Anti-Corruption Network for Eastern Europe and Central Asia 7 th General Meeting, 25-27 June 2008, Tbilisi, Georgia 53 ANNEX 1: PRESENTATIONS FROM PLENARY SESSION 1 Monitoring Anti-Corruption Efforts in Europe Mr. Drago Kos, President, GRECO; Chairman, Commission for Prevention of Corruption, Slovenia Slide 1 Monitoring anti-corruption efforts in Europe Drago KOS President of GRECO Chairman of the C. for the Prevention of Corruption Slovenia Anti-Corruption Network for Eastern Europe and Central Asia Tbilisi, 25-27 June 2008 Slide 2 International anti- corruption standards The Twenty Guiding Principles for the Fight against Corruption (1997) The Criminal Law Convention on Corruption (1999) The Civil Law Convention on Corruption (1999) Codes of Conduct for Public Officials (2000) Funding of Political Parties (2003) Convention on the fight against corruption involving officials of the EC or officials of Member States of the European Union Convention on the protection of the EC financial interests + protocols OECD Convention on combating bribery of foreign public officials in international business transactions UN Convention against corruption (UNCAC, 2003)
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Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
53
ANNEX 1: PRESENTATIONS FROM PLENARY SESSION 1
Monitoring Anti-Corruption Efforts in Europe
Mr. Drago Kos, President, GRECO; Chairman, Commission for Prevention of Corruption, Slovenia
Slide 1
Monitoring anti-corruption efforts in
Europe
Drago KOS
President of GRECO
Chairman of the C. for the Prevention of Corruption
Slovenia
Anti-Corruption Network for Eastern Europe and Central Asia
Tbilisi, 25-27 June 2008
Slide 2 International anti-
corruption standardsThe Twenty Guiding Principles for the Fight against
Corruption (1997)
The Criminal Law Convention on Corruption (1999)
The Civil Law Convention on Corruption (1999)
Codes of Conduct for Public Officials (2000)
Funding of Political Parties (2003)
Convention on the fight against corruption involving
officials of the EC or officials of Member States of the
European Union
Convention on the protection of the EC financial interests
+ protocols
OECD Convention on combating bribery of foreign public
officials in international business transactions
UN Convention against corruption (UNCAC, 2003)
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 3
The 20 Guiding Principles forthe Fight against Corruption
A catalogue of measures to be included in comprehensive national strategies against corruption :
Awareness of corruption, transparency in public administration, independence and specialisation of authorities, criminalisation of corruption, proceeds of corruption, legal persons, immunity, media, research etc.
Monitoring: GRECO
Slide 4
Criminal Law Conventionon Corruption
Wide scope to combat corrupt practices throughcriminal law
Provides for :- co-ordinated criminalisation of a wide range of corruption related offences; including private corruption, trading in influence and acccounting offences- complementary criminal law measures, including corporate’s liability- international co-operation
Monitoring: GRECO
Slide 5
Civil remedies, compensation for damage
resulting from corruption
Validity of contracts
Civil law measures
Protection of whistleblowers
Monitoring: GRECO
Civil Law Conventionon Corruption
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 6
Ethical climate in public administration
Ethical conduct expected from public officials
Information to the public on conduct to be expected
Monitoring: GRECO
Model Code of Conductfor Public Officials
Slide 7 Recommendation 2003/4 on common rules against corruption in the funding of political parties and electoral campaigns
Transparency
Supervision
Sanctions
Monitoring: GRECO
Slide 8
Group of States against Corruption
(GRECO)
Partial and Enlarged Agreement of the Council of Europe
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 9 GRECO
Group of States against Corruption
International monitoring mechanism
Established in 1999 by the Council of Europe
46 members (without Liechtenstein, San
Marino, Belarus)
Open to member and non-member States of the Council of Europe
TASK:
- Monitoring the observance of Council of Europe’s international legal instruments on corruption
Slide 10
GRECOWorking methods
Mutual evaluation and peer pressure
Follow-up mechanism
Slide 11 GRECO Evaluations
Procedure: Evaluation rounds
Specific provisions selected
Questionnaire
Evaluation teams
Country visits
Evaluation reports
Recommendations
Compliance procedure
Publication
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 12 GRECO
First Evaluation Round
1 January 2000 - 31 December 2002
Evaluation themes:- Principle 3 : independence and autonomy of persons in charge of the prevention, investigation, prosecution and adjudication of corruption offences
- Principle 6 : to limit immunity from investigation, prosecution or adjudication of corruption offences
- Principle 7 : promotion of the specialisation of persons or bodies in charge of fighting corruption
(“20 Guiding Principles”)
Slide 13
GRECO findings of the first evaluation
round
Three main fields of necessary improvements:
substantive law
implementation of adopted legislation
general topics important for the fight against
corruption
Slide 14 GRECO
Second Evaluation Round
1 January 2003 – 31 Dec. 2006
Evaluation themes:- Proceeds of Corruption
- Public Administration and Corruption
- Legal Persons and Corruption
(“20 Guiding Principles” and Criminal Law Convention on Corruption)
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 15
GRECO findings of the second evaluation
round
Main fields of necessary improvements:
Effectivenes of ML mechanisms
Conflicts of interest
Pantouflage/revolving doors
Whistleblowers‟ protection
Responsibility of legal persons
Slide 16 GRECO
Third Evaluation Round
1 January 2007 – 31 Dec. 2009
Evaluation themes:- Criminalisation of corruption (ETS 173, 191)
- Transparency of party funding (Rec.2003/4)
Slide 17
GRECO findings of the third evaluation
round
?
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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The UN Convention against Corruption and its Review Mechanism in the Making
Mr. Giovanni Gallo, Anti-Corruption Expert, UNODC
Slide 1
The United Nations
Convention against Corruption
and its review mechanism in the making
7th Meeting of the Anti-Corruption Network for
Eastern Europe and Central Asia Tbilisi, Georgia, 25-27 June 2008
Slide 2
2
2
13
24
37
54
80
93
117
108
0
20
40
60
80
100
120
140
Dec
-03
Mar
-04
Jun-
04
Sep-0
4
Dec
-04
Mar
-05
Jun-
05
Sep-0
5
Dec
-05
Mar
-06
Jun-
06
Sep-0
6
Dec
-06
Mar
-07
Jun-
07
Sep-0
7
Dec
-07
Mar
-08
Adopted by General Assembly Resolution 58/4 of 31 October 2003
Entered into force on 14 December 2005
117 Parties, 140 Signatories
Status of ratification
14 December 2005
30 ratification
entry into force
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 3
3
Status of ratification by region (total: 117)Western
European and
other States: 16
(14%)
Group of Latin
American and
Caribbean
States: 23 (20%)
Group of Eastern
Europe States: 19
(16%) Group of Asian
States: 21 (18%)
Group of African
States: 38 (32%)
Slide 4
4
COSP 3
The Conference of the States Parties
2009 Qatar
10-14/12/2006, Jordan
COSP 228/1 – 1/2/2008, Indonesia
COSP 1
Meetings of the Working Groups on:
Technical assistance
Asset Recovery
Review of Implementation
Slide 5
5
1st Conference of the States Parties
Review of Implementationmechanism necessary
Technical AssistanceInformation Gathering
self-assessment checklist
Asset Recovery
Amman, Jordan
December 2006
The first session of the CoSP held
in Jordan in December 2006,
adopted 8 resolutions and 1
decision.
I would like to focus on what
emerged as the three key areas at
the Conference: which were
Review of Implementation, Asset
Recovery and Technical Assistance.
Related to these, the Conference
also adopted a resolution on how it
wants the Secretariat to gather
information both on the
implementation of the Convention
and on technical assistance needs.
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 6
6
2nd Conference of the States Parties
Review of implementation – parameters of the review mechanism
Asset recovery
Technical assistance
Appeal to implement provisions of UNCAC
Bribery of officials of public international organizations
Venue of COSP 3
Slide 7
7
Towards the establishment the UNCAC review mechanism
A two-pronged approach:
The horizontal review - all States Parties
The pilot review programme - 28 volunteer countries
Slide 8
8
The horizontal review
Horizontal review
covering all
chapters
Prevention (art. 5, 6, 9)Criminalization
(art. 15, 16, 17, 23, 25)
Asset Recovery
(art. 52, 53, 54, 55, 57)
International Cooperation
(art. 44, 46)
UNCAC self-assessment checklist
strong emphasis on technical assistance needs and donors’ coordination
As a tool to facilitate the provision
of information, the Conference
decided to use a self-assessment
checklist.
It requested the Secretariat to
finalize and distribute the self-
assessment checklist which was
done by 15 June.
The checklist is aimed at a
horizontal review of the
Convention, covering provisions
from all chapters of the Convention.
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 9
9
8 9
15 1612
2
4
30
124
7
411
1
African Group Asian Group Eastern
European Group
GRULAC WEOG
Reporting parties Reporting signatories Non reporting parties
Response to the UNCAC self-assessment checklist
Slide 10
10
UNCAC adherence by ACN members
Not signed
3Signatories
1
Parties
16
UNCAC self-assessment reports submitted by
ACN members
Yes
13
No
3
ACN participating countries
Slide 11
11
The voluntary pilot review programme
28 participating Countries:
Argentina, Austria, Bolivia, Burkina Faso,
Colombia, Croatia, Dominican Republic, Fiji,
Finland, France, Greece, Indonesia, Jordan,
Mexico, Mongolia, the Netherlands, Norway,
Pakistan, Panama, Peru, Philippines, Poland,
Romania, Serbia, Sweden, Tanzania, the UK,
USA
Main features:
Strictly voluntary
Limited in scope
Limited in duration
16 countries representing all
geographical regions are
participating in this pilot
programme. The main features of
the programme are that it is:
strictly voluntary,
limited in scope - it reviews 8
articles from all chapters of the
Convention,
and it is limited in duration – for the
time being its first phase is
expected to end with the report
back to the 2nd
session of the
Conference.
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7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 12
12
Voluntary pilot programme: strategy
Methodology
combined self-assessment / group / expert review method
identify implementation gaps and needs for technical assistance
recommend concrete measures to implement the Convention
Aims and expected outcomes
assist participating countries
test effectiveness and efficiency of the approach
provide information to the CoSP on lessons learnt and experience gained
suggest possible elements of a full-fledged review mechanisms
facilitate decision on the review mechanism at 3rd session of the Conference
Slide 13
13
CoSP 2, the review mechanism should
Assist States parties in their implementation efforts
Be transparent, efficient, non-intrusive, non-adversarial, non-punitive, inclusive and impartial
Not produce any form of ranking
Provide opportunities to share good practices and promote collaboration
Complement existing international and regional review mechanisms, cooperate with them and avoid duplication of efforts
Slide 14
14
Working Group on Review of Implementation to hold 4 meetings,prepare TOR for a review mechanism for consideration, action andpossible adoption by CoSP3
UNODC to assist Group by submitting background information,incl. TORs of existing review mechanisms and States to submitproposals for TOR for consideration by Group
UNODC to continue pilot review programme
UNODC to expand and States to complete the self-assessmentchecklist, to create a comprehensive information-gathering tool
Relevant decisions by the Conference
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 15
15
Extended Pilot Review
Programme
Expanded self-assessment
checklist
Road to Doha 2009 – likelihood of review mechanism and…
Implement other resolution
adopted by CoSP2
Parliamentarians,
private sector, media
Education, awareness raising
“play fair in sports & life”
Slide 16
16
For further information:
United Nations Office on Drugs and CrimeVienna International Centre
All stakeholders with a business relationship with ABB are able to make a report by telephoning the ABB stakeholder hotline or submitting a Web report
Telephone the ABB stakeholder hotline
on + 41 43 317 33 67
This service is provided by an independent third party and is available 24 hours a day, 7 days a week
Make a Web submission report Click on the following link to submit a Web report. Once the report is received by the ABB Group compliance office, you will receive an e-mail response to confirm receipt
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
80
Applying International Standards to Private Sector Operations
Mr. Michael Davey, Director for Caucasus, Moldova & Belarus, EBRD
Slide 1
European Bank for
Reconstruction and Development
Applying International
Standards to Private Sector
Operations
Michael Davey
Director for Caucasus,
Moldova & Belarus
Slide 2
What are the EBRD‟s objectives?
To promote transition to market economies by
investing mainly in the private sector
To mobilise significant foreign direct investment
To support privatisation, restructuring and better
municipal services to improve people’s lives
To encourage environmentally sound and
sustainable development
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 3
Office of the Chief Compliance Officer
Independent from banking operations
Responsible for promoting integrity and
business ethics in EBRD and in EBRD
financed projects
Focal point for anti-corruption work
Slide 4
Prevention
Integrity procedures and approvals
Robust integrity due diligence
Independent integrity investigations
Slide 5
Integrity Due Diligence Procedures
Red flag checklists (Integrity and ML)
Integrity concerns brought to Credit and
CCO
Integrity Investigators (outside firms)
Discussion in Operations Committee
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7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 6
Integrity Guidelines
New guidelines adopted in June 2005
Criteria to assist banking teams
Promotes greater transparency and
consistency
Does not substitute for exercise of judgement
Slide 7
Avoid Convicted Criminals
….and those under criminal investigation
However, take account of whether
investigations or convictions are politically
motivated or commercially driven
Tax convictions and investigations often
misused
Slide 8
Check “Blacklists”
…only take account of internationally
recognised checklists
Look especially to MDB blacklists (avoid
reputational risk)
World check good source
If previously on list, when and why removed?
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 9
Past vs. Present
Credible evidence linking to current ties
to organised crime or criminal activities
What is credible evidence?
Tax evasion or tax avoidance?
Slide 10
Risk Based Approach: PEPs
Identify PEP
Get senior management approval
Determine source of wealth
Determine level of risk
Ensure continuous monitoring
Slide 11
EBRD‟s AML framework
Principles / Policies / Procedures and Guidance Notes in place
Training and awareness raising seminars delivered (approximately five per annum)
Banking and Credit (Risk Management) departments conduct specific screening on a project by project basis
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 12
EBRD‟s AML measures (1)Know your customer
Know your customer
– Full responsibility of project teams
– Graduated response based on perceived risks
Completion of Red Flag Integrity and Anti-Money Laundering Checklists
– Retained in Project files
– Concerns raised with Credit (Risk Management) and Chief Compliance Officer
Slide 13
Public Procurement
Application of Bank’s Procurement Rules and
Procedures
Preventing abuses through open tenders
Addressing fraud and corruption in
procurement in EBRD funded projects
Slide 14
International Co-operation
In the fight against corruption, the EBRD
works with and supports:
– IOs such as OECD and Council of Europe
– Extractive Industries Transparency Initiative
– Financial Action Task Force
– IFI Task Force and MDB Investigators Forum
– Transparency International
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Slide 15
Conclusions
EBRD long experience for working in
challenging environments
Our fraud and corruption policies are based
on this experience but continue to evolve
Need to be part of international standard
setting
Need to be lock-step with other MDBs
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Going Beyond Compliance in Relationship with Government
Mr. Archil Bakuradze, Deputy Secretary General, International Association of Business and
Parliament (London), Chairman, Anti-Corruption Commission of the International Chamber of
Commerce – Georgia
Chairman, Ladies and Gentlemen,
It is a great delight to attend and to be able to speak at this international meeting which brings
together exceptionally wide range of expertise on the subject of anti-corruption.
Objective of my presentation is to introduce two practical initiatives from Georgia, which will
illustrate the role of business in reducing, or to be more precise, preventing corruption, which is
the main focus of this session. Yesterday we have heard a lot about fighting corruption,
identifying and persecuting corruption-related crime, whereas this session will be more about
preventing corruption and what business can do in this direction.
I was thinking what should I call this speech and I decided it should be: “GOING BEYOND
COMPLIANCE IN RELATIONSHIP WITH GOVERNMENT”. In this speech I will try to
answer the following questions:
What companies can do about preventing corruption – is it enough just not to pay bribes,
facilitation payments, kickbacks etc.?
How good governance determines the operating framework for companies and at what
degree it reduces the risk?
What are the mechanisms which ensure transparency and effectiveness in public private
dialogue?
How this dialogue creates a basis to identify and tackle potential problems of corruption?
First example of business initiative which is oriented on anti-corruption is about the ICC Georgia.
The objective of the Anti-Corruption Commission, which has been created just two months ago, is
to contribute towards the achievement of ICC-Georgia‟s goal to create a corrupt-free business
environment in Georgia. Main directions are:
Regular assessment of the state of corruption and identification of policy areas,
legislation and gaps in public administration which contribute towards corruption;
Elaboration of recommendations on anti-corruption initiatives for the Government and
private sector;
Development of the Anti-corruption Code and Guidelines
Using international best practice from ICC to increase awareness among ICC Members
and wider business community on anti-bribery instruments, prevention, integrity
programmes, ethical reporting by companies and ways to resist various extortion
scenarios.
Support in ratification of the UN Convention against Corruption.
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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The role and responsibility of business community is immense. The challenge is making the
business active, engaged and interested in the issues of common concern, before these particular
problems affect the business itself. In Georgia we are observing a process of changing the
business culture where companies increasingly assume their share of responsibility in the policy
dialogue. Of course the dialogue is a two way process and commitment of both parties is
important.
It is worthwhile to mention that there is also a crucial political will on the side of the Georgian
Government to improve economic governance and policy dialogue with businesses. There is a
good realisation that economy should grow to be able to sustain the achievements and current
momentum of reforms. But it is not always easy to translate this “good will” on the top of political
establishment into the coherent action of entire body of public administrators, however drastically
you reduce their number and size. It is like a big ship. If you turn the wheel it takes miles upon
miles to change a course. Therefore, it is not an easy task to introduce changes at this level and it
certainly takes time.
The role of business is to act collectively on the issues of common concern and be an equal
partner with government in implementing reforms.
Another initiative which is a good example of transparent and effective pubic-private dialogue in
Georgia is the work conducted by International Association of Business and Parliament.
Economic legislation is becoming complex. It is not an easy task to legislate for rapidly changing
economies which are not only complex due to new areas of business and development of
technology but also interdependent in result of globalisation.
Government has a task to be ahead of competition and develop a policy which will be beneficial
for economy and had minimum unintended consequences for other groups in society. They should
also have to take into consideration employment, social, environmental and many other aspects of
their decisions.
On top of it government should make decisions very quickly as there are big and rising pressures
from voters, which are never satisfied as well as pressures from interest groups and international
community to reform at a very high speed.
In this situation for Government it is important to listen and communicate with these groups,
including the business. This is not an easy task as it requires professional, systemic
communication as well as resources, people and a planning of the efforts.
There is another hurdle which both government and business should think about. This is a public
perception that any dialogue or cooperation between business and politicians is corrupt. Therefore
the dialogue should take place within the platforms or with the help of mechanisms which have a
strong element of transparency to ensure enough safeguards and insurance policies for both
government and businesses against such suspicions.
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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By their nature politicians not always see business from business point of view and due to their
lack of experience do not understand the business realities. Although we have number of
prominent politicians in Georgia who came from successful business career one can hardly agree
that whole government, civil service, Parliament and judiciary knows modern business and have
full understanding of challenges confronted by companies.
From another side, businesses do not fully understand how government works while dealing with
very distinct expectations from different groups in society.
In result, there is a degree of alienation, distrust and misconceptions towards one another.
Majority of politicians think of business in terms of tax payers without fully appreciating other
dimensions of it. Soviet legacy of administrative command economy is unfortunately still has an
impact even 17 years after the collapse of the Soviet Union.
Therefore it is obvious that new mechanisms are needed to ensure continuous, effective and
transparent policy dialogue between business and Government. Without this cooperation the anti-
corruption and many other policies will not be developed and effectively implemented.
The question is: How we achieve such a dialogue and ensure transparency and integrity of
it?
Before I answer this question I would like to highlight another aspect of governance, which has
crucial importance for young democracies like Georgia.
I would like to elaborate on the division of power between branches of government and namely
between executive and the legislature. This division, greater autonomy of Parliament from
executive and institutional strength has still to come. Parliaments as elected bodies have
responsibility to legislate on behalf of voters and various interest groups in society. Also
Parliaments are there to oversee the work of executive. This is a powerful mechanism within the
constitution for the system of checks and balances. Sometimes we try to reach accountability and
transparency of government by many other mechanisms, ignoring a significant one which is right
there, in the Constitution.
Parliaments have their unique role in governance including in the area of fight against corruption.
Unfortunately Parliaments are always perceived as too political, sometimes too incompetent, very
short-term oriented and unreliable.
International development assistance has traditionally marginalised Parliaments and usually
cooperation has been implemented more in „executive to executive‟ mode.
Yet, Parliaments are elected bodies which on behalf of society oversee the actions of the executive
and should be the guarantors of the integrity and effectiveness in executive.
However successful the government is, if system of checks and balances is absent, we cannot
claim that government has achieved its goals. There is a need in greater accountability and
openness within the system of government first of all towards the Parliament.
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Businesses should also understand better the role of Parliament, utilise its powers, learn about its
culture and how it operates. This mutual understanding is the basis on which the effective policy
dialogue can be built on.
Business knows all about the shareholder value, employee relations, community investment and
even global warming. Yet businesses frequently ignore or do not do anything about a very
important stakeholder – the government and Parliament, which can overnight change entire
operating environment for the business.
That‟s why there is a need for business to be pro-active and engage in a regular, transparent and
long term relationship with government and Parliament.
Coming back to the questions How to achieve such dialogue and ensure transparency and
integrity of it? I would like to tell you more about the business and Parliament concept.
It is essentially an integrity exercise which allows the effective and transparent platform for
dialogue between businesses and Parliament. On the basis of this cooperation it is possible inter
alia to eliminate areas of policy, legislation or deficiencies in public administration which are
conducive to corruption.
The business and Parliament concept was devised 30 years ago in the UK Parliament. Now it
operates within 15 national Parliaments as well as the European Parliament. IABP fosters
transparent and effective relationships between businesses and legislators to address all
considerations I have mentioned earlier.
The Code of Principles guides all activities implemented within our national Business and
Parliament Schemes. It defines the scheme as being neutral, independent, non-lobbying, non-
sectoral and apolitical.
There are structures, policies and processes which ensures the integrity of the operation.
The role of the International Association is to accredit on the annual basis the national business
and Parliament schemes, help them through exchange of knowledge and information and support
creation of new schemes worldwide.
Georgia was the first country among „emerging democracies‟ which adopted the concept and
makes a good use of this mechanism even today. IABP Georgia play significant role in
maintaining a transparent and productive dialogue between businesses and the legislature. This
model also successfully operates in Armenia and Moldova.
In conclusion, it is worthwhile mentioning that good governance and corrupt-free business climate
cannot come with one policy or a single structure installed within the government. It should come
from the variety of initiatives both from government as well as a business community. The work
of ICC and the International Association of Business and Parliament in Georgia are good
examples of such successful initiatives.
Thank you very much for your attention!
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
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Fighting Corruption Through Collective Action
Mr. Michael Jarvis, Business, Competitiveness, and Development Programme, World Bank
Institute
Slide 1
Fighting Corruption Through
Collective Action
Aim of this PPT is to give introduction to topic. Focus is to highlight big
picture and why corruption matters for everyone.
Slide 2 Corruption remains a significant problem for business (2005) …
0 10 20 30 40 50 60 70 80 90 100
EU-comp
Arm
BiH
Bul
Cro
Geo
Mac
Mol
Rom
Ukr
Question: “Can you tell me how problematic are these different factors for the operation and growth of your business.” Percentage of firm managers who answered corruption is a moderate or major problem.
Source: Anticorruption in Transition 3 – Who is Succeeding … and Why? (Washington, DC: The World Bank, 2007)
Anti-Corruption Network for Eastern Europe and Central Asia
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Slide 3
State capture by private interests
0
1
2
3
4
Geo Ukr Cro Rom Bul Mol SAM Mac Alb BiH
sta
te c
ap
ture
in
dex
Source: Anticorruption in Transition 3 – Who is Succeeding … and Why? (Washington, DC: The World Bank, 2007)
State Capture, 2002-2005
State Capture Index measures the extent to which private
payments/gifts to parliamentarians to affect their votes, or
to government officials, to affect the content of
government decrees, had a direct impact on their
business.
Slide 4
Project Level
Combating corruption in
World Bank Group operations
Country Level
Helping countries build more capable
& accountable states
Global Level
Working with development partners, sharing experience &
addressing transnational issues
Key elements of World Bank‟s GAC strategy
Key Instruments:
• Investment climate
• Engaging private sector
on anticorruption
• „Demand-side‟
Key Instruments:
• Risk mapping
• Procurement
• INT Investigations
• Debarring corrupt firms
Key Instruments:
• Support global
conventions (OECD,
UNCAC)
• StAR
Instruments for Private Sector Role
CORE SLIDE
Key messages:
• the strategy is not only about anticorruption in Bank projects
• it is about helping countries strengthen governance to enable
development
as well as transnational issues, such as asset recovery and the role of
multinationals from developed countries in corruption
Anti-Corruption Network for Eastern Europe and Central Asia
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Slide 5
Public Management
Public financial management & procurement
Administrative & civil service reform
Governance & Service Delivery
Transparency, participation, accountability in service provision (health, education,
transport)
Sector-level corruption issues (EITI, forestry)
Civil Society, Media & Oversight Institutions
State oversight institutions (parliament, judiciary, SAI)
Transparency & participation (right to information, user
participation)
Civil society & media
Local GovernanceCommunity-driven development
Local government transparency
Downward accountability
Private Sector
Competitive investment climate
Responsible private sector
Helping countries improve governance Different entry points across countries
Coalition building across stakeholders
CORE SLIDE
Key messages: to clarify that
• there are many entry points for governance reform, and the choice
depends on country context
• while there are many examples of good work in all these areas, the Bank
has historically focused within governance primarily on public
management
• The Bank wants to scale up work in the other four areas, as appropriate
and in partnership with other donors: these are the frontiers
building multistakeholder constituencies for reform are a critical aspect of
managing the reform process
Slide 6 Fighting corruption collectively with all
stakeholders increases the impact of
individual action
”Collective Action”:
Is a collaborative and sustained process of
cooperation between stakeholders.
Increases the impact and credibility of individual
action.
Brings vulnerable individual players into an alliance
of like-minded organizations.
Levels the playing field among competitors.
May complement, or temporarily substitute for and
strengthen, weak local laws and anti-corruption
practices.
BUT: Collective Action is not easy or quick, and
requires patience, hard work and expertise.
Key characteristic
Companies
GovernmentCivil society
Collective action usually
involves various
stakeholders
Collective
Action
Why should companies also engage against corruption collectively - as well
as individually?
Collective action is a proven method of fighting corruption. Mexico,
Indonesia, Ecuador and Germany (among many others) are locations where
business and other stakeholders presently use various forms of collective
action.
It is used in:
variety of industry sectors
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conditions (emerging and developed markets)
variety of different forms – from project-specific integrity pacts to long
term business initiatives
Operationally, collective action can be incorporated into a company‟s
project management, corporate risk management, and compliance activities.
Strategically, using collective action is a tangible demonstration of a
company‟s commitment to many of the principles underlying corporate
social responsibility and “effective” compliance program activities.
Slide 7
Implementing collective action: options
Integrity pact Anti-corruption declaration
Formal, written contract between
customer and bidding companies
Bidding and implementation
processes monitored by external
monitor
Sanctions apply in case of violations
Ethical principles bind
signatories to not engage in
corruption in the daily business
Public commitment leads to
enforcement 'by honor‘
Initiative can advocate anti-
corruption with government
Anti-corruption principles bind
signatories to not engage in
corruption during project
Public commitment leads to
enforcement 'by honor' and
peer pressure
Compliance-related
prerequisites for membership
Adoption of membership
requirements checked by external
audits
Members get certified or will be
excluded
Principle-based initiative Certifying business coalition
External enforcementEthical commitment
Collective
Action
Degree enforcement
Project / transaction
based agreement
Long-term initiative
Business coalition
Organi-
zation A
Company
C
Company
A
Independent
facilitator
Applications
There are different types of anti-corruption collective action programs – and
while they all help achieve a common goal – lower levels of corruption –
each works differently depending on the country environment, human and
financial resources available, etc.
Within the guide, we outline four different types of initiative – it doesn‟t
mean there aren‟t others – but these four capture the essence of what
collective action against is all about. The four types of programs are:
•Transparency International‟s Integrity pacts
•Anti-corruption declarations
•Certifying business coalitions
•Principles-based initiatives
This web portal provides additional resources on how these different
initiatives work, and helps users to determine which might be most
applicable to their situations.
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Slide 8
Selected success stories
Customer /
Principal
Project description Main achievements
Pakistan
International
Airlines (PIA)
Integrity pact
MOU between PIA and TI-P for transparency in
procurement systems under recommendation of
Government of Pakistan
• Development of PIA "Procurement
Manual" for all SBD's on
procurement of works, goods and
services based on international
standards and recommendations by
the National Accountability Bureau
• Best practice model for anti-
corruption initiatives across Asia
Code of
Pharma-
ceutical
Manufacturers
Sectorial code of conduct for members of
IFPMA*
Includes more restrictive provisions on travel,
gifts and events, code complaint procedure and
code compliance network
• Anti-corruption declaration can be
created in a sector-wide effort
• Brings together companies from
developed and developing countries
Paraguqy
Pacto Etico
Commercial
Certifying business coalition
Business principles, ethics principles, quality
management
Includes certification process, random audits,
and trainings/workshops.
• 150 members signed pact, currently
100 applicants
• PEC seal is becoming a branding
tool in Paraguay which is perceived
to be one of the most corrupt
countries in LAC
* International Federation of Pharmaceutical Manufacturers and Associations Notes on each case example in guide book
Slide 9
Demand for tools and guidance
• Joint effort of Companies, NGOs and Multi-laterals;
• Guide and Portal on Collective Action;
• 25 case studies, 50 country profiles, 15 industry profiles;
• Implementation guidelines.
Joint effort of:
World Bank Institute; United Nations
Global Compact; Center for International
Private Enterprise; Global Advice Network;
Grant Thornton; Siemens; Transparency
International.
To help companies design and implement collective action initiatives, WBI
together with a coalition of companies, NGOs and multilaterals developed
implementation resources to give companies an impetus to make real change
as to how they go about doing business in high risk environments.
Specifically, we developed a guide and accompanying interactive web portal
that provide business leaders with multiple tools to combat corporate
corruption that have already been piloted in different countries including
Mexico, Ecuador, Pakistan and Germany.
With the guide and portal we are not trying to reinvent the wheel – many
anti-corruption tools already exist that business leaders can consult -, but we
are trying to give companies better understanding of the value of collective
approaches and how to access these existing tools and select those that are
most appropriate for their specific needs.
We did not start with the proposition to develop a tool and then match it to a
problem. Rather, with the guide and portal we are trying to help you to
identify your problem and based on your problem, we help you to chose the
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right tool to solve your problem.
We have been lucky to have been able to work with leading companies and
business-oriented NGO and multilaterals representing crucial expertise in
this process: UN Global Compact, Center for International Private
Enterprise, Global Advice Network, Transparency International, Grant
Thornton and Siemens. Many of our partners from this initiative are here
with us today and I will introduce them later.
Furthermore, the guide was reviewed by many companies and business
groups, such as BDI (Bundesverband der Deutschen Industrie e.V.,
Germany), Haylide Chemicals (India), Microsoft (US), Pacto Etico
Comercial (Paraguay), Sanlam Limited (South Africa), the Prince of Wales
International Business Leaders Forum (UK), and ThyssenKrupp AG
(Germany).
Of course, we also could not have developed these resources without the
help of our colleagues here in the Bank. This is a true World Bank GROUP
product, as we received input from PREM, SDN, IFC, INT and several
regional departments.
Slide 10
Guide: “Fighting Corruption through
Collective Action”
Page 39 January 2008
Involve third
party to
promote
collective
action to
customer
Decision tree helps to design the approach for project related
collective actions
Decision tree
1
1
Are tender
documents
already finalized
/ released?
Is customer willing to
fight corruption 2)
Are third parties
available to influence
customer?
(e.g. anti-corruption
offices of government,
multilateral donors)
1) Decision has to be made by internal compliance / risk assessment team in headquarters. Various sources for country specific assessment
are given on slides 81 - 83 2) For details: see slide 87
No
No
Yes Promote
collective
action to
customer via
facilitator
Yes
Prerequisites for project-related collective action not met – go to decision tree 2
to evaluate possibility of principle – based / Certified association
Yes 1.1
1.2
Does your
company
perceive
corruption as
major barrier to
do business in
respective
country? 1)
No
No need for collective
action – consider other
ways to continue doing
business with integrity
No
Yes
Integrity Pact / Anti-corruption declaration
Page 52 January 2008
How to get started?
Initiate business coalition (1/2)
2.1
IO: International Organization MDB: Multilateral Development Bank
Source: Interviews
Facilitator
(NGO / IO)
Company
For details please
refer to slide 55
1
2
…
4
43
Establish
contacts to
facilitator
Create
concept
Approach
government
Concept
note
1st meeting with
facilitator
Present
company
profile,
compliance
policy and
concept for
collective action
(one may use
material from
chapter 4 of this
manual)
Ask for
feedback /
recommen-
dations
Identify
appropriate
facilitator
Create list of
potential partners
Companies
NGOs
Religious
groups
MDBs
Prioritize: which
companies / other
stakeholders
need to take part
to ensure
sufficient
attention /
credibility?
Assess the
potential
oversight role of
government (e.g.
anti-corruption
bureaus)
Conduct workshop to
evaluate business
situation, risk of
corruption, benefits
of anti-corruption
activities and best
practice examples
Summarize intention
and objective of
initiative in concept
note
Facilitator to send
out concept note to
potential partners
and follow-up
1 2 3 4
Certifying business coalitionPrinciple-based initiative
Page 83 January 2008
Four Integrity Pact contract examples provided – however contracts
have to be adjusted to specific prerequisites of country and project
Integrity Pact contract examples
IP: Integrity Pact
Source: Internet, Interviews
IP from project "Berlin
airport"
Seen as best practice
example
Available in German only
IP contract from project
"Hydroelectric power plant",
Ecuador (English translation)
No "Social Witness"
Detailed description of
Arbitration Tribunal
IP template from
Transparency International
Specifically designed for
contracts in the defense
industry
IP contract used by ONGC
India
Based on contract of Berlin
airport
Classification and definition
of Collective Action
Decision trees
Process steps
Highlighted topics and
issues to consider
(e.g. anti-trust)
Contract templates
Profiles of initiatives
Contact list
Basis
Find the right approach
for your situation
Benefit from various real
life examples and
templates
Follow detailed
process steps
Examples
XXXX ProjectName MM/YY – FileName.ppt
Definition of corruption, dangers of corruption
Overview on various ways to fight corruption
As already mentioned, our fighting corruption through collective action
resources consist of two parts, a guide and accompanying web portal.
The guide helps business leaders to better identify the corruption challenges
and to select, adapt and implement a collective action tools that fits their
specific problem.
Catering to our main target group, companies, we tried to make the guide
and portal as business friendly as possible – hence the familiar Power Point
format.
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Slide 11
Finding the right solution to specific anti-
corruption problems
SpecificS
ollution
Project
Do you face
corruption risk in a
particular project
or in general?*
START
Country
Sector
Prerequisites for collective
action not in place
(refer to slide 57 for suggestions
how to deal with this situation)
Do any appropriate
business coalitions
already exist?
Yes
No
Did major companies
express their will to
fight corruption in
respective country /
sector?
Yes
Are any potential
facilitators available?
How to get
started (refer to
slide 38)
No
No
Join coalition and
setup anti-
corruption
initiative
(refer to slide 55)
Project / transaction
based initiative
Long-term initiative
Are tender documents
already finalized?No
Is customer
willing to fight
corruption?
Yes
Yes No Try to implement a long-term
initiative
* high-risk country or
high-risk sector
The decision trees in the guide, such as this sample, help in this process of
identifying the appropriate path to take, and whether the conditions exist for
any form of collective action initiative.
Slide 12
Web Portal: www.fightingcorruption.org
Country Profiles
Industry Profiles
Implementation
Steps
Country and
industry profiles
Case Studies
Events and
WorkshopsLaunched on June 19 in
London
The portal offers country and industry profiles, as well as more information
on how to implement collective action program. The additional resources on
the portal complement the guide and are designed to help firms adapt the
tools to their country and sector. The portal will also sever as a platform for
anti corruption practitioners to exchange their experiences on collective
action. We invite everyone to give us feedback and to help us to expand this
portal. We are already pleased that additional members, beyond the core
group that developed the guide, are contributing to the portal‟s ongoing
development. We hope that this can become the center for a community of
practice to update – an “open source” platform.
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Slide 13 Strengthening collective action efforts:
capacity building and open source
approach
Need to build understanding of collective action options and to strengthen business action on corruption.
Need for organizations, including World Bank, to champion and facilitate collective action initiatives with business: workshops on the opportunity for both internal and external audiences
offer best practice resources and guidance to private sector led initiatives, including country/industry pilots
encourage and support collective action components in operational initiatives (e.g. small grants; operations components)
capacity building
Continue global level advocacy and outreach on collective initiatives on integrity with the private sector
In addition to expanding the portal and disseminating the guide, we also
plan:
-Country pilots: workshops, capacity building assistance and working with
industries, but also relevant government officials, potential civil society
partners
-To investigate how to incorporate collective action components in lending
projects: encourage and support collective action components in WBG-
supported operational initiatives.
We see a need to work to build the capacity of individual firms and business
associations to promote and adopt collective action measures. A new report
suggests that companies are increasingly recognising the risks of corruption
and doing more to combat it, and more than half of companies are increasing
training on corruption, but we hope that such training can include
components to cover collective action options (source: Ernst and Young).
Slide 14
Thank You!
Michael Jarvis
World Bank Institute
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ANNEX 3: PRESENTATION OF THE TRANSPARENCY INTERNATIONAL 2008 GLOBAL
CORRUPTION REPORT - CORRUPTION IN THE WATER SECTOR
Mr. Manoj Nadkarni, Communications Coordinator, Water Integrity Network (WIN)
Slide 1
The Global Corruption Report
2008
Corruption in the Water Sector
Manoj Nadkarni
Communications Coordinator
The Water Integrity Network (WIN)
Slide 2
• Annual TI flagship publication
• Systematic assessment of the state of
corruption around the world
• 3 sections:
• Thematic: in-depth analysis of one key issue
• Country reports: institutional changes and key developments in 30 countries
• Research: overview of latest research findings
• English version published by Cambridge University Press
What is the GCR?
Anti-Corruption Network for Eastern Europe and Central Asia
7th General Meeting, 25-27 June 2008, Tbilisi, Georgia
• Embezzlement, bribery, bid-rigging in construction (Argentina, Paraguay)
• Fraud and manipulation in resettlement and compensation programmes (China, Indonesia, Zambia)
• Poor ethnic minorities most affected, political acceptance of hydropower undermined
Slide 11
How much does corruption cost?
Classic figure: 20–35 percent provided by Davis (2004) for water service delivery in South Asia
• Provides a sectoral, not a regional, indication
• this estimate is limited to petty corruption and does not account
for high-level abuse or diversion of resources.
• Non-revenue water
• Measuring corruption is an urgent area of future work.
Davis. J. (2004).
Corruption in public
service delivery:
experience from South
Asia's water and sanitation
sector. World
development, vol. 32, no. 1
; p. 53-71.
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Slide 12
Grand corruption
• Kickbacks for inflated bills, unit costs and material quantities.
• Rigging competition in building water infrastructure, Corruption in awarding water contracts
• Corrupt procurement: many forms,
• tailoring project specifications to a corrupt bidder, providing insider information, limiting bid advertising, shortening bid periods and breaching confidentiality, Contractors may provide entertainment in exchange for certifying their work or turning a blind eye to construction shortcomings
Corruption favours large-scale, capital-intensive projects because they are more likely to involve and benefit actors with deep pockets
In Australia, suppliers of
valves and fittings used for
water systems were fined a
total of A$2.85 million in
2000 for engaging in price-
fixing, tender-rigging and
market-sharing. 2002 two
years later three Swedish
suppliers of water and
sewage pipes were
convicted of price-fixing
and market-sharing.
The cost of the joint
Paraguayan–Argentinian
Yacyretá Dam, started in
1983 and completed only
in 1994, ballooned from
US$2.7billion to 11.5
billion. It is widely cited as
a „monument to
corruption‟.
Slide 13
Public or private?
• Does business or government do a better job supplying water to the people and keeping corruption in the sector low?
Slide 14
Privatisation
• Effective water provision depends more on the quality of governance, both for the provider and the sector, than on the ownership structure.
• Even if water infrastructure is financed and managed by the public sector, the system will still depend on products and services delivered by private entrepreneurs.
Public Private PartnershipsBut we need to harness the private sector’s expertise and
capital for a specific local context
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Slide 15
OECD Principles for Private Sector Participation in Infrastructure
• Principle 6: infrastructure projects should be free from corruption at all
levels and in all project phases. Public authorities should take effective
measures to ensure public and private sector integrity.
• Principle 20: private sector participants in infrastructure should
observe commonly agreed principles and standards for responsible
business conduct.
• Principle 22: private sector participants, their subcontractors and
representatives should not resort to bribery.
• Principle 23: Private sector participants should contribute to strategies
for communicating and consulting with the general public, including
consumers, affected communities and corporate stakeholders.
Slide 16
Key Lessons from the GCR
• Procurement practices must be strengthened
• Accountability must be improved
• Integrity measures must be applied across the
board
• Participation must be enhanced
Slide 17
GCR solutions
• Transparency
• mapping pollution (China), water points (Malawi),
• effective water and information rights (Argentina, India)
• independent regulators
• institutional reform for water utilities: (Senegal,
Cambodia)
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Slide 18
GCR solutions
Participation
• participatory budgeting and spending reviews (Brazil)
• water user associations to manage irrigation systems
• social audits (India), participatory project monitoring
(Philippines), social witness in tendering (Mexico)
Collective action
• integrity pacts (Colombia, Argentina)
• integrated water resources management: involve all
stakeholders
Slide 19
Water specific lessons
• Climate change makes fighting corruption more urgent than ever
• The costs of corruption are disproportionately borne by
the poor
• Anti-corruption efforts must focus on the poor. Marginalised groups must be engaged so
their voices are heard; The poor’s access to information must be improved
• Work to prevent corruption before it happens, as cleaning it up
after the fact is difficult and expensive – or even impossible.
• Understand the local water context, otherwise reforms will fail.
One size never fits all.
• Build pressure for water reform from above and from below.
Slide 20
One tool to fight corruption…
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Slide 21
What is the WIN?
Formed to support anti-corruption activities in the water sector worldwide by forging coalitions that can take action in ways that individuals or single organisations cannot.
The complexity of multiple geographical and institutional levels typical of water sub sectors makes coalitions essential.
Slide 22
Network membership: inclusiveness
• Individuals
• Civil Society
• Research organizations, Universities
• International and Regional Policy Organizations (incl. UN Agencies)
• Public Utilities
• Regulators
• Private Sector/ Private Operators
• Media
• Donors, multilateral development banks
Slide 23
Founding organizations:
• IRC International Water and Sanitation Centre,
• Stockholm International Water Institute (SIWI),
• Swedish Water House (SWH),
• Water and Sanitation Program-Africa (WSP-Africa),
• Transparency International (TI)
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Slide 24
Initial network activities
• The GCR 2008 Corruption in the Water Sector
• Knowledge building and dissemination (e.g. Policy Briefs, Licensing Study)
• Small grants for civil society/ NGOs
• Case studies & documenting use of tools
• Connecting people: Network website with community functions
• Capacity building (workshops)
Slide 25
What WIN can do in the region
• Capacity building workshops
• Help identifying experts
• Adding a water dimension to existing work on public