Governance as an SDG Accelerator

Chapter 5. Fostering a culture of integrity and fighting corruption

Abstract

Integrity in public policies is the cornerstone of a system of sound public governance. It is vital to govern in the public interest and for the prosperity and well-being of society as a whole. This chapter shows that integrity in public policies strengthens the democratic process and reduces the risk of policy capture in SDG implementation. Integrity also promotes economic growth by cultivating a level playing field for business, helps reduce socio-economic inequalities, and supports environmental sustainability goals. Furthermore, strengthening integrity and reducing corruption is critical for restoring trust in government.

Fostering a culture of integrity is a key governance challenge for SDG implementation

Integrity in public policies is the cornerstone of a system of sound public governance. It is vital to govern in the public interest and for the prosperity and well-being of society as a whole. However, no country is immune to violations of integrity, and corruption remains one of the most challenging issues facing governments today. Particularly in today’s context of growing inequality and an erosion of trust in government, there is a growing perception that policy-making is being captured by vested interests.

Together with various international organisations such as the United Nations Office on Drugs and Crime (UNODC), UNDESA, UNDP, the IMF, World Bank and the Asian and African Development Banks, the OECD has been a strong advocator of a culture of integrity (IMF, 2019[1]; UNODC, 2017[2]; World Bank, 2018[3]).

The 2030 Agenda provides an opportunity to bring fresh momentum to this discussion by highlighting the multi-faceted nature of integrity, the connections between the domestic and international agendas, and providing a lever to engage civil society. Within the SDG framework, SDG 16 – “Peace, Justice and Strong Institutions” – includes commitments to reduce corruption and bribery in all their forms (16.5), develop effective, accountable and transparent institutions at all levels (16.6), reduce illicit financial flows (16.4) and ensure responsive, inclusive, participatory and representative decision-making (16.7). Corruption and lack of integrity in public decision-making are also a threat to inclusive growth (SDGs 8 and 11), widen economic and social inequalities (SDG 10), impede the effective delivery of public services and undermine the values of democracy. Likewise, integrity is essential to implement effective policies and achieve sustainable reforms in many sectors such as health (SDG 3), education (SDG 4), gender equality (SDG 5), climate action and environmental policies (SDG 13, 14, 15), as well as water and sanitation (SDG 6).

The interlinkages between integrity and SDG implementation

Integrity promotes economic growth by cultivating a level playing field for business, helps reduce socio-economic inequalities, and supports environmental sustainability goals. Strengthening integrity also helps make public policies more effective and increases the efficiency and legitimacy of public policies.

Lack of integrity undermines economic growth and hampers business operations

Within the economy, corruption and policy capture lead to biased decisions, which results in an inefficient use of public resources. In turn, this lowers economic productivity and endangers sustainable growth. Empirical evidence from OECD countries has found that higher levels of corruption are associated with lower levels of competition (OECD, 2016[4]), which affects especially small or less influential companies facing higher entry barriers or lack of market access (SDG 8). As a result, private companies may prefer to invest in unproductive rent-seeking activities.

Corruption also undermines innovation and the diffusion of new technologies (SDG 9). Evidence from 22 OECD countries suggests that the negative impact of corruption on Total Factor Productivity growth over a twenty-year period is due to corruption undermining technological change and companies’ incentives to build up entrepreneurial skills, invest in innovation, research and development, which are crucial ingredients for sustainable growth (Salinas-Jiménez and Salinas-Jiménez, 2007[5]). It prevents the creation of an enabling market environment where the most productive firms can thrive. Box ‎5.1 provides the example of the UK’s anti-corruption strategy, which outlines how tackling corruption and strengthening integrity allows the government to achieve long-term economic outcomes.

Box ‎5.1. The long-term objectives of the UK Anti-Corruption Strategy

The United Kingdom Anti-Corruption Strategy for 2017-2022 is grounded in the benefits of tackling corruption on the achievement of desired impacts. Recognising that corruption is a threat to Britain’s safety and security, and that integrity “underpins the UK’s ability to boost trade and attract investment”, the strategy identifies three national long-term expected outcomes: (i) reduce threats to Britain’s national security; (ii) increase economic prosperity; and (iii) enhance public confidence in Britain’s domestic and international institutions. This vision is supported by six priorities, each with several goals and specific reform measures:

1. Reduce the insider threat in high-risk domestic sectors.

2. Strengthen the integrity of the UK as an international financial centre.

3. Promote integrity across the public and private sectors.

4. Reduce corruption in public procurement and grants.

5. Improve the business environment globally.

6. Work with other countries to combat corruption.

Annex E includes a case study that focuses on the fifth priority - improving the business environment globally.

Source: UK Government (2017[6]), UK Anti‑corruption Strategy 2017 to 2022, https://www.gov.uk/government/publications/uk-anti-corruption-strategy-2017-to-2022.

Integrity enhances equitable access to vital social services such as healthcare, education and water and sanitation

The achievement of many of the targets of the SDGs rely on the successful delivery of public services such as education and healthcare, which in turn enhances a government’s credibility. However, corruption can occur at every stage of the service delivery chain, from policy design to implementation and evaluation. The capture of health (SDG 3), water (SDG 6), energy (SDG 7) or educational (SDG 4) policies can restrict equitable access to and undermine the quantity and quality of these public services, thus contributing to a vicious cycle of economic and social inequalities (SDG 10). Lower quality services can also entail health, environmental and security harms (OECD, 2017[7]).

Corruption risks vary across sectors. For example, in the water sector, citizens can be asked to pay a bribe in order to receive a water connection. Ensuring availability and sustainable management of water and sanitation (SDG 6) therefore requires sound and accountable governance institutions. Healthcare policies are particularly vulnerable to conflicts of interests between health-policy makers and the pharmaceutical industry or undue influence due to financial contributions from companies to medical research. This risk was identified as an important corruption vulnerability in Greece’s healthcare sector (Box ‎5.2).

Box ‎5.2. Integrity and reduced corruption in the Greek health sector

In 2016, the OECD, Greece and the European Commission launched a project to increase integrity and reduce corruption in Greece through technical empowerment of the Greek authorities for the implementation of the National Anti-Corruption Action Plan. Following the identification of the health sector as being particularly vulnerable to corruption risks, the OECD supported the Ministry of Health in developing a tailored Anti-Corruption Action Plan in 2017 to address the weaknesses of the current Greek healthcare system. The Action Plan consists of 61 specific measures to increase integrity and reduce corruption, structured around two key areas:

1. Structural reforms in health. These reforms aim to address the deep-rooted causes of corruption problems in the Greek health sector, in particular:

• Ensure commitment to implement the anti-corruption measures at the highest ministerial level.

• Centralise procurement processes and tackle corruption in purchases.

• Increase scrutiny and control over the pricing of medicines and health products.

• Increase transparency over the benefits accepted by health professionals.

• Appoint medical auditors to prevent poor or corrupt clinical practices.

• Strengthen the legal framework and ethical codes of health professionals.

• Require officials to report suspected misconduct.

2. Giving citizens a voice and real information. These measures include providing citizens with online information on surgery waiting lists and success rates, as well as on hospitals daily effectiveness. Other proposed actions also aim to facilitate complaints about corruption and establish mechanisms for citizen feedback.

Source: OECD (2018[8]), Final Report on the Greece-OECD Project: Technical Support on Anti-Corruption, unpublished, OECD, Paris.

Breaches to integrity impede effective climate action and threaten the implementation of environmental regulations

Lack of integrity can also significantly impair governments’ capacity to tackle social problems and challenges such as climate change (SDG 13) and environmental protection (Box ‎5.3). Corruption is a key enabler and facilitator of the illegal exploitation and trade of natural resources such as wildlife and marine biodiversity (SDG 14 & 15). Failure to address the institutional and governance gaps that allow corruption to take place, often because the policies that could be adopted to address these challenges would negatively affect interests benefitting from the status quo, have particularly dire consequences for local communities who depend on these natural resources (OECD, 2018[9]).

Box ‎5.3. Illegal wildlife trade threatens sustainable development outcomes in Indonesia

Indonesia’s large biodiversity makes it susceptible to illegal wildlife trade (IWT). The problem is complex and linked to a number of factors that are critical to the country’s long-term development. Enforcement capacity gaps, corruption, unclear legal frameworks, and issues with inter-agency coordination between government bodies complicate matters further.

Across the country, over hundred resident species of birds, mammals and reptiles are threatened by extinction, with serious implications for the achievement of a number of SDG targets, e.g. 15.7 (end poaching), 16.4 (reduce illicit financial and arms flows), and 8.5 (employment). The legal loopholes and steps towards reform, as well as concrete measures to improve governance for corruption and environmental crime, are explored further in Annex E.

Integrity strengthens overall governance and institutional environments

Moving beyond the economy, integrity strengthens the fundamental democratic process of fair decision-making based on openness, dialogue, consensus and the public interest. It also reinforces other fundamental values such as the commitment to a pluralistic democracy based upon the rule of law and respect of human rights.

Corruption, on the other hand, can lead to blocked reforms or inadequately enforced policies, fostering the perception that public policies are unfair and unduly influenced (Box ‎5.4). Corruption can also considerably reduce the financial leeway of governments, exacerbating challenges to reaching the SDGs in light of a lack of sufficient funding (UN, 2018[10]). Lingering perceptions of corruption and embezzlement breed discontent and polarisation, erode government credibility and legitimacy, and hamper effective policy implementation (OECD, 2016[4]). There is growing evidence that voters feel disillusioned about political integrity and the intertwinement of elite networks across sectors of society, with less than half of OECD countries’ citizens (42%) trusting their national government (OECD, 2017[11]). Furthermore, research and evidence from post-conflict situations around the world show the need and the value of tackling corruption risks from the beginning in peace building and reconstruction processes. Thus, integrity is vital to restore trust, not just in government, but also in public institutions, regulators and companies. This is why re-building trust in governments and business through greater integrity and accountability were identified as a key pillar of the OECD Policy Framework for Inclusive Growth (OECD, 2018[12]).

Box ‎5.4. Integrity for peace in Colombia

The corrosive influence of corruption is evident in a country recovering from conflict. Corruption can lead to the embezzlement of funds dedicated to the victims or the reconstruction process, the entrenchment of illegal actors who use corruption as a means to carry out illegal activities in areas with weak, corruptible, state institutions, and lead to breakouts of violence. Mainstreaming an anti-corruption and integrity perspective into post-conflict phases contributes to safeguard the objectives of peace, and coordination of the public integrity system with the responsible public entities for implementing post-conflict programmes and policies is key.

The challenge related to corruption and the opportunity offered by the Colombian Peace Agreement (Acuerdo final para la terminación del conflict y la construcción de una paz estable y duradera) signed in 2016 has been recognised by the government and by the Guerrilla, the FARC-EP. Measures aimed at tackling corruption by increasing citizen participation, transparency and integrity have been incorporated throughout the Peace Agreement. In particular, chapter 2 of the Peace Agreement explicitly recognises the importance of strengthening political participation as a “democratic opportunity to build peace”, and commits to the creation of democratic mechanisms for citizen participation such as citizen oversight boards, public transparency watchdog organisations as well as stakeholder participation mechanisms for the drafting of a bill on guarantees for social movements and organisations, and social protests and demonstrations. In addition, the Agreement recognises the importance of strengthening internal control in local areas that have been affected by the conflict. It also provides for the creation of a Commission for the Follow-up, Impulse and Verification of the Implementation of the Peace Agreement, composed by three members of the FARC-EP and three members appointed by the President of Colombia. Implementing the Colombian Peace Agreement will require important financial investments, involve many actors, and take place in areas with weak state capacities. A lack of integrity in these processes could not only endanger their effectiveness, but could even lead to new conflict and the entrenchment of criminal actors.

Sources: OECD (2017[13]), OECD Integrity Review of Colombia: Investing in Integrity for Peace and Prosperity, https://dx.doi.org/10.1787/9789264278325-en; Galtung, F. and M. Tisné (2009[14]), “A new approach to postwar reconstruction”, http://muse.jhu.edu/journals/jod/summary/v020/20.4.galtung.html (accessed on 29 December 2014).

Implementing the SDGs by placing integrity at its core

Integrity is a critical component of the SDGs framework, not only for preventing corruption and safeguarding democratic institutions (SDG 16), but also for making economies more productive, public sectors more efficient and societies more inclusive. Fostering a culture of integrity will also be crucial to implement the overall 2030 Agenda in an efficient, transparent, inclusive and accountable way. Building coherent integrity strategies integrated into wider governance practices at all levels is vital to achieve progress on every one of the SDGs. In Thailand, for example, anti-corruption and good governance have been mainstreamed in wider national development strategies (see Annex E). The OECD Recommendation on Public Integrity provides a framework for integrating anti-corruption as part of a whole-of-government strategy (Box ‎5.5).

Box ‎5.5. OECD Recommendation on Public Integrity

The OECD Recommendation on Public Integrity (OECD, 2017[15]) provides a strategy for organisations to build whole-of-government integrity systems and promotes coherence with other key elements of public governance. Moreover, as risks to integrity exist across interactions between the public sector, the private sector and civil society, the recommendation incorporates a whole-of-society approach tailored to the specific integrity risks of sectors, organisations and officials.

In particular, the Recommendation provides guidance to policy-makers for developing a public integrity strategy that is built on three pillars. First, a coherent and comprehensive public integrity system aims to ensure that policy makers develop a set of interconnected policies and tools that are coordinated and avoid overlaps and gaps. The Recommendation also stresses the importance of high-level political support: growing empirical evidence gathered by behavioural science researchers shows that emphasising commitments at the highest political and management levels sets the scene for how integrity is perceived across the public sector and society (OECD, 2018[16]; Lambsdorff, 2015[17]).

Second, the system needs to rely on effective accountability, building on risk-based controls, encouraging transparency and stakeholders’ engagement in the design and implementation of public policies, which is a crucial element to support the implementation of the SDGs.

The third pillar of an integrity system provides for cultivating a culture of integrity and intends to appeal to the intrinsic motivation of individuals to behave ethically – in the public sector, the private sector, and society as a whole. Countries can take action to engage their citizenry in understanding and upholding their roles and responsibilities for public integrity, including through stakeholder participation. For example, efforts can address the public through awareness raising campaigns, or the private sector through championing and incentivising responsible business conduct. Similarly, educating children and youth for public integrity can be an enabler to build the knowledge, skills and interest in preventing, condemning and fighting corrupt practices (OECD, 2018[18]).

Sources: OECD (2017[15]), OECD Recommendation of the Council on Public Integrity, http://www.oecd.org/gov/ethics/OECD-Recommendation-Public-Integrity.pdf; OECD (2018[16]), Behavioural Insights for Public Integrity: Harnessing the Human Factor to Counter Corruption, https://doi.org/10.1787/9789264297067-en; Lambsdorff, J. (2015[17]), “Preventing corruption by promoting trust – Insights from behavioral science”, https://ideas.repec.org/p/zbw/upadvr/v6915.htm; OECD (2018[18]), Education for Integrity: Teaching on Anti-Corruption, Values and the Rule of Law, http://dx.doi.org/www.oecd.org/gov.ethics/integrity-education.htm.

Preserving integrity in public procurement systems

Corruption and wrongdoing can be the result of intentional dishonest behaviour, but it can also be the consequence of ignorance of laws and norms or the corollary of an institutional culture. Thus, setting clear standards for the conduct expected by public officials is a necessary first step. Codes of conduct have proven to be instrumental in promoting integrity in any organisation as they provide a clear benchmark for acceptable behaviour and ethical standards against which personnel and the institution itself can be held accountable. A code of conduct can be seen as a sort of contract among employees within the organisation, as well as a statement to third parties about the ethical standards to expect and respect (OECD, 2015[19]).

There is also a growing awareness in countries and international organisations about the use of public procurement as a lever to ensure businesses act responsibly. The OECD Recommendation on Public Procurement emphasises the key steps that countries can take to pursue policy objectives and Responsible Business Conduct (RBC) is clearly mentioned as one of the policy areas that can be pursued through public procurement (OECD, 2015[20]). In addition, the OECD Guidelines for Multinational Enterprises (OECD, 2011[21]) are the leading international instrument on corporate responsibility. The guidelines promote positive contributions by enterprise to economic, environmental and social progress worldwide (OECD, 2011[21]). The OECD recently released the OECD Due Diligence Guidance for Responsible Business Conduct to provide a tool for both companies and governments to understand how RBC can be reflected in public procurement (OECD, 2018[22]).

Box ‎5.6. Code of conduct for procurement in Canada

The Government of Canada is responsible for maintaining the confidence of the vendor community and the Canadian public in the procurement system, by conducting procurement in an accountable, ethical and transparent manner.

The Code of Conduct for Procurement aids the Government in fulfilling its commitment to reform procurement, ensuring greater transparency, accountability, and the highest standards of ethical conduct. The Code consolidates the Government’s existing legal, regulatory and policy requirements into a concise statement of the expectations the Government has of its employees and suppliers.

The Code of Conduct for Procurement provides all those involved in the procurement process – public servants and vendors alike – with a clear statement of mutual expectations to ensure a common basic understanding among all participants in procurement.

The Code reflects the policy of the Government of Canada and is framed by the principles set out in the Financial Administration Act and the Federal Accountability Act. It consolidates the Federal Government’s measures on conflict of interest post-employment measures and anti-corruption, as well as other legislative and policy requirements relating specifically to procurement. This Code is intended to summarise existing law by providing a single point of reference to key responsibilities and obligations for both public servants and vendors. In addition, it describes vendor complaints and procedural safeguards. The Government expects that all those involved in the procurement process will abide by the provisions of this Code.

Source: Public Services and Procurement Canada (2018[23]), Context and Purpose of the Code, https://www.tpsgc-pwgsc.gc.ca/app-acq/cndt-cndct/contexte-context-eng.html.

The Sustainable Development Goals, notably SDG 16.6, address the development of effective, accountable and transparent institutions at all levels of government. SDG 12.7 on Responsible Consumption and Production calls for the implementation of sustainable public procurement policies and action plans. Public procurement also creates an opportunity to reduce companies’ negative impacts on supply chains including eliminating forced labour, promoting decent work, reducing the risks of environmental damage and ensuring respect for human rights.

On 19 September 2017, several governments including Australia, Canada, New Zealand, the United Kingdom and the United States endorsed a call to action to end forced labour, modern slavery and human trafficking, through which they committed to taking steps to eliminate slavery from their economies: “the Principles to Guide Government Action to Combat Human Trafficking in Global Supply Chains” (US Department of State, 2018[24]).

In 2018, the G20 Labour Ministers also highlighted, in the “Strategy to eradicate child labour, forced labour, human trafficking and modern slavery in the world”, the need to “utilise public procurement to improve compliance with labour standards, in coordination with other government agencies”. The strategy also calls for enhancing best practices on public procurement, government contracting and responsible government-backed financing (ILO, 2018[25]).

There are a diversity of approaches to addressing RBC using public procurement as a policy lever. Environmental considerations, for example, have become common policy objectives. Almost all OECD countries support green public procurement through various policies and strategies at the central level and those developed by specific procuring entities (OECD, 2017[11]). Other RBC considerations such as human rights and social aspects including forced labour exploitation are lagging behind. A 2016 survey on links between public procurement and human rights in twenty jurisdictions found that “most respondents reported that there are no dedicated legal measures that explicitly address the obligations of public authorities to respect human rights in the context of public purchasing in general” (International Learning Lab, 2016[26]). Many of the sectors of forced labour exploitation are linked to public procurement such as construction, manufacturing, wholesale and trade, mining and quarrying (WTO, 2015[27]).

Lessons learned from country experiences

Fighting corruption and promoting integrity is vital to achieving the SDGs. With this view, countries are embarking on different ways to align their anti-corruption strategies with other national priorities - from using legislation and law enforcement to mobilising civil society and businesses.

Annex E highlights the experiences of four countries: Indonesia, Lithuania, Thailand and the United Kingdom. Each faces specific challenges to address a problem that hampers effective policy delivery and damages the prospects for inclusive and sustainable development. In Indonesia, for example, illegal wildlife trade threatens sustainable development outcomes. The examples also show that countries are increasingly taking a comprehensive approach to tackling corruption and engaging business and civil society, in addition to promoting integrity in the civil service. In Lithuania, for example, the anti-corruption authority – Special Investigation Service – is taking a whole-of-government and whole-of-society approach to integrity and anti-corruption, and has taken considerable steps to raise awareness on the prevention of corruption, both within other government agencies and across society and the private sector as a whole. The Government of Thailand also takes a whole-of-government approach to promote integrity and fight corruption, with all government agencies and institutions expected to adopt guidelines and measures in line with the National Anti-Corruption Strategy. Each national and provincial government department is subject to Annual Integrity and Transparency Assessments to ensure enforcement.

The United Kingdom has developed a comprehensive Anti-Corruption Strategy for 2017-2022, which is aligned with other national priorities, such as reducing threats to national security, promoting economic prosperity, and increasing trust in national and international institutions.

Box ‎5.7. OECD contributions to support integrity and anti-corruption measures in SDG implementation

The OECD has long been engaged in the fight against corruption and the promotion of integrity. Responding to repeated calls from the international community, the OECD is determined to take this fight to a new level by ensuring consistent and coherent action regarding existing and future instruments and initiatives. The new approach ensures an integrated strategy to support governments in the fight against corruption by tackling both the demand and supply side. On the integrity side, the OECD Recommendation on Public Integrity is the first compelling international instrument for the implementation of public integrity measures at the state level and draws on 20 years of experience in this area. On the foreign bribery side, the main OECD instrument is the OECD Anti-Bribery Convention a legally binding instrument that promotes the criminalisation of bribery of foreign officials.

The OECD Working Party of Senior Public Integrity Officials (WPSPIO) launched in November 2016 its Initiative for Evidence-based Integrity Policies. The Initiative, which aims to facilitate governments’ effective implementation of the 2017 OECD Recommendation on Public Integrity, aims to achieve continuous learning and improvement of public integrity policies by generating knowledge through integrity measurement.

The OECD’s community of anti-corruption experts and activists has also expanded with the annual OECD Global Anti-Corruption and Integrity Forum, which gathers thousands of representatives from anti-corruption entities, the private sector, academia and civil society to reflect on new approaches to tackle corruption more effectively and promote integrity.

The Recommendation of the Council on Public Procurement (OECD, 2015[20]) supports government efforts to preserve the integrity of the public procurement system through general standards and procurement-specific safeguards.

The OECD Guidelines for Multinational Enterprises (OECD, 2011[21]) are the leading international instrument on corporate responsibility. The guidelines promote positive contributions by enterprise to economic, environmental and social progress worldwide (OECD, 2011[21]). The OECD recently released the OECD Due Diligence Guidance for Responsible Business Conduct to provide a tool for both companies and governments to understand how RBC can be reflected in public procurement (OECD, 2018[22])

Through all these activities, the OECD aims to continue to expand the global application and implementation of its globally relevant standards, carry out peer reviews of countries with a view to strengthen their anti-corruption practices, and strengthen its engagement with non-government stakeholders. The OECD is also exploring the application of OECD standards at sub-national government and sectoral levels. The proposed Global Hub on the Governance for the SDGs will channel support to countries and deliver capacity building on all these different areas in a comprehensive manner.

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