Peter Eigen, the founder of Transparency International, warns us that our governance systems are failing us in the face of a globalized economy. We can see evidence of this failing governance: billions of poor, hungry, people without access to sanitation. And we can see that some problems are beyond the reach of national or multinational governance: the image of a helpless Obama at a oil-covered beach, a helpless Ban Ki Moon at a refugee camp.
Eigen was World Bank director for East Africa and discovered that many of the best things he tried to do were destroyed by corruption. He was trying to understand why the worst thought-out projects – massive infrastructure projects that had little chance of success and terrible environmental impacts – seemed to go ahead first. These projects often were rejected by the donor community, but they were pushed through by powerful kleptocrats within governments. As Eigen worked to reveal this corruption, he was censured by his bosses at the World Bank, who objected to his “romatic, unprofessional work” on exposing corruption.
The uncomfortable truth is that most countries that were members of the World Bank felt that corruption was okay. German companies paid many millions in bribes, systematically, and over long periods of time. Indeed, the practice was so well established that bribes were tax deductible under German law. Worldwide, roughly 1 trillion was paid a year in bribes.
So Eigen left the World Bank in protest and started Transparency International. He tells us that the lessons learned in starting the project have implications for other issues, like the work Auret Van Heerden is doing on global supply chains. As with the supply chain, there’s a real danger that as you stop permitting bribery, you’ll get outcompeted by countries that do permit it. You have to overcome this prisoner’s dillemma by cooperating with businesses. Eigen advocates “antagonistic cooperation” – using a term his wife, a prominent political scientist coined. In Germany, he explained that in the first meetings, no one was willing to admit that they paid bribes. In the second, everyone admitted they did, and in the third meeting, they all agreed to change. This was especially amazing because the government explicitly didn’t apply pressure, and believed that bribery was necessary to keep German business competitive.
Transparency International now provides tools to make it easier to escape the prisoner’s dillemma. The Corruption Perception Index is one tool, as is the fact that TI now has presences in 130 countries and national chapters dedicated to tackling corruption.
The challenge he’s focused on now is adding transparency to extractive industries. Abundant, easily accessible resources tend to lead towards corruption, because the opportunities are simply so tempting. So EITI is working with the biggest mining and oil companies of the world, the governments of nations dependent on extractive industries, and civil societies. Four countries have committed to a very high set of standards – Azerbaijan, Liberia, Mongolia, Norway – and others are on their way towards compliance.
The magic of this process, Eigan tells us is the interaction of government, corporation and civil society – it’s a magical triangle to lead to a better world. But all participants – including civil society – need to become more participatory and transparent.