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TEDxBerlin

Peter Eigen: How to expose the corrupt

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Some of the world's most baffling social problems, says Peter Eigen, can be traced to systematic, pervasive government corruption, hand-in-glove with global companies. In his talk, Eigen describes the thrilling counter-attack led by his organization, Transparency International.

- Founder, Transparency International
As a director of the World Bank in Nairobi, Peter Eigen saw firsthand how devastating corruption can be. He's founder of Transparency International, an NGO that works to persuade international companies not to bribe. Full bio

I am going to speak about corruption,
00:15
but I would like to juxtapose
00:17
two different things.
00:20
One is the large global economy,
00:22
the large globalized economy,
00:27
and the other one is the small, and very limited,
00:30
capacity of our traditional governments
00:33
and their international institutions
00:37
to govern, to shape, this economy.
00:39
Because there is this asymmetry,
00:43
which creates, basically,
00:48
failing governance.
00:51
Failing governance in many areas:
00:53
in the area of corruption and the area of destruction of the environment,
00:55
in the area of exploitation of women and children,
00:59
in the area of climate change,
01:02
in all the areas in which we really need
01:06
a capacity to reintroduce
01:09
the primacy of politics
01:14
into the economy,
01:17
which is operating in a worldwide arena.
01:19
And I think corruption,
01:24
and the fight against corruption,
01:26
and the impact of corruption,
01:28
is probably one of the most interesting ways
01:30
to illustrate what I mean
01:32
with this failure of governance.
01:34
Let me talk about my own experience.
01:37
I used to work as the director
01:41
of the World Bank office in Nairobi
01:44
for East Africa.
01:47
At that time, I noticed
01:49
that corruption, that grand corruption,
01:51
that systematic corruption,
01:54
was undermining everything we were trying to do.
01:56
And therefore, I began
02:00
to not only try to protect
02:02
the work of the World Bank,
02:05
our own projects, our own programs
02:07
against corruption,
02:09
but in general, I thought, "We need a system
02:11
to protect the people
02:14
in this part of the world
02:16
from the ravages of corruption."
02:18
And as soon as I started this work,
02:21
I received a memorandum from the World Bank,
02:24
from the legal department first,
02:27
in which they said, "You are not allowed to do this.
02:29
You are meddling in the internal affairs of our partner countries.
02:31
This is forbidden by the charter of the World Bank,
02:35
so I want you to stop your doings."
02:38
In the meantime, I was chairing
02:41
donor meetings, for instance,
02:43
in which the various donors,
02:45
and many of them like to be in Nairobi --
02:47
it is true, it is one of the
02:50
unsafest cities of the world,
02:52
but they like to be there because the other cities
02:54
are even less comfortable.
02:56
And in these donor meetings, I noticed
02:59
that many of the worst projects --
03:01
which were put forward
03:03
by our clients, by the governments,
03:05
by promoters,
03:07
many of them representing
03:09
suppliers from the North --
03:11
that the worst projects
03:13
were realized first.
03:15
Let me give you an example:
03:17
a huge power project,
03:19
300 million dollars,
03:21
to be built smack into
03:24
one of the most vulnerable, and one of the most beautiful,
03:26
areas of western Kenya.
03:29
And we all noticed immediately
03:32
that this project had no economic benefits:
03:34
It had no clients, nobody would buy the electricity there,
03:37
nobody was interested in irrigation projects.
03:41
To the contrary, we knew that this project
03:43
would destroy the environment:
03:46
It would destroy riparian forests,
03:48
which were the basis for
03:50
the survival of nomadic groups,
03:52
the Samburu and the Turkana in this area.
03:54
So everybody knew this is a, not a useless project,
03:58
this is an absolute damaging, a terrible project --
04:01
not to speak about the future indebtedness of the country
04:04
for these hundreds of millions of dollars,
04:08
and the siphoning off
04:10
of the scarce resources of the economy
04:13
from much more important activities
04:15
like schools, like hospitals and so on.
04:18
And yet, we all rejected this project,
04:20
none of the donors was willing
04:23
to have their name connected with it,
04:25
and it was the first project to be implemented.
04:28
The good projects, which we as a donor community
04:30
would take under our wings,
04:33
they took years, you know,
04:35
you had too many studies,
04:37
and very often they didn't succeed.
04:39
But these bad projects,
04:41
which were absolutely damaging -- for the economy
04:43
for many generations, for the environment,
04:45
for thousands of families who had to be resettled --
04:48
they were suddenly put together
04:51
by consortia of banks,
04:53
of supplier agencies,
04:56
of insurance agencies --
04:58
like in Germany, Hermes, and so on --
05:00
and they came back very, very quickly,
05:03
driven by an unholy alliance
05:05
between the powerful elites
05:07
in the countries there
05:11
and the suppliers from the North.
05:13
Now, these suppliers
05:15
were our big companies.
05:17
They were the actors of this global market,
05:19
which I mentioned in the beginning.
05:22
They were the Siemenses of this world,
05:24
coming from France, from the UK, from Japan,
05:27
from Canada, from Germany,
05:29
and they were systematically driven
05:31
by systematic, large-scale corruption.
05:34
We are not talking about
05:37
50,000 dollars here,
05:39
or 100,000 dollars there, or one million dollars there.
05:41
No, we are talking about 10 million, 20 million dollars
05:44
on the Swiss bank accounts,
05:47
on the bank accounts of Liechtenstein,
05:49
of the president's ministers,
05:51
the high officials in the para-statal sectors.
05:55
This was the reality which I saw,
05:58
and not only one project like that:
06:00
I saw, I would say,
06:02
over the years I worked in Africa,
06:04
I saw hundreds of projects like this.
06:06
And so, I became convinced
06:08
that it is this systematic corruption
06:11
which is perverting economic policy-making in these countries,
06:14
which is the main reason
06:17
for the misery, for the poverty,
06:20
for the conflicts, for the violence,
06:23
for the desperation
06:25
in many of these countries.
06:27
That we have today
06:29
more than a billion people below the absolute poverty line,
06:31
that we have more than a billion people
06:34
without proper drinking water in the world,
06:37
twice that number,
06:39
more than two billion people
06:41
without sanitation and so on,
06:43
and the consequent illnesses
06:45
of mothers and children,
06:47
still, child mortality of more than
06:50
10 million people every year,
06:53
children dying before they are five years old:
06:55
The cause of this is, to a large extent,
06:57
grand corruption.
07:00
Now, why did the World Bank
07:02
not let me do this work?
07:05
I found out afterwards,
07:08
after I left, under a big fight, the World Bank.
07:11
The reason was that the members of the World Bank
07:14
thought that foreign bribery was okay,
07:17
including Germany.
07:20
In Germany, foreign bribery was allowed.
07:22
It was even tax-deductible.
07:24
No wonder that most of the most important
07:27
international operators in Germany,
07:29
but also in France and the UK
07:32
and Scandinavia, everywhere, systematically bribed.
07:34
Not all of them, but most of them.
07:36
And this is the phenomenon
07:39
which I call failing governance,
07:41
because when I then came to Germany
07:44
and started this little NGO
07:46
here in Berlin, at the Villa Borsig,
07:48
we were told, "You cannot stop
07:52
our German exporters from bribing,
07:55
because we will lose our contracts.
07:57
We will lose to the French,
08:00
we will lose to the Swedes, we'll lose to the Japanese."
08:02
And therefore, there was a indeed a prisoner's dilemma,
08:05
which made it very difficult
08:08
for an individual company,
08:10
an individual exporting country
08:12
to say, "We are not going to
08:15
continue this deadly, disastrous
08:17
habit of large companies to bribe."
08:20
So this is what I mean
08:24
with a failing governance structure,
08:26
because even the powerful government,
08:29
which we have in Germany, comparatively,
08:31
was not able to say,
08:34
"We will not allow our companies to bribe abroad."
08:36
They needed help,
08:39
and the large companies themselves
08:41
have this dilemma.
08:43
Many of them didn't want to bribe.
08:45
Many of the German companies, for instance,
08:47
believe that they are really
08:49
producing a high-quality product
08:51
at a good price, so they are very competitive.
08:53
They are not as good at bribing
08:56
as many of their international competitors are,
08:59
but they were not allowed
09:01
to show their strengths,
09:03
because the world was eaten up
09:05
by grand corruption.
09:08
And this is why I'm telling you this:
09:10
Civil society rose to the occasion.
09:14
We had this small NGO,
09:18
Transparency International.
09:20
They began to think of
09:22
an escape route from this prisoner's dilemma,
09:24
and we developed concepts
09:27
of collective action,
09:31
basically trying to bring various competitors
09:33
together around the table,
09:35
explaining to all of them
09:37
how much it would be in their interests
09:39
if they simultaneously would stop bribing,
09:41
and to make a long story short,
09:43
we managed to eventually
09:46
get Germany to sign
09:48
together with the other OECD countries
09:50
and a few other exporters.
09:52
In 1997, a convention,
09:54
under the auspices of the OECD,
09:57
which obliged everybody
09:59
to change their laws
10:01
and criminalize foreign bribery.
10:03
(Applause)
10:05
Well, thank you. I mean, it's interesting,
10:09
in doing this,
10:11
we had to sit together with the companies.
10:13
We had here in Berlin, at the Aspen Institute on the Wannsee,
10:16
we had sessions with about
10:19
20 captains of industry,
10:21
and we discussed with them
10:23
what to do about international bribery.
10:25
In the first session -- we had three sessions
10:27
over the course of two years.
10:29
And President von Weizsäcker, by the way,
10:31
chaired one of the sessions, the first one,
10:34
to take the fear away
10:36
from the entrepreneurs,
10:38
who were not used to deal
10:41
with non-governmental organizations.
10:43
And in the first session, they all said,
10:45
"This is not bribery, what we are doing." This is customary there.
10:48
This is what these other cultures demand.
10:51
They even applaud it.
10:54
In fact, [unclear]
10:56
still says this today.
10:58
And so there are still a lot of people
11:00
who are not convinced that you have to stop bribing.
11:02
But in the second session,
11:05
they admitted already that they would never do this,
11:07
what they are doing in these other countries,
11:09
here in Germany, or in the U.K., and so on.
11:12
Cabinet ministers would admit this.
11:14
And in the final session, at the Aspen Institute,
11:17
we had them all sign an open letter
11:20
to the Kohl government, at the time,
11:23
requesting that they
11:25
participate in the OECD convention.
11:27
And this is, in my opinion,
11:29
an example of soft power,
11:32
because we were able to convince them
11:34
that they had to go with us.
11:36
We had a longer-term time perspective.
11:38
We had a broader,
11:41
geographically much wider,
11:43
constituency we were trying to defend.
11:45
And that's why the law has changed.
11:47
That's why Siemens is now in the trouble they are in
11:49
and that's why MIN is in the trouble they are in.
11:52
In some other countries, the OECD convention
11:55
is not yet properly enforced.
11:58
And, again, civil societies
12:00
breathing down the neck of the establishment.
12:02
In London, for instance,
12:05
where the BAE got away
12:07
with a huge corruption case,
12:09
which the Serious Fraud Office tried to prosecute,
12:11
100 million British pounds,
12:15
every year for ten years,
12:17
to one particular official of one particular friendly country,
12:19
who then bought for
12:22
44 billion pounds of military equipment.
12:24
This case, they are not prosecuting in the UK.
12:28
Why? Because they consider this
12:30
as contrary to the security interest
12:32
of the people of Great Britain.
12:35
Civil society is pushing, civil society
12:37
is trying to get a solution to this problem,
12:39
also in the U.K.,
12:42
and also in Japan, which is not properly enforcing,
12:44
and so on.
12:46
In Germany, we are pushing
12:48
the ratification of the UN convention,
12:50
which is a subsequent convention.
12:52
We are, Germany, is not ratifying.
12:54
Why? Because it would make it necessary
12:56
to criminalize the corruption
12:59
of deputies.
13:02
In Germany, we have a system where
13:04
you are not allowed to bribe a civil servant,
13:06
but you are allowed to bribe a deputy.
13:09
This is, under German law, allowed,
13:12
and the members of our parliament don't want to change this,
13:15
and this is why they can't sign
13:17
the U.N. convention against foreign bribery --
13:19
one of they very, very few countries
13:22
which is preaching honesty and good governance everywhere in the world,
13:24
but not able to ratify the convention,
13:27
which we managed to get on the books
13:29
with about 160 countries all over the world.
13:32
I see my time is ticking.
13:35
Let me just try to
13:37
draw some conclusions from what has happened.
13:39
I believe that what we managed to achieve
13:42
in fighting corruption,
13:46
one can also achieve
13:49
in other areas of failing governance.
13:51
By now, the United Nations
13:53
is totally on our side.
13:55
The World Bank has turned from Saulus to Paulus; under Wolfensohn,
13:57
they became, I would say, the strongest
14:01
anti-corruption agency in the world.
14:04
Most of the large companies
14:06
are now totally convinced
14:08
that they have to put in place
14:10
very strong policies
14:12
against bribery and so on.
14:14
And this is possible because civil society
14:16
joined the companies
14:19
and joined the government
14:21
in the analysis of the problem,
14:23
in the development of remedies,
14:25
in the implementation of reforms,
14:27
and then later, in the monitoring of reforms.
14:30
Of course, if civil society organizations
14:33
want to play that role,
14:36
they have to grow into this responsibility.
14:38
Not all civil society organizations are good.
14:42
The Ku Klux Klan is an NGO.
14:45
So, we must be aware
14:48
that civil society
14:50
has to shape up itself.
14:52
They have to have a much more
14:54
transparent financial governance.
14:56
They have to have a much more participatory governance
14:58
in many civil society organizations.
15:01
We also need much more competence of civil society leaders.
15:04
This is why we have set up the governance school
15:07
and the Center for Civil Society here in Berlin,
15:10
because we believe most of our educational
15:12
and research institutions in Germany
15:15
and continental Europe in general,
15:17
do not focus enough, yet,
15:19
on empowering civil society
15:21
and training the leadership of civil society.
15:23
But what I'm saying from my very practical experience:
15:26
If civil society does it right
15:29
and joins the other actors --
15:32
in particular, governments,
15:35
governments and their international institutions,
15:37
but also large international actors,
15:40
in particular those which have committed themselves
15:43
to corporate social responsibility --
15:45
then in this magical triangle
15:47
between civil society,
15:50
government and private sector,
15:52
there is a tremendous chance
15:54
for all of us to create a better world.
15:56
Thank you.
16:00
(Applause)
16:02

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About the Speaker:

Peter Eigen - Founder, Transparency International
As a director of the World Bank in Nairobi, Peter Eigen saw firsthand how devastating corruption can be. He's founder of Transparency International, an NGO that works to persuade international companies not to bribe.

Why you should listen

From the website of Transparency International comes this elegant definition: What is corruption? Corruption is the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority.

Peter Eigen knows this. He worked in economic development for 25 years, mainly as a World Bank manager of programs in Africa and Latin America. Among his assignments, he served as director of the regional mission for Eastern Africa from 1988 to 1991. Stunned by the depth and pervasiveness -- and sheer destructiveness -- of the corruption he encountered, he formed the group Transparency International to take on some of the main players in deals with corrupt officials: multinational corporations.

Eigen believes that the best way to root out corruption is to make it known. Thus, Transparency International works to raises awareness of corruption, and takes practical action to address it, including public hearings.

More profile about the speaker
Peter Eigen | Speaker | TED.com