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Abu Dhabi, UAESaturday 21 April 2018

Clamping down on corruption will help the world develop

In many parts of the world, corruption remains an intractable and sizeable problem that is thwarting the growth and potential of the next generation.

Anyone who sees corruption merely as one of the costs of doing business is unwilling to acknowledge a more difficult truth – corruption drives inequality, punishing those who are already the most vulnerable.

In many parts of the world, corruption remains an intractable and sizeable problem that is thwarting the growth and potential of the next generation. With problems, but also significant progress on a number of fronts of combating corruption, we sought to identify three horizons of issues – now, near and far – that could radically change the impact of corruption on our society.

In the immediate term, we must target our anti-corruption efforts where we know the risks are highest. Particularly when it comes to development funding, the sectors with the greatest influx of money should come under higher level of scrutiny – extractives and energy, infrastructure and health. Non-renewable mineral resources play a dominant role in 81 countries, which collectively account for a quarter of world GDP.

Lending institutions such as the World Bank have heightened risk mitigation measures for certain projects, which would be best complemented by initiatives that cut across companies working in different sectors. Concurrently, a number of forward-thinking executives from the private sector are endorsing the idea of formal “safe harbour” principles. Under such principles, national authorities agree that if companies apply best practices and follow the legal framework, they would have some assurance of accommodation should issues arise.

In the near term, we need to do more to quantify the true cost of corruption. For more than a decade, the most often-quoted statistic is that US$1 trillion in bribes is paid annually. The number is staggering, and yet it is no longer shocking. Worse, because the figure is global, unfortunately it allows individual countries to dance around the problem. Each year the results of Transparency International’s Corruption Perceptions Index are met with mixed interest. Some people take issue with attempting to measure an intangible perception, but the results are an excellent reminder to the world that corruption is indeed a problem, generating very necessary dialogue about its true impact. More concrete indicators of the financial implications of corruption, coupled with more direct measurement of the impact of corruption on youth and the next generation (similar to the efforts undertaken by the World Economic Forum and the Partnership Against Corruption Initiative last year) can help in holding policymakers more accountable on their efforts in tackling corruption – not to mention we could rightly celebrate those that make progress.

The farther horizon we identified may, in fact, not be as remote. Technological advances are enabling more efficient business processes, allowing many countries to accelerate their development and lifting people from poverty. In the developed economies, big data and artificial intelligence processes are creating industries and solutions that are revolutionising our daily lives. According to the World Economic Forum’s recent report on technology tipping points and societal impact, by 2026 there will be an AI machine on a corporate board of directors. These developments can have a tremendous implication for the transparency agenda. Access to data can create a much more sophisticated manifestation of illicit financial flows or tax evasion schemes. The growing sophistication of machines can ultimately enable a system of corruption that can perpetuate itself without human assistance.

Through the UN’s Sustainable Development Goals, the world has committed to substantially reducing corruption and bribery in all forms. We must rise to the occasion by having a better understanding of the multidimensional nature of the problem and innovative tools to address it.

Leonard McCarthy is the chairman, and Margery Kraus the vice chairwoman, of the World Economic Forum’s Global Agenda Council on Transparency and Anti-Corruption. He is the World Bank’s integrity vice president; she is the founder and chief executive of Apco Worldwide.

Our regular Tuesday columnist, Sabah Al Binali, returns next week.

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