseincomes are being monitored.

Any tax secrecy provisions should not prevail against the exercise of investigative powers, butviews may differ as to whether the authorisation to inspect them should come from a courtorder or simply be given to an investigator by the head of the Agency. If others are to haveresponsibility for the monitoring processes, the Agency must still be affordedtimely access to the disclosures.

Many hope to be able to use monitoring as a barrier to the acquisition ofillicitly-acquired wealth, but at best this has not yet been proved. Creating aframework where persons are prosecuted where they make false declarationswould only be really effective if they were then subject to a court orderingthe forfeiture of the property which had not been declared. The prime valueof declarations is that they can identify actual and potential conflictsof interest.

Corruption in public procurement

The use of "commissions" paid to local agents is the most frequent source of corruption ininternational transactions. Not only does this practice threaten sound decision-making, butalso adds to the national debt. Little or no income tax is paid by those receiving the payments.The public loses out in all three respects.

Therefore, legislation establishing an Anti-Corruption Agency or Commission could obligethose tendering for public contracts--and their local and other agents--to make full disclosureof all commissions and performance bonuses paid in respect of their bid and to provide,on request, full details of the services rendered for those commissions. Such disclosures shouldbe made at the time of the bidding and again within six months of the completion or abandonmentof a contract.^[14]

Foreign companies

Foreign suppliers often regard themselves as exempt from local laws, knowing that they arebeyond the reach of authorities and free to breach the criminal law by paying bribes to publicofficials. This situation can be resolved, at least in part, by adding a remedying provisionto the Act. Such a provision may state that where the Agency has evidence which establishes,on the balance of probabilities, that such a company or its subsidiary has committed anoffence against the Act, the Agency can apply to the court for an order excluding that firm orits directors and all other companies associated with it, from undertaking any business withthe government for a period of time decided by the courts.

Public hearings

The ICAC in New South Wales (Australia), another of the world's leading Anti-CorruptionAgencies, has for some years been empowered to hold public hearings. On these occasions,witnesses are summonsed to give evidence and although their evidence cannot be used againstthem in criminal proceedings, the hearings provide an opportunity to enlighten the public asto precisely what has been taking place. Once illegal and highly questionable patterns ofbehaviour have been exposed in this way, it is reasonable to expect that those involved arelikely to be shamed into changing their ways. In particular, an inquiry into abuses of travelprivileges by elected Members of the State Legislature led to greater clarity in procedures andhigher standards of conduct by those concerned.^[15]

However, such public hearings have sparked an intense debate and led to a re-examination ofthe way in which the agency is to work in the future. Public hearings outside the criminal justicesystem can leave allegations floating and, worse, prevent the trial of the suspects who sayjustifiably that they could not now have a fair trial. Although the practice may well be abolishedin New South Wales, in a country gripped by systemic corruption and anxious to put thepast behind it, the approach may have value as a way of exposing to public view and closingdown patterns of systemic corrupt practice, If there are to be no subsequent court proceedings(provided, of course, that full and honest disclosure has been made), it would serve as a wayof shaming those from the past, and as a means of highlighting practices which were unacceptableand so must be changed.

A few words of caution

An Agency or Commission cannot be expected to fight the country's corruption on its own. Itmust have the support of every sector of the community, including the public sector. Governmentdepartments and other official agencies, including the police, should be required to provideappropriate assistance. It should vigorously pursue a three-pronged approach of prevention,prosecution and community education in a coordinated manner. Civil society and the privatesector must be won over and made allies. Agency personnel can also be expected todevelop specialist investigative skills necessary to track down the illicit gains made from corruption.For example, a senior government official, the subject of corruption allegations, wasmonitored by investigators from his country's Anti-Corruption Agency while on a holiday outof the country with his family. While away, the official spent large sums on expensive fashionsand jewellery and purchased an apartment in the name of a relative. He used credit cardsissued by a foreign bank. The investigators traced the balance of the illicit money through thebank which issued the credit cards.^[16]In this regard, cultivating the cooperation of foreign Anti-CorruptionAgencies can be especially valuable.

Special care must be taken in appointment procedures, and in guaranteeing security of tenurefor those at the top levels of the Agency, to ensure that only those enjoying wide public confidencehold these positions. More than this, particular attention has to be paid to monitoringthe performance of officers at all levels within the Agency. However, just as an Anti-CorruptionAgency can be susceptible to those at the highest levels of government, it can also be usedas a weapon with which to persecute political opponents. Even where the independence of theoffice is respected and an Agency is able to operate freely, it occupies extremely difficult terrain.Imaginative thought has to be given as to how a powerful and independent anti-corruption body can itself be made accountable, and corruption within the organisationminimised. One approach which has worked well in Hong Kong is toestablish oversight committees on all aspects of the Agency's work (with participationfrom outside the Agency, including civil society and the privatesector). A file cannot be closed or an investigation discontinued before oneof these committees has been informed and has given its advice.

Unfortunately, Anti-Corruption Agencies have been more often failures thansuccesses. For reasons not yet wholly apparent, they have tended to be muchmore successful in East Asia--in countries such as Singapore, Malaysia, Taiwanand Hong Kong--than they have been elsewhere. One factor is clear: ineach of those countries the Agencies have enjoyed high levels of political andpublic support. They have also had adequate research abilities, and haveadopted both rigorous investigative methods and adventurous programmes ofprevention and public education. The comparatively recent introduction ofsimilar Agencies in Botswana and Malawi is being watched with interest.

One may suspect that Anti-Corruption Agencies have been established inother countries with perhaps no real expectation of their ever tackling difficultcases at senior levels of government. They have been staffedand resourced accordingly. Some have done good work in attacking defects inintegrity systems, but only at junior levels, however most have had a negligibleimpact on tackling "grand corruption". Even when Agencies or Commissionsare well-resourced and established under model legislation, to be whollysuccessful they will still have to rely on other institutions. If the judicial systemis weak and unpredictable, then efforts to provide remedies through the courts will be problematic.So where corruption is widespread, an Agency alone will not provide a completeanswer but be an important part of a broader national plan of action.

Some indicators for assessing Anti-Corruption Agencies as integrity pillars

Are the appointing procedures for the head of the Agency such as to ensure that he or she is competent, independent of the party in power, and likely to discharge the Agency's duties without fear or favour?
Once appointed, is the head of the Agency independent from political control in the day-to- day conduct of the Agency's affairs?
Is the Agency adequately resourced?
Do other staff enjoy independence from political interference in the discharge of their duties? Are there "no go" areas for investigators?
Are staff adequately trained?
Are staff adequately remunerated?
Is the Office of the President or Prime Minister within the Agency's jurisdiction? (If so, are the staff confident enough to exercise that jurisdiction should occasion arise?)
Are staff in sensitive areas subjected to random "integrity tests"?
Are there arrangements to ensure that the Agency itself cannot become a source of corruption?
Can the services of staff whose integrity has became doubtful be quickly dispensed with?
Is the Agency accountable to the Executive, the Legislature, the courts and the public?