Trillions of dollars lost to corruption globally – experts
By Lovemore Ranga Mataire
VICTORIA FALLS – The World Bank and the European Union estimate that about $1,5 trillion of the world’s gross domestic product is lost through corruption and this has hampered development in most African countries.
In his presentation at the just-ended International Conference for Research, Innovation and Development organised by the European Alliance for Innovation, the past chairperson for the Engineering Council of Zimbabwe, Martin Manhuwa, said corruption was a major obstacle to the development of safe and adequate infrastructure in Africa.
“A World Bank and EU Commission estimate of the cost of corruption (bribery and fraud) generally is five percent of the world’s gross product which translates to $1.5 trillion. Conservative estimate of cost of corruption in the international construction is five percent of the global construction sector, which translates to about US$200 billion,” said Eng. Manhuwa.
Eng. Manhuwa said the situation has changed from 20 years ago when corruption was widely regarded as normal, part of the culture, an inevitable part of business life and necessary economic oil.
He said business people from developed countries which enforced anti-corruption rules in their own countries used to believe that different rules applied when working in developing countries.
“It was inconceivable that a UK director would go to jail for a corrupt act committed overseas, or that a UK company would be convicted and fined for overseas corruption,” he said.
He said people’s mindset on corruption started changing in the 1990s with the gradual realisation that corruption was damaging.
Eng. Manhuwa said people began to realise that corruption kills in that substandard houses would collapse during earthquakes and kill people and massive plunder of public funds by government officials.
He said it was during this reawakening period that economists who previously argued that corruption helped growth were silenced and consensus emerged that corruption retarded growth.
Eng. Manhuwa said it was due to corruption that funds were diverted to corrupt officials, funders, contractors, consultants, suppliers and agents and the human cost was monumental as people died due to lack of food, healthcare and dangerous or dilapidated infrastructure.
“Corruption is pervasive in developing countries because of weak institutions and the lack of effective checks and balances. It is mainly the funds from the developed world, the development banks and donors that circulate in corrupt practices in the developing world. The construction sector is thus vulnerable to corrupt practices since it involves significant building contracts as well as monopolistic services.”
He said the realisation that corruption was damaging led to demands for change in the 1990s when a number of anti-corruption organisations emerged. Some of the organisations include Transparency International, the Organisation for Economic Co-operation and Development (OECD) established by anti-bribery working group and it was around the same time that the United States stated to advocate for other countries to adopt similar legislation to Foreign Corrupt Practices Act of 1977. Realisation grew that nothing would change unless there was international consensus. Calls emerged for international anti-corruption treaties to be signed.
A number of treaties have since been signed and these include the United Nations Convention Against Corruption with prosecution agencies now starting to investigate and prosecute companies and individuals worldwide for corruption.
Citing examples, Eng. Manhuwa said Siemens executives were prosecuted and imprisoned for a US$1.6 billion corruption scandal while Swiss subsidiary of French engineering company, Alstom, was fined $42m by Swiss authorities in 2011 in relation to bribery involving securing power station contracts in 15 countries.
In China, former railway minister Liu Zhijun was given a suspended death sentence in July (2013) for accepting a total of 64.6 million yuan in bribes to help 11 people secure contracts and promotions. His female colleague Ding Shumiao is accused of giving Liu more than 49 million yuan and arranging sexual favours for him. She faces trial in Beijing for bribery and illegal business activities after she “intervened in bidding for dozens of railway projects”.
Eng. Manhuwa said it was encouraging that some organizations were now beginning to look for independent verification that their clients, partners and supply chain have implemented anti-corruption systems.
He said the British Standards Institution (BSI) published BS 10500 in 2011 – a specification for an anti-bribery management system which has become a model for most countries.
“Consequently, tackling corruption in the construction sector requires the elaboration of a comprehensive strategy that involves efforts from all stakeholders, including public sector, private companies and consumers,” Eng. Manhuwa said.
He said governments must come up with strategies of combating corruption in both the private and public sector with key project participants committing to strict anti-corruption policies.
Eng. Manhuwa said effective anti-corruption strategies proposed by the World Bank, Transparency International and professional institutions include increasing political accountability, strengthening civil society participation, creating a competitive private sector and institutional restrains on power and improving public sector management.
Other proposals include the promulgation of laws and best practices uniformly implemented by regional organisations such as SADC, COMESA, ECOWAS and EAC.
Eng. Manhuwa also called for the establishment of Councils of Good Governance to advise on anticorruption policy ant the establishment of anti-corruption commissions