Partnering Against Corruption Initiative Global (PACI)
Project manager: Arthur Wassuna
This issue is a behavioural issue
There are many programs out there specialising in anti-corruption efforts. What sets yours apart from others?
The other thing is our private sector focus. If you look at the anti-corruption landscape, most are more focused on the public sector. But there are very few focused on the private sector. I think the third thing is the fact that we are a cross-sector initiative.
If you look at initiatives like EITI [Extractive Industries Transparent Initiative], they do call for companies to implement something. You could say they are somewhat private sector focused but they fail in terms of the third consideration. They are not cross sector but fairly focused on one sector. If you look at those three things, they are what make PACI unique.
How do you ensure that companies implement your directives correctly?
When companies join PACI we require them to complete what we call an implementation commitment survey. What that does it is says how far the company has gone even before joining in terms of implementing the program and assesses the PACI principles, what they need to do to actually implement the program.
Every two years they have to complete this survey and through that we are able to assess the extent to which they actually comply. Non-compliance is a consideration for delisting. Or, if there is a systemic case of corruption, again we delist them. We are very strict on that.
What countries that joined PACI have had the best results in their efforts to rid their institutions of corruption?
First of all, I’d like to mention that only companies can join PACI. If you look at a company like Siemens, for instance, they joined PACI three or four years ago after they had a big scandal that you may have heard about. Right now, even beyond PACI, they are one of the major companies working on the anti-corruption front. They’ve even established a USD 100 million fund to fund anti-corruption initiatives all around the world. This has been a huge transformation for the company and it also reflects well for the industries and countries in which they work.
In terms of countries, I wouldn’t talk of PACI specifically. But what we have is the Global Agenda Council on Anti-Corruption in the World Economic Forum, which is essentially a high ranking economic body for anti-corruption. One of the members of the council is the prime minister of Georgia. I think they’ve done a great job in terms of transforming the mindset in that particular country, making it more clean and less corrupt. They’ve taken quite a radical approach, but it just depends as what works in Country A might not work in Country B.
Mongolia doesn’t seem to be alone in the fight against corruption. How did you come to the decision to choose Mongolia and root out corruption?
Mongolia is a good example of what we look for when we’re going to these countries, and that is political commitment coming from the top. When we came here initially, we were drawn in by the mining sector in Mongolia. The forum has a mining team in addition to the anti-corruption team and they were doing a presentation on responsible mining. Part of that has a transparency compliment. My team was initially drawn into the project to provide some kind of presentation for that transparency bit.
When this was seen by some of the higher ranking government officials here, we were called upon to present a much broader based plan for all sectors, not just mining. That then led to the formation of PACI Mongolia.
The third thing is this country is now emerging. It’s a very good time to put in place some of these controls and make sure that these resources are actually used for the benefit of the population.
What do you think is the general trend for fighting corruption worldwide now?
For one, the fight against corruption in the world is picking up pace, driven chiefly by two factors. One has been the adoption by the Group of 20 [G 20] countries. They have a very ambitious anti-corruption action plan. This is the first time that the G20 has talked about the issue.
What is unique about that plan is part of it calls for the private sector to partner with the G20 group in terms of implementing the plan. That has never happened before. There’s been a very heightened focus on anti-corruption.
The second thing has been the promulgation of far-reaching national laws on the issue. You are talking about the U.S. FCPA [Foreign and Corrupt Practices Act], which is being enforced much more rigorously now.
I think those two issues from a policy perspective and also from a legal perspective have been critical in moving the fight forward.
What can someone do when they come into contact with corruption and are asked, for example, to give a bribe to a loan officer for approval of a mortgage?
It’s an interesting problem and it’s not just with the banking sector. It’s also many other service industries. When you want a service, the process continues to delay until you provide what they want, even if they don’t make an explicit request for a bribe.
It differs from country to country. In countries that I’m familiar with, the banking sector is heavily regulated. They have an oversight body that looks at various issues to do with banking, not just corruption but also interest rates and things like that. They should have some sort of bankers association where affected borrowers can go and complain about instances like this because it could be a very small issue that only concerns the relevant loan officer. That’s case number one. Case number two is it could be a systemic issue with the bank. It’s difficult to tell; it depends on the individual circumstances of the case.
The first line of defense would be to approach whoever it is that is the banking regulator and complain about this and have them take action if it’s a management issue. If it’s a local issue then they need to approach whoever the senior person is and make the complaint.
Mongolia has a law that punishes people for making such a complaint. It expects people to look elsewhere for that sort of service. These issues seem to be well ingrained in society too. How can we tackle this issue?
Part of it is what you’re saying about ordinary people’s awareness, making sure people are aware this is not acceptable. The other part is about enforcing the law. There must be a law against doing that and if it’s properly enforced then this shouldn’t happen. There should be some form of complaint mechanism to go through. At least that’s the way it’s done in other countries. I’m not sure about the particular Mongolian context, but that’s what I can think of.
When will you return to monitor the process?
I’ve hired a project manager for Mongolia, a Mongolian, to work this particular project, so it’s unlikely that I’ll come in person. But he will be coming more often to work with the chamber towards implementing the work plan they agreed on.
How will PACI follow the progress of companies implementing your anti-corruption directives?
The first thing for them was to design a plan. Sixty out of 150 of them, I think, have done that. The next stage for those who haven’t designed their plan is to design it and then the chamber can coordinate and make sure the plan is being enforced.
What else can we do to increase people’s awareness about corruption and it’s not something they should tolerate?
Last year I came to the Mongolian Economic Forum and as far as I can remember there wasn’t a dedicated anti-corruption session. I think this year there was a good effort to make sure that the issue is at least at the top of people’s agenda.
As PACI Mongolia continues to grow in stature, and size I guess that will feed into public awareness. In particular there is the fact that we don’t only have a multi-stakeholder board but also a very good backing from the president’s and the prime minister’s offices. This is critical in terms of changing mindsets and behaviours. It’s going to be a step-by-step process, but I think we are generally on the right track.
This issue is a behavioural issue
There are many programs out there specialising in anti-corruption efforts. What sets yours apart from others?
What we find that is unique about PACI are essentially three things. One is the fact that we actually require companies to implement something. That’s really unique. A lot of the other anti-corruption initiatives out there—if you talk about the U.N. Global Compact, Transparency International, and many others out there—most of them don’t require companies to implement anything. Most of them just say lets join together and lets go forward.
The other thing is our private sector focus. If you look at the anti-corruption landscape, most are more focused on the public sector. But there are very few focused on the private sector. I think the third thing is the fact that we are a cross-sector initiative.
If you look at initiatives like EITI [Extractive Industries Transparent Initiative], they do call for companies to implement something. You could say they are somewhat private sector focused but they fail in terms of the third consideration. They are not cross sector but fairly focused on one sector. If you look at those three things, they are what make PACI unique.
How do you ensure that companies implement your directives correctly?
When companies join PACI we require them to complete what we call an implementation commitment survey. What that does it is says how far the company has gone even before joining in terms of implementing the program and assesses the PACI principles, what they need to do to actually implement the program.
Every two years they have to complete this survey and through that we are able to assess the extent to which they actually comply. Non-compliance is a consideration for delisting. Or, if there is a systemic case of corruption, again we delist them. We are very strict on that.
What countries that joined PACI have had the best results in their efforts to rid their institutions of corruption?
First of all, I’d like to mention that only companies can join PACI. If you look at a company like Siemens, for instance, they joined PACI three or four years ago after they had a big scandal that you may have heard about. Right now, even beyond PACI, they are one of the major companies working on the anti-corruption front. They’ve even established a USD 100 million fund to fund anti-corruption initiatives all around the world. This has been a huge transformation for the company and it also reflects well for the industries and countries in which they work.
In terms of countries, I wouldn’t talk of PACI specifically. But what we have is the Global Agenda Council on Anti-Corruption in the World Economic Forum, which is essentially a high ranking economic body for anti-corruption. One of the members of the council is the prime minister of Georgia. I think they’ve done a great job in terms of transforming the mindset in that particular country, making it more clean and less corrupt. They’ve taken quite a radical approach, but it just depends as what works in Country A might not work in Country B.
Mongolia doesn’t seem to be alone in the fight against corruption. How did you come to the decision to choose Mongolia and root out corruption?
Mongolia is a good example of what we look for when we’re going to these countries, and that is political commitment coming from the top. When we came here initially, we were drawn in by the mining sector in Mongolia. The forum has a mining team in addition to the anti-corruption team and they were doing a presentation on responsible mining. Part of that has a transparency compliment. My team was initially drawn into the project to provide some kind of presentation for that transparency bit.
When this was seen by some of the higher ranking government officials here, we were called upon to present a much broader based plan for all sectors, not just mining. That then led to the formation of PACI Mongolia.
The most important thing was political commitment, which was there, and also a strong chamber [the Mongolian National Chamber of Commerce and Industry] and business community that’s committed to anti-corruption.
The third thing is this country is now emerging. It’s a very good time to put in place some of these controls and make sure that these resources are actually used for the benefit of the population.
What do you think is the general trend for fighting corruption worldwide now?
For one, the fight against corruption in the world is picking up pace, driven chiefly by two factors. One has been the adoption by the Group of 20 [G 20] countries. They have a very ambitious anti-corruption action plan. This is the first time that the G20 has talked about the issue.
What is unique about that plan is part of it calls for the private sector to partner with the G20 group in terms of implementing the plan. That has never happened before. There’s been a very heightened focus on anti-corruption.
The second thing has been the promulgation of far-reaching national laws on the issue. You are talking about the U.S. FCPA [Foreign and Corrupt Practices Act], which is being enforced much more rigorously now.
There is also the U.K. Bribery Act, which came into force last year. It provides for wide-ranging jurisdiction for U.K. courts to punish companies that engage in corruption, even outside the territorial boundaries of the UK. That’s a huge impetus for companies to do clean business because many companies have operations within the UK and then fall under the act.
I think those two issues from a policy perspective and also from a legal perspective have been critical in moving the fight forward.
What can someone do when they come into contact with corruption and are asked, for example, to give a bribe to a loan officer for approval of a mortgage?
It’s an interesting problem and it’s not just with the banking sector. It’s also many other service industries. When you want a service, the process continues to delay until you provide what they want, even if they don’t make an explicit request for a bribe.
It differs from country to country. In countries that I’m familiar with, the banking sector is heavily regulated. They have an oversight body that looks at various issues to do with banking, not just corruption but also interest rates and things like that. They should have some sort of bankers association where affected borrowers can go and complain about instances like this because it could be a very small issue that only concerns the relevant loan officer. That’s case number one. Case number two is it could be a systemic issue with the bank. It’s difficult to tell; it depends on the individual circumstances of the case.
The first line of defense would be to approach whoever it is that is the banking regulator and complain about this and have them take action if it’s a management issue. If it’s a local issue then they need to approach whoever the senior person is and make the complaint.
Mongolia has a law that punishes people for making such a complaint. It expects people to look elsewhere for that sort of service. These issues seem to be well ingrained in society too. How can we tackle this issue?
I totally agree and that is why I say this issue is a behavioural issue. It’s about changing mindsets in behaviour, it’s not about skill. A loan officer knows it’s wrong to demand a bribe, but he’ll do it because he knows he can get away with it or because it’s something that is established practice. That’s a more difficult problem to solve.
Part of it is what you’re saying about ordinary people’s awareness, making sure people are aware this is not acceptable. The other part is about enforcing the law. There must be a law against doing that and if it’s properly enforced then this shouldn’t happen. There should be some form of complaint mechanism to go through. At least that’s the way it’s done in other countries. I’m not sure about the particular Mongolian context, but that’s what I can think of.
When will you return to monitor the process?
I’ve hired a project manager for Mongolia, a Mongolian, to work this particular project, so it’s unlikely that I’ll come in person. But he will be coming more often to work with the chamber towards implementing the work plan they agreed on.
How will PACI follow the progress of companies implementing your anti-corruption directives?
The first thing for them was to design a plan. Sixty out of 150 of them, I think, have done that. The next stage for those who haven’t designed their plan is to design it and then the chamber can coordinate and make sure the plan is being enforced.
What else can we do to increase people’s awareness about corruption and it’s not something they should tolerate?
Last year I came to the Mongolian Economic Forum and as far as I can remember there wasn’t a dedicated anti-corruption session. I think this year there was a good effort to make sure that the issue is at least at the top of people’s agenda.
As PACI Mongolia continues to grow in stature, and size I guess that will feed into public awareness. In particular there is the fact that we don’t only have a multi-stakeholder board but also a very good backing from the president’s and the prime minister’s offices. This is critical in terms of changing mindsets and behaviours. It’s going to be a step-by-step process, but I think we are generally on the right track.
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