IN ENGLISH: Article on Newsmill, 23 August 2009

Minister for International Development Cooperation Gunilla Carlsson presents a story of corruption:

Zero tolerance against corruption – an impossible task?

I have been responsible for Sweden’s development assistance policy for almost three years now. During this period, the Swedish state has paid a total of around SEK 100 billion in development assistance. This amounts to approximately SEK 93 million per day for this year alone. Every krona is steered in line with the objective of helping to create conditions that will enable poor people to improve their living conditions. 

To ensure that these billions do actually achieve this objective, the Alliance Government has implemented the most radical change to Swedish development assistance in 40 years:

  • We have focused development assistance on fewer countries so as to ensure a qualitative commitment in these countries.
  • We have reviewed our multilateral development assistance and evaluated the effectiveness and relevance of the multilateral development bodies.
  • We have adopted programmes for greater results-based management and more rigorous reporting requirements in all areas of development cooperation.  
  • For the first time ever we have submitted a written communication to the Riskdag (Swedish Parliament) on the results of development assistance.
  • We have paved the way for a more efficient and effective development assistance agency.
  • We have made clear that our overarching priorities are democracy and human rights, environment and climate, and gender equality and the role of women in development.

Despite these changes, I am not satisfied. I assumed the role of minister to take on a dual responsibility – towards Swedish taxpayers and towards poor people in developing countries. Today, after more than a thousand days of intensive reform work, I ask myself to what extent it is actually possible to live up to the responsibility of ensuring that this money is always used in the right way and always used to do good. Because even if there are many examples of individual development assistance initiatives that have been successful and achieved exactly what they were intended to achieve, I also need to know, as Minister for International Development Cooperation, that development assistance as a whole is contributing to development. Let me explain what I mean.

I will not be satisfied until I can guarantee, or at least prove in a convincing way, that Swedish development assistance as a whole really is making a contribution to poverty reduction, freedom and progress in developing countries. I will quite simply not be satisfied until I can say that aid is effective.

The greatest threat to effective aid is the prevalence of corruption in environments where aid operates. Scandals are reported on a regular basis, but can we ensure that our systems detect all of them, and if so, how?

Corruption scandal in Zambia

Let me give a current example of our shortcomings. Sweden has been engaged as a donor of development assistance in Zambia since it gained independence in 1964.

At the beginning of the summer a corruption scandal was uncovered in the Zambian Ministry of Health. An investigation carried out by the Zambia Audit Office revealed that ZMK 32 billion (approximately SEK 50 million) had been embezzled during the period January 2008 – 31 May 2009. SEK 26 million of this SEK 50 million had been embezzled from a ‘basket fund’ that donors such as Holland, Canada and Sweden contribute to. The rest was embezzled from the Global Fund, and from funds in the Zambian state budget. As Sweden contributes to the Global Fund and the state budget through its general budget support, Swedish funds have also been embezzled here. There are indications that irregularities have existed since the early 2000s. This is a major scandal that has been written about in the Zambian press, as well as other African and international media. It has been remarkably quiet in Sweden. This silence worries me. This is why, as the Minister responsible, I am now speaking out about this.

The Zambia Audit Office and the Anti-Corruption Commission of Zambia have taken action. Several auditors have been installed at the Ministry. A criminal investigation has been initiated. A working group of representatives of donors and the Zambian Ministry of Health has been formed. An action plan has been put in place and measures introduced for continuous checks. Sweden has offered to provide auditing expertise. Swedish payments have been frozen awaiting a financial audit. Sida’s own anti-corruption group will travel to Zambia to carry out its own review of lessons to be learnt for anti-corruption work.

I am extremely disappointed by the fact that millions have been embezzled, not least as I am aware of the consequences this will have for the Health Ministry’s ability to provide health care. But it would be wrong of me to say I am surprised, because I know that large capital inflows such as development assistance risk becoming too great a temptation unless there are effective mechanisms in place to prevent corruption.

At the same time I am very relieved that the Zambia Audit Office – thanks to the whistleblower who drew the corruption at the Ministry of Health to the attention of the Zambian Anti-Corruption Commission – is now taking measures to investigate the case and bring those responsible to justice. As Minister for International Development Cooperation, I cannot help but ask the question: How long would it have taken before we, as donors, noticed something was awry if it hadn’t been for the whistleblower? 

But above all, I am concerned that this case of corruption is most probably not a one-off or an exception. This concern is rooted in a growing awareness that corruption undermines the development efforts of Sweden and other donors throughout the world on a daily basis without our finding out in time. And that despite clear ethical guidelines and declarations of intent, we are still too poorly equipped to effectively prevent and combat corruption. This is not good enough.
Is zero tolerance impossible?

I have often spoken about my zero tolerance against corruption. But the longer I work in development assistance, the more I have come to doubt that it is possible in practice to apply this attitude consistently in environments where aid operates. Because what does zero tolerance actually mean? I believe that some who talk about zero tolerance don’t really want to see what zero tolerance entails. Of course it means never accepting that development assistance funds disappear into the pockets of corrupt officials. Of course it means not supporting regimes that turn a blind eye to corruption in the institutions they are responsible for. Of course it means strengthening auditors-general and protecting whistleblowers. But it also means more than this. For example, I am not convinced that development assistance per se never feeds corruption in the environments we operate in. I therefore consider that, in the world of development assistance today, it is an impossible task to achieve zero tolerance against corruption.

Poverty and corruption often go hand in hand. Corruption is both an expression and a consequence of underdevelopment. It is a fact that most countries receiving aid are also at the bottom of the Transparency International list of the world’s most corrupt countries. Transparency International’s Corruption Perception Index (CPI) measures the levels of corruption in the public sector and political activities as perceived by qualified observers. While Sweden, New Zealand and Denmark achieve the highest 2008 CPI score (9.3 out of 10), most of Sweden’s recipient countries score under 2.5 on a scale of 1–10, where 1 corresponds to the assessment of the public sector as highly corrupt. None of the partner countries with which Sweden has long-term development cooperation scores more than 3.5.   

This does not mean that corruption is a feature of the country’s management of aid funds but that aid operates in an environment that is highly characterised by corruption. This threatens to totally undermine the fight against poverty. Transparency International notes that continued high levels of corruption in low-income countries could cause a humanitarian catastrophe. Against this backdrop, we must take a serious view of the fact that for decades we have paid aid worth billions to countries where corruption has increased rather that decreased.

Taxpayers’ money must not be left to chance

The current Zambia case illustrates not only one of the main problems of aid but also many of our own shortcomings. Quite simply, whether or not we find out about corruption is all too often a matter of chance.  

I do not want to leave any tax money in the hands of chance. I want to be able to look Swedish taxpayers in the eye. And poor people in developing countries too. Corruption is always a serious matter. And I expect I am not the only one who feels a huge sense of disappointment when, in particular, the tax money and donations meant to alleviate need and poverty, and promote efficient institutions, end up in the wrong hands. 

Certainly there are policies and guidelines and action plans to fight corruption. There are anti-corruption manuals and anti-corruption projects. There are established processes for handling corruption cases and an investigation team responsible for the investigation. Sida’s own anti-corruption regulation was revised in December 2008 and is based on the approach to never accept, always act and always inform when corruption is suspected.  

Early in 2007, the Government had already tasked Sida to report the measures taken to prevent the occurrence of corruption in initiatives financed by Swedish development assistance. My assessment is that Sida, within the scope of its authority, makes ambitious efforts to combat and uncover corruption.

In addition, the Swedish Agency for Development Evaluation (Sadev) was instructed in July 2007 to carry out an evaluation of the work done by the Ministry for Foreign Affairs and Sida to prevent corruption in connection with Swedish funding in development cooperation.

But this is obviously not enough.

Time to face reality

If we are serious about fighting poverty, we must begin by acknowledging reality. 

Does this mean that as aid donors we have to accept that a share of aid will always disappear through corruption? The answer to this question is an unqualified ‘no’.

But when time and again we see that aid cannot do what it is meant to do – to fight poverty – what then can we demand of aid in a world where corruption is a fact of life?

Could Zambian economist Dambisa Moyo actually be right when she claims that perhaps aid is not a part of a possible solution but in fact part of the problem? We must, as one of the world’s largest aid donors, venture to ask this question.

These questions, that concern our management of millions of kronor of taxpayers’ money, are so important that I neither can, nor should, answer them on my own. For this reason, I am now asking for, and would welcome, help from all of you who care about the fight against poverty and the management of aid funds to take part in the next step in action for smart aid that does genuine good. Because even if I question whether it is possible, in practice, to meet the responsibility to ensure that Swedish development assistance is always used correctly and does good in a world where corruption is a fact, the responsibility is ultimately mine. I would now like your help with this responsibility.

I will say more about how this question can be answered in a press briefing tomorrow, Tuesday. I look forward to an open debate.

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