Switzerland has now returned US$6 million in assets stolen by former dictator, Jean Claude 'Baby Doc' Duvalier to Haiti. Transparency International (TI) ranked poor Haiti 177 out of 180 on its 2008 index of the most corrupt countries of the world and rich Switzerland at an angelic 5. But Swiss banks have, for many years, been accepting corrupt, blood and criminal money from all sordid types like Nazis, the mafia and brutal dictators. Its bank secrecy laws are antithetical to transparency, the lack of which leads to corruption. Why then is Switzerland honest for accepting money from Duvalier, but Haiti corrupt for being raped?

A CRIMINAL ECONOMY

In this April 26, 2003 file photo, the headquarters of Alstom Prom AG, a subsidiary of French engineering company Alstom SA, is seen in Baden, Switzerland. Swiss police searched premises linked to French engineering company Alstom SA and made one arrest as part of an investigation into suspected corruption and money laundering. - File

Swiss banks stand at the centre of the Swiss economy so one might say that the Swiss economy is to a great degree, a criminal economy. But it is part of how the world economy works. United States tax authorities, who have been bled by tax avoidance, are pursuing a civil case against a leading Swiss bank to access thousands of names of US citizens who are hiding about US$14.8 billion in secret Swiss bank accounts. That bank has already paid US$780 million to the US and has had to disclose the names of 250 Americans who the US said committed tax fraud. Yet, TI said Switzerland is one of the five most honest countries in the world.

Daniel Kaufman, a scholar of corruption wrote in Forbes, the rich man's magazine, that corruption is not just a problem of developing countries, but developed ones as well, and has not declined on average. Bribery, he estimates, amounts to an astonishing US$1 trillion each year. The poor doesn't have that kind of money to spend on more than petty bribes. The rich does.

The problem, Kaufman points out, comes from state capture where, "powerful companies (or individuals) bend the regulatory, policy and legal institutions of the nation for their private benefit. This is typically done through high-level bribery, lobbying or influence peddling". It might be a firm wanting a permit, a corporation wanting to influence the regulatory framework or another wanting to shape the rules of the game so as to get monopolistic rights.

Kaufman is a former director of governance at the World Bank. I take him to mean that corruption is built into and normalised by 'the economy' where it can be subtle and legal. For example, a campaign contribution might be made with an understanding that strings are attached. In many countries, this may be legal, even if unethical. Kaufman points out that, "In industrialised countries undue influence is often legally exercised by powerful private interests, which in turn influence the nation's regulations, policies and laws."

ECONOMIC CRISES

Duvalier

The World Bank talks about how corruption undermines GDP in developing countries. I hope its economists are writing a report about how corruption in industrialised countries, explained by Kaufman, is costing the world trillions of dollars and hundreds of millions of jobs and livelihoods. The greatest cost of corruption comes, not from the developing countries or even the state, but from the developed countries and the private economy. TI had to admit that the wealthy countries of Europe declined on measures of corruption in 2008.

American politicians themselves talk about the corrosive influence of corruption on democracy, at least at campaign times, when they cite special interests and lobbyists, tax avoidance in off-shore banks, campaign financing war chests, and congressional voting records that favour corporations. Kaufman takes up from here. The measurement of corruption, he says, should be broadened to include these acts of influence. He devised his own measure.

Kaufman found that, by his measure, the United States would rank 53 out of 104 countries, the bottom 50 per cent. But TI puts the United States at 18 out of 180 countries, in the top 10 per cent of the most honest countries. Kaufman also warns that while capture has caused much of the economic crisis, the solution - stimulus packages worth some US$5 trillion globally - is a very lucrative incentive for these very same corrupt individuals and companies who are already lining up for bail-out and stimulus money.

INTEGRITY IN JAMAICA

The world economic crisis is caused by state capture that in turn causes systemic failures of oversight, regulation and disclosure in the financial sector. It is a complicit democracy that allowed Freddie Mac and Fannie Mae to use millions of dollars to influence members of United States Congress to make lax and permissive laws regarding mortgages. Weak regulations also allowed AIG and Countrywide Financial and even the Securities and Exchange Commission to operate in this lax environment. This environment caused bold con artists like Madoff to set up Ponzi schemes, and now we hear of charges of fraud against business and cricket mogul Allen Stanford. We will see how badly the contagion spreads out from Antigua to the rest of the Caribbean. David Jessop said this, plus fall-outs from informal investment schemes and recent business failures already pose a threat to the region's financial services (Gleaner, February 22, 2009).

FIGHTING CORRUPTION

The lessons for Jamaica are that TI's measure of corruption is not the best and certainly not the only measure that we can learn from. Second, corruption in normal times is bad, but in these times, might get worse. Stimulus packages will attract the greedy, the fraudulent, and the undeserving.

Trevor Munroe is leading the effort of the Centre for Leadership and Governance (CLG) in the Department of Government at UWI, Mona, through the National Integrity Action Forum (NIAF) to find better ways to fight corruption in Jamaica. This initiative was launched on January 28. In fact, it will hold a roundtable with opinion-makers and media practitioners at UWI on March 4.

The integrity forum's campaign should aim for deep transparency, effective disclosure, and improved auditing and accounting. Probably these can come out of what the NIAF is promoting, which is a network of corruption-fighting partner agencies and individuals. These, Professor Munroe explained, are those on the front-line combating corruption who need greater collaboration to produce more effective outcomes.

The NIAF is drawing on the rich expertise of network participants, along with foreign counterparts, combining these with research and coming up with a practical action plan to raise Jamaica's levels of national integrity. This plan would strengthen the fight at all levels and also target the 'big fish' who often get away with illicit wealth thereby discrediting the rule of law and all constituted authority.

To do this, the NIAF will need to maximise its resource network over the two-year life of the initiative. Its strengths lie in the support of Professor Munroe, the Department of Government's CLG, and the endorsement of the CLG's mandate by former principal and governor general, Sir Kenneth Hall as well as current principal, Professor Gordon Shirley. The initiative has the support of the contractor general, director of public prosecution, commissioner of customs and inland revenue, auditor general, commissioner of police and assistant commissioner in charge of anti-corruption. It is supported by the prime minister and the Opposition. It has the backing of USAID.

There is more than an economic crisis. There is a crisis of trust and authority and hence, integrity. It is good that UWI and its anti-corruption partners are so directly engaged to address this crisis.

Robert Buddan lecturers in the Department of Government, Mona campus, UWI. Email: Robert.Buddan@uwimona.edu.jm or columns@gleanerjm.com