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[Senate Hearing 106-873]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 106-873

        ANTI-CORRUPTION EFFORTS AND AFRICAN ECONOMIC DEVELOPMENT

=======================================================================

                             PUBLIC MEETING

                               BEFORE THE

                    SUBCOMMITTEE ON AFRICAN AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 21, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                    U.S. GOVERNMENT PRINTING OFFICE
68-756 CC                   WASHINGTON : 2000

                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

                    SUBCOMMITTEE ON AFRICAN AFFAIRS

                    BILL FRIST, Tennessee, Chairman
ROD GRAMS, Minnesota                 RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas                PAUL S. SARBANES, Maryland

                                  (ii)

  

                            C O N T E N T S

                              ----------                              
                                                                   Page

Lowery-Derryck, Vivian, Assistant Administrator Africa, U.S. 
  Agency for International Development...........................    12

    Prepared statement...........................................    16

Marshall, Aileen, Senior Advisor, Global Coalition for Africa, 
  Washington, D.C................................................    30

    Prepared statement...........................................    32

Schloss, Miguel, Executive Director, Transparency International, 
  Washington, D.C................................................    35

    Prepared statement...........................................    38

Schneidman, Witney W., Deputy Assistant Secretary of State for 
  African Affairs................................................     3

    Prepared statement...........................................     6

Taylor, Simon, Director, Global Witness, London, England.........    21

    Prepared statement...........................................    24

                                 (iii)

  

 
        ANTI-CORRUPTION EFFORTS AND AFRICAN ECONOMIC DEVELOPMENT

                              ----------                              

                      THURSDAY, SEPTEMBER 21, 2000

                               U.S. Senate,
                   Subcommittee on African Affairs,
                            Committee on Foreign Relations,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 3:00 p.m. in 
Room SD-419, Dirksen Senate Office Building, Hon. Russell D. 
Feingold presiding.
    Present: Senator Feingold.
    Senator Feingold I am not opening this session with a gavel 
for two reasons--one is, I am not in the majority; but the 
other reason is, this was originally scheduled as a hearing, 
but because of procedural reasons it is necessary for us to do 
this in the format of a roundtable today, so I hope people in 
the room can hear just as well, and we apologize for that, but 
given all the efforts of everyone to come we certainly did not 
want to delay this. In fact, Senator Frist, who of course, 
intends to be here, simply cannot get here right now, and hopes 
to get here as soon as possible. I want to thank Senator Frist 
for convening this roundtable meeting today on a topic of great 
interest to me. Senator Frist and I have been able to work 
together on a number of important issues over the past year on 
this subcommittee, from Zimbabwe to Sierra Leone, from Rwanda 
to the AIDS crisis, and the Subcommittee on Africa has 
benefitted greatly from Senator Frist's leadership and 
enthusiasm for African issues. I truly appreciate his efforts, 
and I know that it was difficult, given all the things that are 
going on right now, for him to make it possible for us to do 
this, but he did it anyway, and I am extremely grateful for 
that, and I will repeat that when he comes.
    I also want to thank all of the participants for being here 
today, and in a few moments will ask each of you to speak for 
approximately 5 minutes, or up to 5 minutes with your remarks, 
and then we will get into more of a discussion.
    This roundtable focuses on anticorruption efforts in 
Africa, and I want to clarify at the outset that the purpose of 
this meeting is not to paint an entire continent with one broad 
brush, nor to engage in a round of Africa-bashing, wherein 
scores of countries are blanketly accused of being corrupt, 
mismanaged, hopeless places. Let us make no mistake, corruption 
is not just an African problem. It is a global problem. I 
believe it is a problem right here in the United States, as I 
think I have made fairly clear.
    This meeting is in part an acknowledgement of the fact that 
corruption issues have been moving into the public sphere in 
Africa. In Kenya, in July, a raucous argument erupted in 
parliament when ruling party MP's joined with some opposition 
members to strike a list of corrupt politicians from a select 
committee report. These forces prevailed, but the fact that the 
so-called list of shame ever existed, the very fact that this 
led to real debate, seems to me to be a positive sign.
    In Nigeria, President Obasanjo has made fighting corruption 
one of his top priorities. Last year, the U.S. worked with 11 
African countries to develop a set of principles to fight 
corruption. Corruption is being discussed openly today, and the 
continent is better for it.
    I hope to explore three broad questions at this meeting. 
First, what is the relationship between fighting corruption and 
pursuing U.S. interests on the continent? I believe that 
corruption stands in the way of virtually all of our United 
States policy goals in Africa. It diverts resources from 
desperately needed basic health and education services. It acts 
as a deterrent to trade and investment, undermines the 
accountability that is at the core of democratization. It 
allows the few to benefit from violent conflict, while the many 
suffer. I hope that the participants will help to draw out 
these relationships in their remarks.
    Second, I hope to explore the efforts currently underway to 
combat corruption on the continent. When I was in Uganda last 
December, the minister of ethics and integrity spoke to me of 
her desperate need for trained auditors and investigators. 
Since that time, I have been pleased to learn that the Office 
of the Inspector General at USAID plans to train approximately 
60 people from Uganda's Supreme Audit Institution, NGOs and 
USAID personnel to improve their auditing skills.
    It seems to me that this is an area where U.S. expertise 
and experience can be shared to the benefit of both of our 
countries, but it will also take the efforts of African 
Governments themselves, of NGOs, the independent press, and the 
international financial institutions to combat corruption 
effectively. I hope that we can begin to examine the efforts 
already underway in the meeting today.
    Finally, I hope that we can begin to determine through this 
roundtable discussion the extent to which the United States is 
a part of the problem in Africa. For every bribe taken, there 
is a bribe paid. This country ranked in the middle of 
Transparency International's 1999 bribe payer's index, which 
suggests to me that there is room for improvement in U.S. 
business practices.
    I feel particularly connected to this, because one of my 
predecessors in the United States Senate, William Proxmire of 
Wisconsin, wrote the Foreign Corrupt Practices Act. Press 
reports have suggested that the U.S. banks were involved in the 
Abacha regime's program of grand scale embezzlement. I think it 
is only reasonable to ask ourselves, in the context of this 
meeting, to examine these issues.
    So having had a chance to give some brief remarks at the 
beginning and, of course, when Senator Frist comes he will 
offer his opening remarks, we can now move on to hear from each 
of you, and we will begin with Mr. Witney W. Schneidman, the 
Deputy Assistant Secretary of State for African Affairs.

    STATEMENT OF MR. WITNEY W. SCHNEIDMAN, DEPUTY ASSISTANT 
             SECRETARY OF STATE FOR AFRICAN AFFAIRS

    Mr. Schneidman.  Senator Feingold, I would like to thank 
you and Senator Frist very much for providing this opportunity 
to participate in this roundtable. I am glad that we are 
continuing to move forward to examine what is a very important 
subject.
    President Clinton, Vice President Gore, and Secretary 
Albright have placed a high priority within the 
administration's foreign policy on fighting corruption and 
bribery, and promoting good governance and strengthening the 
rule of law in Africa and globally. Your committee's continued 
leadership on African issues is critical to our effort to help 
the nations in Africa develop a future of peace, prosperity, 
and freedom. This afternoon, in the few minutes available, I 
would like to touch on some of the issues that are contained in 
my more developed text, and we look forward to working with you 
in this committee on these issues to share ideas and to develop 
solutions to these challenges.
    Now, it is well-known that corruption is a significant 
obstacle to economic development and the improvement of living 
conditions throughout Africa, as it is in other regions of the 
world, as you just noted. Given poverty's pervasiveness in 
Africa, efforts by officials to extract bribes, or the 
willingness of businessmen to offer bribes, or the willingness 
of officials and business representatives to engage in corrupt 
practices, it is a clarion call for action.
    We also need to move against the illicit trade by corrupt 
officials, rebels, and criminals in oil, diamonds, and other 
precious minerals. Increasingly, these ill-gotten profits are 
used to fuel the conflicts which we are working so hard to end. 
We are encouraged that African Governments, leaders of the 
media, civil society, and private sector have shown a new 
willingness to confront these difficult problems. With respect 
to issues of governance, African leaders have come to recognize 
that corruption, opaque practices, and a lack of accountability 
weaken democratic values, sap economic growth and key 
development, and undermine new investment activities. Although 
much work remains ahead, this administration has implemented 
various innovative strategies to support and stimulate African 
efforts to combat corruption. Under President Clinton's 
partnership for economic growth and opportunity, and his 
international crime control strategy for example, we are 
developing key tools in the fight against corruption in an 
effort to accelerate Africa's integration into the global 
economy, which is one of our key foreign policy objectives in 
Africa.
    Senator, at every opportunity, U.S. officials underscore 
the importance of promoting good governance and fighting 
corruption as a means of strengthening the rule of law, 
improving the investment climate, and enhancing social equity. 
During his two trips to Africa, President Clinton repeatedly 
raised the importance of good governance in fighting 
corruption. So have the numerous members of the President's 
cabinet who have traveled to Africa over the last several 
years. We advanced our dialogue on corruption at every turn, 
such as at the U.S.-Africa Ministerial in March 1999, when more 
than 150 ministers of finance, trade, and foreign affairs came 
to Washington for 3 days of discussions.
    Most recently, we have raised the importance of staying 
vigilant to routing out corruption through demarches both here 
and in African capitals as we discussed with our African 
counterparts eligibility criteria of the African Growth and 
Opportunity Act.
    As a result, today, in addition to the State Department and 
USAID, virtually every Government agency, from Justice to the 
Treasury Department, from the Office of Government Ethics to 
the Commerce Department, is implementing creative new 
initiatives to strengthen our partnership with Africa and in 
fortifying democratic institutions on the continent to promote 
better governance and halt corruption.
    Now, the administration is encouraged by many indications 
that governance as well as corruption have become a more 
salient issue in Africa. As you noted, African leaders are more 
willing to speak out on the issue. Namibia, Botswana Uganda 
have set exemplary standards on promoting public integrity and 
the rule of law. A newly assertive press in many African 
countries has not flinched from attacking poorly managed 
institutions and allegedly corrupt individuals. Laudable 
efforts are underway to strengthen customs services. The 
Governments of Benin, Ethiopia, Malawi, Mali, Uganda, and 
Tanzania agreed to introduce no-bribery clauses in public 
contracts.
    As you are aware, sir, the United States cooperates with 
many nations to combat all forms of corruption and to help our 
businesses operate throughout the world on as level a playing 
field as possible. For example, under the first-ever 
international crime control strategy in United States history, 
released by President Clinton in May 1998, we have broadened 
our efforts to provide systematic and comprehensive support and 
ASsistance to enable other nations to act against corruption 
and organized crime.
    In Washington in February 1999, implementing one 
initiative, the international crime control strategy, Vice 
President Gore hosted the first global forum on fighting 
corruption. Over 500 participants from 90 nations attended, 
which included participation by 15 African countries and the 
Global Coalition who is represented here today.
    Several days prior to this forum, Senator, I had the 
personal honor to cohost with Ambassador Amadu Udubdala, who is 
the executive secretary of the GCA, a day-long meeting at which 
representatives at the ministerial level from 11 African 
countries adopted 25 principles that we are hopeful will soon 
form the basis of an African anticorruption convention. We have 
shared these principles with all of our embassies in Africa, 
and have encouraged them to make these principles an important 
part of our bilateral dialogue.
    More recently, we asked all of our ambassadors to raise 
with their host Governments, as well as with leaders of the 
private sector, civil society, and the media, what steps they 
are taking to combat corruption, develop an African 
anticorruption convention, and what they are doing to prepare 
for the second global forum to be held in May 2001 in the 
Netherlands, cohosted by the Netherlands and the United States.
    It is important to note that through the efforts of the 
Global Coalition on Africa, that Africa is keeping pace with 
other regions in the world who have combined efforts to fight 
corruption. The important work undertaken by GCA compliments 
our anticorruption and transparency efforts in other regions, 
including the OECD Antibribery Convention, the Inter-American 
Convention Against Corruption, and Transparency International 
of the Asian Pacific Economic Cooperation Forum.
    Moreover the General Assembly of the United Nations this 
fall is expected to approve procedures for the negotiation of a 
new international instrument against corruption.
    Now, I would just like briefly to touch on several of our 
bilateral programs. Under the auspices of the U.S.-Africa 
Bilateral Commission, the United States and South Africa have 
adopted a joint action plan designed to improve the 
transparency and predictability of South African Government 
processes and procedures affecting foreign investment, 
including ethics, licensing, procurement, and judicial 
enforcement. Working through the U.S.-South Africa Justice and 
Anticrime Cooperation Committee, which is part of the BNC, both 
Governments together will focus on crime prevention, upholding 
integrity among justice and security officials, anticorruption 
and Government transparency measures, including police 
accountability.
    In Nigeria, the United States has taken a keen interest in 
supporting the development of the rule of law, and the 
Secretary of State has identified Nigeria as one of four 
democracies deserving of particular attention this year. We 
have developed the U.S.-Nigeria Joint Economic Partnership 
Committee to support Nigeria's economic reform efforts, and I 
think we are all very encouraged by President Obasanjo's strong 
commitment to rooting out corruption and the steps that he has 
taken from day 1, when he became president 15 months ago, and 
we can go into the law later.
    In Kenya, as you noted, there are two important 
anticorruption bills now pending in the country's parliament. 
The draft code of ethics would require financial disclosure for 
top civil servants, while the economics crime bill would 
strengthen the powers of arrest and prosecution for the nascent 
Kenyan anticorruption authority. Approval and implementation of 
this legislation is crucial to keep Kenya on track with its IMF 
program, and to keep its economic reforms on track. The 
economic crimes bill has been gazetted, and parliament is 
expected to take up both bills when it returns in October.
    In Angola, a country that we have been reading about in the 
Washington Post over the last couple of days--I think there is 
another picture to put forward. We have made it clear to the 
Government that, aside from the ongoing civil war, a lack of 
transparency poses a serious impediment to greater involvement 
by U.S. firms in the nonoil sectors of the economy. On numerous 
occasions and, in particular, at our meetings of the U.S.-
Angola Bilateral Consultative Commission, we have urged the 
Government to work with the IMF and to take measures to stop 
the widespread graft and corruption.
    Senator, we were encouraged when, earlier this year, the 
Angolan Government concluded a stock monitoring program with 
the IMF that has as one of its key components an audit of the 
oil accounts. Over the last month, the Angolan Government 
awarded a contract to the international consulting firm, KPMG, 
that will begin to conduct the audit, or diagnostic, as it is 
referred to, of the oil sector. We are very hopeful that the 
Government will continue to make progress in this most 
important area.
    Now, let me conclude on a more positive note. Monday, July 
24, the U.S. and Botswana Government inaugurated our newest 
International Law Enforcement Academy in Gaborone, Botswana. As 
in other ILEA's, we will be providing over time a range of 
courses for law enforcement professionals throughout southern 
Africa that will focus on modern law enforcement investigative 
practices and management techniques. Such training has multiple 
objectives, including reforming the civil and criminal codes 
and revamping procedures to enable investigators, prosecutors, 
and judges alike to address criminal activity in an environment 
respectful of civil rights and ethnic minorities. This last 
point is a particular challenge in a region where tensions 
between ethnic groups have defined political, economic, and 
social structures for centuries.
    I would like to thank the members of this committee for 
this opportunity to participate in this roundtable this 
afternoon, and to discuss the issues of corruption and our 
anticorruption efforts in Africa. As I have tried to put 
forward, the threats of corruption and bribery in this region 
are serious impediments to social, economic, and political 
development.
    The United States seeks to address these threats through 
bilateral and multilateral cooperation and through direct 
training and technical assistance. Lasting reform can only be 
built on a solid foundation of the rule of law. It means 
enlisting Government, the media, civil society, nongovernmental 
organizations, and the business community in joining together 
to fight the culture that permits corruption to exist and 
flourish.
    Senator Feingold, I want to thank you and Senator Frist and 
others for your concern and leadership on advancing America's 
interests in Africa. We look forward again to working with you 
and finding solutions to these difficult issues and challenges, 
and I look forward to our discussion and answering any 
questions you might have.
    Thank you very much.
    [The prepared statement of Mr. Schneidman follows:]

              Prepared Statement of Whitney W. Schneidman

    Mr. Chairman, Members of the Committee:
    Thank you for providing this opportunity to testify before this 
Committee and to address the impact of corruption and bribery in 
Africa. President Clinton, Vice President Gore and Secretary Albright 
have placed a high priority within the Administration's foreign policy 
on fighting corruption and promoting good governance and strengthening 
the rule of law in Africa and globally.
    This Committee's continued leadership in African issues is critical 
to our effort to help the nations in Africa develop a future of peace, 
prosperity and freedom. This morning, I would like to discuss the 
Administration's initiatives and programs in combating corruption in 
Africa. We look forward to working with you on these issues, to share 
ideas, and to develop solutions to these challenges.

                WHY ANTI-CORRUPTION IS VITAL IN AFRICA?
    Corruption in Africa is of particular concern because it undermines 
the emerging political and economic institutions in these countries and 
threatens the ongoing political and economic reforms in the region. It 
corrodes democratic institutions, weakens the rule of law, and 
undermines the confidence of people in democracy.
    Corruption, as illustrated by the illicit trade of national 
resources, is also theft from a nation. It robs citizens in Africa of 
their future and has a debilitating impact on their quality of life. As 
a consequence, poorly managed resources, embezzlement, and corruption 
result in fewer funds allocated to government programs in education, 
healthcare, housing, physical infrastructure (such as, water and 
sanitary systems, roads) and other social services.
    Effective responses to the challenges of corruption must come from 
each individual government. A nation's ability to confront and surmount 
corruption and organized crime depends on political will. Policy 
encouragement and material support offered by other nations can be 
invaluable, but they cannot substitute for the determination and 
capability of each nation to act within its own borders.
    Corruption flourishes behind closed doors and where bureaucratic 
control is unchecked. Transparency and accountability, by opening up 
government to the bright light of public view, reduce the opportunity 
for corrupt acts by public officials. Transparency complements strong 
law enforcement by using management and policy reforms. It also 
complements democratic principles such as freedom of speech and a free 
media, freedom of information, open procurement and contracting 
measures, public access to decision-making, and public education as 
ways to replace a culture of corruption with a culture of integrity.

        PROMOTING ANTI-CORRUPTION AND GOOD GOVERNANCE IN AFRICA
    The problems facing Africa today are enormous. Persistent conflict, 
HIV/AIDS, poverty, and environmental degradation are some of the 
greatest threats to Africa's security, stability, and prosperity.
    Corruption is another obstacle to Africa's economic and political 
development. It takes many forms. The illicit trades by corrupt 
officials, rebels and criminals in oil, diamonds and other precious 
minerals and resources, are part and parcel of corruption.
    Notwithstanding these challenges, many African governments and 
private sector leaders have shown a new willingness to confront these 
difficult issues. With respect to issues of governance, African leaders 
have come to recognize that corruption, opaque practices and a lack of 
accountability weaken democratic values, sap economic growth, impede 
development, increase vulnerability to financial crises, and undermine 
new investment activities.
    Corruption problems are not unique to Africa. Corruption played a 
large role in the recent Asian financial crisis. Wherever it occurs, 
corruption hinders the rule of law, impedes economic growth and slows 
entry into the global marketplace.
    Although much work remains ahead, the Administration has 
implemented various innovative strategies for minimizing corruption in 
Africa. Under the President's Partnership for Economic Growth and 
Opportunity and International Crime Control Strategy, we are 
accelerating Africa's integration into the global economy and 
developing key tools in the fight against corruption.
    The President and many members of his cabinet have traveled to 
Africa on numerous occasions. At every opportunity, U.S. officials have 
underscored the importance of promoting good governance and fighting 
corruption as a means of strengthening the rule of law, improving the 
investment climate, democratization, conflict resolution and social 
equity. We have also advanced our dialogue on anti-corruption with 
African countries through discussions at the U.S.-African Ministerial 
(March 1999), two meetings of the U.S.-SADC Forum (1999, 2000), and 
most recently through demarches both here and in African capitals as we 
discuss with our African counterparts, the eligibility criteria of the 
Africa Growth and Opportunity Act.
    As a result, today, in addition to the State Department and USAID, 
virtually every government agency--from Justice to the Treasury 
Department, from the Office of Government Ethics (OGE) to the Commerce 
Department is implementing creative new initiatives to strengthen our 
partnership with Africa and in fortifying its democratic institutions 
to promote better governance and halt corruption.

         THE ADMINISTRATION'S ANTI-CORRUPTION EFFORTS IN AFRICA
    The Administration is encouraged by the many indications that 
African leaders and civil society have taken up the campaign for good 
governance and against corruption. Namibia, Botswana, and Uganda have 
set exemplary standards on promoting public integrity and the rule of 
law. A newly assertive press in many African countries has not flinched 
from attacking poorly managed institutions and allegedly corrupt 
individuals. Laudable efforts are underway to strengthen customs 
services. The governments of Benin, Ethiopia, Malawi, Mali, Uganda and 
Tanzania have agreed to introduce no-bribery clauses in public 
contracts. World Bank President Wolfensohn has received letters from 
several African heads of state requesting World Bank assistance to 
establish or strengthen anti-corruption programs.
    The United States has been active in this area through our 
bilateral efforts, the multilateral development banks, the Global 
Coalition for Africa (GCA), and non-governmental and civil society 
organizations such as Transparency International.
    The United States cooperates with other nations to combat all forms 
of corruption and to help our international businesses operate without 
the baneful effects of corruption. Under the first-ever International 
Crime Control Strategy in United States history, released by President 
Clinton in Nay 1998, we have broadened our efforts to provide 
systematic and comprehensive support and assistance to enable other 
nations to act against corruption and organized crime. In global and 
regional diplomatic processes, we are seeking to define comprehensive, 
objective statements of practices governments should employ to control 
and combat corruption and organized crime. We are working to increase 
the public commitment of governments and political leaders to adopt and 
implement such practices.
    In Washington in February 1999, Vice President Gore hosted and 
chaired the First Global Forum on Fighting Corruption, one of the 
initiatives contained in the International Crime Control Strategy. Over 
five hundred participants from ninety nations attended, this included 
participation by 15 African countries and the Global Coalition for 
Africa (GCA). Participants extensively discussed a comprehensive set of 
principles and practices that are effective to promote public integrity 
and to combat official corruption. In their final Declaration, the 
participants called for governments to adopt practices appropriate to 
each nation's particular circumstances and requirements and to assist 
each other in fighting corruption.

                   GLOBAL COALITION FOR AFRICA (GCA)
    Since the Global Forum, the State Department has continued to 
develop and coordinate the Vice President's comprehensive international 
initiative against corruption in Africa and elsewhere. We have also 
worked with other governmental partners to encourage the political will 
to establish or improve their institutional capacities to define and 
implement national regimes based on the ``Guiding Principles for Fight 
Corruption and Safeguarding Integrity among Justice and Security 
Officials.''
    As a part of the follow-up to President Clinton's trips to Africa, 
and on the margins of the Vice President's Global Forum on official 
corruption, I co-chaired several meetings between the GCA and the 
United States to discuss collaboration between African countries to 
address corruption. Countries invited included those visited by 
President Clinton and countries that had participated in a Maputo 
Conference in 1997 to develop effective anti-corruption mechanisms: 
Benin, Botswana, Ethiopia, Ghana, Malawi, Mali, Mozambique, Senegal, 
South Africa, Tanzania, and Uganda.
    As a result of this meeting, Ministers and senior policy makers 
from these 11 African countries, along with senior officials from some 
donor countries and organizations, adopted 25 anti-corruption 
principles to facilitate greater cooperation among regional or sub-
regional groups of African countries. These African countries also 
agreed to adopt anti-corruption principles that would encourage 
implementation of common standards at the national level, as well as 
joint action between and among countries. These principles could also 
form the basis of more formal cooperative frameworks at the sub-
regional or regional levels.
    The important work undertaken by the GCA complements our anti-
corruption and transparency efforts in other regions. These efforts 
include the Organization on Economic Cooperation for Development (OECD) 
Anti-bribery Convention, which obliges major exporting countries to 
make it a criminal offense for individuals or enterprises to bribe 
officials of foreign governments to secure or retain business; the 
Inter-American Convention Against Corruption; the Council of Europe 
Criminal Law Convention Against Corruption; the U.S. initiative against 
corruption in the Organization for Security and Cooperation in Europe 
(OSCE); the Stability Pact Anti-corruption Initiative; and the 
transparency initiative of the Asia-Pacific Economic Cooperation (APEC) 
forum. The General Assembly of the United Nations in the fall of 2000 
is expected to approve procedures for the negotiation of a new 
international instrument against corruption.
    At the 9th International Anti-corruption Conference (IACC) held 
last fall in Durban, South Africa, the State Department and USAID 
sponsored a workshop to further build awareness and support for the GCA 
regional anti-corruption initiative for Africa, as an important element 
of our international strategy against corruption. The United States 
urged that the countries concerned also consider an appropriate 
mechanism for mutual evaluation of implementation of such commitments 
(such as currently exists in the OECD Anti-Bribery Convention), to 
assist governments in implementing effective practices. The GCA and the 
11 African countries are expected later this year to approve at Summit 
level in Abuja, Nigeria, a declaration of anti-corruption principles 
agreed to in 1999.

                       GOOD GOVERNANCE IN AFRICA
    On a parallel track, the Administration continues to promote policy 
dialogue through increased consultations with the OECD Development 
Assistance Committee (DAC), UN Economic Commission for Africa (ECA), 
the World Bank, the IMF, and the African Development Bank (AFDB) on 
transparency and accountability, governance, and anti-corruption issues 
and programs in Africa. The Administration has worked closely with 
African regional economic groupings including the Economic Community of 
West African States (ECOWAS) and West African Economic and Monetary 
Union. (UEMOA).
    As an example of this approach, the Administration supported the. 
recent ``Good Governance and Sustainable Development in Africa'' 
initiative organized by the Federal Republic of Nigeria, the West 
African Economic Association (WAEA), the African Development Bank 
(AFDB), the Organization of African Unity (OAU), the World Bank, UNDP, 
GCA, and other international organizations.
    The initiative's goals are to bring together African and 
international anti-corruption practitioners and experts, scholars, 
civil society representatives, and decision-makers from governments and 
international donors to discuss the state of governance in Africa and 
to establish a mechanism to monitor the progress of good governance 
(integrity, transparency, efficiency and accountability) in Africa. 
Although this initiative is still in its infancy, it will serve to 
complement the anti-corruption efforts by the GCA and other African 
organizations.

                        U.S. BILATERAL PROGRAMS
    With respect to our anti-corruption and rule of law programs, our 
approach is consistent in all the African states. We consider anti-
corruption and good governance to be related and mutually reinforcing 
goals. The cornerstone of our policy is to build, through training and 
technical assistance, strong and democratic institutions to combat the 
problem of corruption.
    Our Anti-Crime Training and Technical Assistance Program (ACTTA) 
uses Foreign Assistance Act monies to support U.S.-African law 
enforcement cooperation in addressing international organized crime, 
financial crimes, narcotics trafficking, trafficking in persons, and 
border security. Fighting corruption is a significant goal of these 
programs. United States federal agencies receiving funding to implement 
training and technical assistance include the Federal Bureau of 
Investigation (FBI), the Drug Enforcement Administration (DEA), the 
International Criminal Investigative Training Assistance Program (DOJ/
ICITAP), the Office of Overseas Prosecutorial Development, Assistance 
and Training (DOJ/OPDAT), the Secret Service, the Internal Revenue 
Service (IRS), the Customs Service, the Bureau of Alcohol, Tobacco and 
Firearms (ATF), the Financial Crimes Enforcement. Network (FinCEN), the 
Department of State, Bureau of Diplomatic Security (DS), the Coast 
Guard; the Federal Law Enforcement Training Center (FLETC), and the 
Office of Government Ethics (OGE).
    I would like at this time to address several particular countries 
in which this Committee may have a specific interest on the 
implementation of the Administration's regional training and technical 
assistance programs for fighting corruption and improving governance in 
Africa.

                              SOUTH AFRICA
    Since 1994, we have engaged the South Africans on a wide range of 
issues in the U.S.-South Africa Law Enforcement Working Group. Under 
the auspices of the U.S.-South Africa Bi-national Commission (BNC), the 
United States and South Africa have adopted a joint action plan 
designed to improve the transparency and predictability of South 
African government processes and procedures affecting foreign 
investment, including ethics, licensing, procurement and judicial 
enforcement. Encouraging the establishment of a culture of transparency 
and good governance in South Africa is a key objective.
    Under the U.S.-Africa Justice and Anti-Crime Cooperation Committee 
(JACC), both countries are cooperating on a broad range of law 
enforcement issues, especially crime prevention, upholding integrity 
among justice and security officials, anti-corruption and government 
transparency measures (including police accountability), and 
government-community relations concerning crimes. Most recently, U.S. 
Attorney General Reno met with South African Minister of Justice Naduna 
to discuss further cooperation on joint law enforcement and crime 
issues including corruption.
    Through USAID's Administration of Justice Project, the United 
States will have provided $16.4 million (from 1994-2001) in total 
support to the South African Justice Department in such areas as 
policy/regulatory reform, institutional development and human rights 
education. USAID is presently planning a new six-year $15 million 
program that will continue to support South Africa's criminal justice 
program with an emphasis on improving management of justice 
institutions; improving case processing and court efficiency, including 
prosecutorial and judicial training; and NGO implementation of selected 
crime prevention strategies. The U.S. Department of Justice, through 
OPDAT, will continue to consult with South Africa's National 
Directorate of Public Prosecutions (NDPP) on formulating a program of 
criminal justice assistance in the prosecutorial sector that will 
complement our anti-corruption efforts.
    The U.S. Office of Government Ethics (OGE) has also engaged in 
formal exchanges of professional expertise between their office and 
their counterpart institution in South Africa. In 1997, a senior 
official from OGE was detailed to the South-African parliament to help 
develop a financial assets declaration system. In 1998, OGE 
provided.consultation to the Guanteng legislature on development of a 
Code of Conduct and financial regulations. Since 1999, OGE has engaged 
in meetings and provided consultation and training for the South 
African Public Service Commission (PSC), as they begin to implement an 
Ethics Code, financial disclosure and training for the South African 
public service. Both parties have scheduled a formal consulting visit 
by commissioners and staff of the PSC to Washington in October, 2000.

                                NIGERIA
    The United States has a keen interest in supporting the development 
of the rule of law in Nigeria. The Secretary of State has identified 
Nigeria as one of four democracies in transition deserving of 
particular attention this year. We.also developed the Joint Economic 
Partnership Committee to support Nigeria's economic reform efforts.
    Given that official corruption is widespread in Nigeria, the task 
of reformers in Nigeria remains daunting. However, President Obasango 
has demonstrated the political will and commitment to overcome these 
obstacles. Obasango's overall anti-corruption strategy includes 
implementing anti-money laundering law, revamping criminal procedure 
code, and reforming the police.
    In June 2000, Nigeria's congress passed and President Obasanjo 
signed into law, comprehensive anti-corruption legislation. The State 
Department is funding a legal advisor and Assistant U.S. Attorney with 
experience in anti-corruption investigations, to advise the Government 
of Nigeria on steps to implement this legislation. The State Department 
also partially funded a diagnostic study of corruption in Nigeria that 
will be used by the World Bank and other international financial 
institutions in designing their programs of assistance.

                                 KENYA
    Two important anti-corruption bills are now pending in Kenya's 
Parliament. The draft Code of Ethics would require financial disclosure 
for top civil servants, while the Economic Crimes Bill (ECB) would 
strengthen the powers of arrest and prosecution for the nascent Kenyan 
Anti-Corruption Authority. Approval and implementation of this 
legislation is crucial to keep Kenya on track with its IMF program and 
its economic reform program. Parliament is expected to take up both 
bills when it returns in. October.

                                 ANGOLA
    We have made clear to the Government of Angola that a lack of 
transparency poses a serious impediment to greater U.S. investment in 
the non-oil sectors of the economy. We have encouraged the government 
to work with the IMF and to take measures to stop the widespread 
corruption. The Government of Angola has begun to recognize that 
corruption is a fundamental issue that must be addressed directly in 
the context of a broader program of economic and political reform. We 
continue to support efforts by the International Monetary Fund and the 
World Bank to press the Government in Luanda to take a series of 
measures designed to improve transparency, increase fiscal 
accountability, and review government management of the oil and diamond 
sectors.

         BOTSWANA INTERNATIONAL LAW ENFORCEMENT ACADEMY (ILEA)
    On Monday, July 24, the United States and Botswana inaugurated our 
newest anticrime academy in Gaborone. As in other ILEAs in Budapest and 
Bangkok, we will be providing over time a range of courses focusing on 
modern law enforcement investigative practices and management 
techniques for countries in southern Africa. Such training, which will 
be conducted both at ILEA and offsite, has multiple objectives. These 
include strengthening law enforcement efforts to confront transnational 
organized crime, reforming the civil and criminal codes, and revamping 
procedures to enable investigators, prosecutors and judges alike to 
address criminal activity in an environment respectful of civil rights 
and ethnic minorities. This last point is a particular challenge in a 
region where tensions between ethnic groups have defined political, 
economic and social structures for centuries.

                             CIVIL SOCIETY
    The State Department also sponsors professional exchange programs 
such as the International Visitor Program in which anti-corruption has 
been one of the topics discussed among officials in government, law 
enforcement, media, academia, and non-governmental organizations.
    U.S. business associations and non-governmental organizations, such 
as Transparency International, the-Corporate Council for Africa, the 
African Business Roundtable, and the American Chambers of Commerce in 
Africa, are playing an important role in helping the U.S. government 
combat anti-corruption and the rule of law in Africa. In May, the 
Department of State published a brochure, ``Fighting Global Corruption: 
Business Risk Management'' that helps raise awareness of Foreign 
Corrupt Practices Act (FCPA) issues and our global anti-corruption 
efforts in Africa and other regions of the world.

                             UNITED NATIONS
    In April 1999, the UN Crime Commission recommended that the UN 
Convention against Transnational Organized Crime, to be completed by 
the fall of 2000, include a provision to criminalize acts of corruption 
involving domestic public officials and transnational organized crime. 
On January 21 of this year, pursuant to a General Assembly resolution 
approving the Crime Commission's December 1999 recommendations, the Ad 
Hoc Committee negotiating the crime convention concluded that it would 
be desirable for the UN to develop a comprehensive global instrument 
against corruption. The Netherlands has indicated that its principal 
goal for the Second Global Forum is to build support for such an 
instrument.

                            GLOBAL FORUM II
    As a follow-up to the Vice President's Global Forum on Fighting 
Corruption, the United States is co-sponsoring Global Forum II, which 
will be held at The Hague in May 2001. The Netherlands has indicated 
its intention to invite all the nations of the world. Major topics of 
Global Forum II are expected to be a potential UN global anti-
corruption instrument, ways to build regional cooperation through 
mutual evaluation mechanisms, and ways to improve inclusion of civil 
society and business in government efforts to reinforce the rule of 
law. The United States is encouraging the Africans to participate fully 
in the Global Forum process, in UN discussions on a possible global 
international instrument on fighting corruption, and in various other 
fora. The GCA is a member of the Organizing Committee for this 
important governmental forum.

                          WORLD BANK AND IFIS
    Within the World Bank, the African Development Bank and the IMF, 
the United States has taken the lead in curtailing economic support to 
governments which are unwilling to take action against corruption. The 
United States also continues to encourage the World Bank and recipient 
African countries to consider more explicitly in policy dialogue, 
country assistance strategies, allocation of resources, and the design 
of projects.
    The State Department, through INL funding, provided substantial 
assistance to the World Bank Institute for three anti-corruption 
diagnostic surveys in Africa. These surveys will provide a basis for 
development of national anti-corruption capacities in Nigeria, Mali, 
and Malawi. We plan to continue this cooperation with the World Bank 
and to continue funding future diagnostics for other African countries.

                         SUMMARY AND CONCLUSION
    I would like to thank the members of this Committee for this 
opportunity to discuss with you the issues of corruption and our anti-
corruption efforts in Africa.
    As I have set forth this morning, the threats of corruption and 
bribery are serious impediments to social, economic and political 
development.
    The United States seeks to address these threats through bilateral 
and multilateral cooperation and through direct training and technical 
assistance. Lasting reform can only be built on a solid foundation of 
rule of law. It means enlisting government, civil society, NGOs and the 
business community in joining together to fight the culture that 
permits corruption to exist and flourish.
    Mr. Chairman, I thank you and this Committee for its concerns and 
leadership on advancing America's interest in Africa.. We look forward 
to working with you and this Committee to find solutions to these 
difficult challenges.
    I would be happy to answer any questions you might have. Thank you.

    Senator Feingold.  I thank you very much, Mr. Schneidman, 
for your comments, and now we will turn to Ms. Vivian Lowery-
Derryck, the Assistant Administrator Africa for USAID. Ms. 
Lowery-Derryck.

STATEMENT OF MS. VIVIAN LOWERY-DERRYCK, ASSISTANT ADMINISTRATOR 
       AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

    Ms. Lowery-Derryck.  Thank you very much, Senator Feingold, 
and thank you and Senator Frist for convening this roundtable 
and for the invitation to discuss AID's anti-corruption efforts 
in Africa.
    Along with other donors, we view corruption as a major 
impediment to sustainable development in Africa, as you earlier 
said, but the good news is that African civil society 
organizations and citizens and Governments are more and more 
willing to acknowledge corruption as a development issue and 
take appropriate action. My fuller remarks have been submitted 
for the record, but in this discussion I am going to focus on 
corruption as a development challenge, and USAID's efforts to 
foster accountability, transparency, and good governance, 
because all of those three reduce the incidence of corruption 
on the continent, but two observations before I turn to 
corruption as the development challenge.
    First of all, progress in tackling corruption is a long- 
term undertaking, and that progress requires patience and 
persistence and a willingness to stay the course with our 
African partners, and secondly, as you noted earlier, Senator, 
we should also remember that corruption is a universal problem, 
and the United States ranks now fourteenth on Transparency 
International's latest index.
    It is a universal problem, but it is more acutely felt in 
the developing world, and particularly in Africa, but we 
believe that corruption, probably with HIV/AIDS is one of the 
most dramatic and acute development challenges facing the 
continent.
    In broad terms, corruption is the abuse of public office 
for private gain, and I say that because we continue to say 
that to people when we are trying to think up definitions for 
corruption, but it undermines the foundation of sustainable 
development in virtually all developing countries. 
Economically, corruption leads to the inefficient allocation of 
resources, it raises the cost of investment, it deceases 
investor confidence, it promotes inequalities and 
inefficiencies in the private sector, it raises the cost and 
decreases the quality of public sector projects and services, 
so I think I am beginning to answer your first question.
    Politically, corruption contributes to a loss of confidence 
in the Government, and a general noncompliance with laws. 
Corruption undermines the legitimacy of elected officials and 
democratic values. It also diminishes the effectiveness of 
public policy and impairs the power of public institutions.
    These consequences fall so very heavily on African 
countries because they are already burdened by poverty, debt, 
disease, illiteracy, and political and economic instability, 
and where corruption undermines the rule of law, public safety 
standards, environmental protection policies, criminal codes, 
and basic legal contracts are not enforced.
    Senator Feingold, corruption basically undermines a 
fundamental goal for us at USAID, which is poverty alleviation, 
and corruption is particularly egregious, because the burden of 
corruption is disproportionately borne by the poorest and most 
vulnerable in virtually any population.
    The cost of corruptions are even further magnified in 
conflict situations. I think that that was your second point. 
In countries that are in turmoil, like Sierra Leone, Angola, 
Congo, large sums of money are amassed through arms sales, 
diamond smuggling, and drug trafficking, and a demand for money 
laundering services thrives in these environments as public 
institutions are overwhelmed and regulatory insight is severely 
compromised. Furthermore, violent conflict is even more likely 
to erupt in countries plagued by endemic corruption.
    Corruption also becomes a national security issue when it 
threatens the success of our interventions to combat HIV/AIDS 
and to prevent violent conflict. The valuable investments of 
USAID programs in African countries are at risk if corruption 
both as a development issue and as a trigger for violent 
conflict is not fully addressed.
    The United States Government, including USAID, has been in 
the forefront of the movement to bring international attention 
to the high cost of corruption and to galvanize the public and 
private sector and developing countries alike to give the issue 
the serious attention that it merits. The USAID's 
administrator, Brady Anderson, just today opened the 
Anticorruption Summit 2000, which is being cochaired by USAID's 
Office of the Inspector General. These meetings, which are 
attended by representatives of 10 African countries, will focus 
on financial accountability and its connections to corruption.
    Increasingly, donors and Africans themselves are openly 
discussing corruption, rather than cloaking it in terminology, 
and USAID is convinced that with the advent of this new 
openness and willingness to confront corruption issues on the 
part of our African partners, civil society can have a 
significant affect on a Government's willingness to enact and 
sustain anticorruption reforms.
    Now, USAID is capitalizing on this favorable environment by 
tackling the issue more directly and by forging partnerships 
with other U.S. Government agencies with bilateral and 
multilateral donors as well as with African Governments and 
regional institutions. Let me just describe a few ways of how 
we are addressing the corruption issue.
    USAID is addressing this by first demanding that its own 
programs are transparently administered. Since its inception, 
the agency has administered numerous checks and balances to 
ensure that our funds are used for their intended purposes. In 
other words, we are modeling for anticorruption.
    For instance, our audits are routinely conducted by our 
Inspector General's Office. For well over a decade, as part of 
its development assistance strategy for Africa, USAID has 
championed accountability and good governance practices. From 
our past experiences in the global and regional fight against 
corruption, we have learned several lessons, and I will just 
cite four.
    First of all, that Government regulation and enforcement 
activities alone are insufficient anticorruption strategies.
    Secondly, achievements of anticorruption reform programs, 
economic and social, are vulnerable to nondemocratic regime 
changes and to the conflicts that are so often generated by 
these changes.
    Third, that civil society must be engaged as a critic of 
existing corruption and as a watchdog against emerging 
corruption.
    And lastly, that donors have to work together against the 
culture of corruption and coordinate anticorruption efforts.
    Based on what we have learned in the past, USAID has 
developed a two-track response to the problems of corruption in 
Africa, first of all changing the enabling environment and, 
secondly, mobilizing public support.
    USAID's democracy and governance and economic growth 
sectors both include the anticorruption measures as part of 
their larger program activities, and this is true in bilateral 
missions as well as through our regional initiatives. Our 
democracy and governance programs emphasize transparency and 
accountability, and those are really our watch-words, 
transparency and accountability, and they do this through 
increased local government and citizen participation in 
decisionmaking, more effective and independent legislatures and 
judiciaries, and enhanced civilian control over the military 
and policy forces.
    USAID programs have trained judges and court administrators 
to prevent tampering with records and reduced delays in hearing 
cases. We have worked with national assemblies to create ethics 
committees and codes of conduct for public officials, we have 
supported the media in developing skills in investigative 
journalism and, again, we think of the case of Angola that we 
have been reading about in the papers for the past 2 days.
    USAID also provides technical assistance and training to 
audit institutions in order to increase fiscal accountability 
and to improve capacity to detect and prosecute for 
misappropriation of funds. In the enabling environment, in 
addition, since its inception in 1997 the Africa Bureau's 
leading economic growth activity and presidential initiative, 
the Africa trade and investment policy program, as we call it, 
ATRIPP, has concentrated heavily on regulatory reform that will 
reduce the opportunities for solicitation of bribes for private 
businesses.
    Major goals of the program include removal of regulatory 
red tape, improvements in the commercial laws and processes, 
establishment of transparent procompetitive regulatory bodies, 
and reform of the tax and customs systems that currently give 
too much discretion to individual officials.
    We are also very clear on a couple of specific 
anticorruption programs. All of our Africa programs are 
coordinated with other donors and organizations working in this 
arena, and we have been collaborating closely, for example, 
with Transparency International, the Global Coalition on 
Africa, and the World Bank as well, in an effort to curb 
corruption.
    USAID and its partners work in some of the most challenging 
development environments, including countries with 
longstanding, endemic corruption problems. For instance, 
Nigeria, one of the most important transitional democracies in 
which USAID works, recently dropped to the last position in 
Transparency International's corruption index that was released 
on September 13, just literally last week.
    But despite this ranking, however, we think that there are 
positive prospects that now exist to improve Governments and 
the investment climate by fighting corrupt practices in the 
public and the private sector. President Obasanjo has taken 
some bold moves, including the anticorruption bill, which 
signals his strong commitment to deal with one of Nigeria's 
most difficult development problems.
    We put a top priority on anticorruption measures in our 
Nigeria program. At the Joint Economic Partnership Commission 
we were very careful to talk about this in ways that make our 
point, but make it in a positive way, and we have pledged that 
we will stay the course to help President Obasanjo build on his 
commitment to transparency and accountability in the country.
    Examples of USAID's corruption activities in Nigeria 
include the fact that the mission is working to increase the 
transparency of Government institutions, particularly focusing 
on the national assembly and six State assemblies. USAID is 
partnering with local Nigerian institutions to establish the 
foundation for a fair and competitive electoral system, 
including the development of a code of conduct for political 
parties, which we think is particularly important.
    At the local level, USAID is supporting the work of 
Transparency International to develop an anticorruption 
training manual for community groups, and at the request of 
President Obasanjo, USAID provided funding for a conference 
that led to establishment of the Nigerian Anticorruption 
Commission.
    In addition to its Nigeria program, USAID supports a wide 
spectrum of anticorruption measures in many other African 
countries, and I will speak to some of those if we have time 
when we get to the discussion. I just note that Kenya is one of 
them that I would focus on.
    So in conclusion, Senator Feingold, we continue to make 
strides to reduce corruption in Africa, although decreases in 
corruption are difficult to quantify. You know, it is not easy 
to count the number of bribes that were not taken or solicited, 
and spectacular results are not quickly available in this area. 
We think a lot about how do we measure this, and it really is 
difficult, because the optimism and the good news is in what 
did not occur.
    However, since USAID began addressing systemic corruption 
several years ago, there has been progress on many fronts, 
including the degree to which citizens and Governments are 
aware and engaged in fighting the corruption, the number of 
elected officials exposed to ethics training, and the depth and 
breadth of regulatory and judicial reforms in several 
countries.
    We should be heartened by these successes, yet we can only 
help support efforts that Africans themselves wish to 
undertake, and I think that we again go back to the example of 
Nigeria, because it is that presidential leadership that really 
does make a difference. The change must come from within, and 
not be externally imposed. Corruption is a critical issue that 
requires diligent attention by African Governments and donor 
partners to forestall its debilitating impact. We in the Africa 
Bureau will continue to work with other donors and with our 
African partners as well as multilateral and regional 
organizations to ensure that the successes achieved thus far 
are sustained and expanded.
    Again, I thank you for really pursuing this issue, because 
we know that reducing corruption is a long-term process, as is 
the promotion of democracy and good governance, but we are 
increasingly required to make difficult decisions regarding 
program funding due to reductions in democracy and economic 
growth resources, and if we are going to be able to collaborate 
with the larger donor community and support our United States 
private sector's involvement in emerging African economies and 
protect our ongoing assistance programs and support Africans in 
their quest for sustainable development, the administration's 
requested resources need to be heeded. We have and we can and 
we will make positive differences, but the support of the 
Congress is absolutely necessary.
    I thank you, Senator Feingold.
    [The prepared statement of Ms. Lowery-Derryck follows:]

               Prepared Statement of Vivian Lowery-Denyck

                              INTRODUCTION
    Good afternoon, Mr. Chairman, I would like by thank the Committee 
for this invitation to testify on USAID anti-corruption efforts in 
Africa. We, along with other members of the donor community, view 
corruption as a major impediment to sustainable development in Africa. 
African civil society organizations, citizens, and governments 
themselves are also more and more willing to acknowledge corruption as 
a development issue--and one not merely a factor in trade relations.
    With the Subcommittee's concurrence, I will address how corruption 
is a development challenge and how USAID is directing programs to help 
foster accountability, transparency and good governance, thereby 
reducing the occurrence of corruption in Africa. We must realize, 
however, that progress in this area requires patience, persistence and 
a willingness to stay the course with our African partners.

                 CORRUPTION AS A DEVELOPMENT CHALLENGE
    In broad terms, corruption is the abuse of public office for 
private gain. It arises both in political and bureaucratic office and 
can be petty or grand, organized or disorganized. Systemic corruption 
in Africa typically occurs in the management of public companies, in 
public markets, in fiscal administration, in customs, in the justice 
system, and often within the military. There is also widespread petty 
corruption in the civil service, which most directly affects the public 
by forcing them to pay for government services that would otherwise be 
free. Whereas corruption in the privat sector undermines economic 
growth, but may not affect political development, public corruption has 
a destabilizing effect on both political and economic systems.
    Corruption undermines the foundations of sustainable development in 
all developing countries. Economically, corruption leads to the 
inefficient allocation of resources, raises the cost of investment, 
decreases investor confidence, promotes inequalities and inefficiencies 
in the private sector, raises the cost and decreases the quality of 
public-sector projects and services. The political consequences of 
widespread corruption, while less quantifiable, are no less real and 
are just as damaging. Corruption contributes to a loss of confidence in 
the government and a general non-compliance with laws, undermines the 
legitimacy of elected officials and democratic values, diminishes the 
effectiveness of public policy, and impairs the power of public 
institutions. Indeed, political fallout from corruption creates a 
vicious cycle of corruption, instability, weak institutions, and more 
corruption.
    The economic and political costs imposed by corruption fall heavily 
on African countries, already burdened by poverty, debt, disease, high 
rates of illiteracy and political and economic instability. Moreover, 
in those countries experiencing widespread, systemic corruption, the 
burden is disproportionately borne by the poorest and most vulnerable 
of the population. Citizens are denied access to basic public services 
and suffer from the non-enforcement of the rule of law, including 
public safety standards, environmental protection policies and even 
criminal codes. Corruption also directly contributes to the lack of 
public infrastructure, investment, education opportunities, and jobs 
that sustain the cycle of poverty endured by so many on the African 
continent.
    These high costs of corruption, which Africans can ill afford in 
any event, are even further magnified in conflict situations. In cases 
of cross-border conflict or failed states, already weak state 
institutions are overwhelmed and regulatory oversight is severely 
compromised. The rule of law often is significantly, if not completely, 
undermined. Opportunities for corruption at all levels abound and often 
go undetected and unpunished. In countries in turmoil, like Sierra 
Leone, Angola, and the Democratic Republic of the Congo, large sums of 
money are amassed through arms sales, diamond smuggling, and drug 
trafficking. A demand for money laundering services especially thrives 
in such environments. Furthermore, violent conflict is more likely to 
erupt in countries plagued by endemic corruption in which public 
dissatisfaction increases as the availability of services declines. The 
valuable investments of USAID programs in African countries, including 
our newly expanded initiatives to combat HIV/AIDS, are at risk if 
corruption--both as a development issue and a trigger for violent 
conflict--is not fully addressed.
    The United States government, including USAID, has been at the 
forefront of the movement to bring international attention to the high 
costs of corruption and to galvanize the public and private sectors--in 
developed and developing countries alike--to give the issue the serious 
attention it merits. In February 1999, Vice President Gore underscored 
the importance of fighting corruption when participants from 90 
governments attended the First Global Forum on Fighting Corruption here 
in Washington and began an intense effort to examine the causes of 
corruption and the practices that are effective to prevent or combat 
it. These important efforts have continued with the planning for a 
Second Global Forum to be held next May in the Netherlands. 
Importantly, World Bank President Wolfensohn noted during last 
October's Ninth International Anti-Corruption conference in Durban, 
South Africa that it was just a few years ago that donors limited their 
discussions to improving transparency and accountability. Now donors 
and Africans themselves openly discuss corruption rather than cloaking 
it in terminology. As I will describe, USAID capitalizes on this 
favorable environment for fighting corruption by incorporating anti-
corruption activities into our programs and forging partnerships with 
other U.S. government agencies, bilateral and multilateral donors as 
well as African governments and regional institutions.

                     HOW USAID ADDRESSES CORRUPTION
    USAID addresses corruption by first ensuring that its own programs 
are transparently administered. The Agency has demanded accountability 
within its development programs since its inception. Within USAID, we 
have instituted numerous checks and balances to ensure our funds are 
used for their intended purpose and audits are routinely conducted by 
our Inspector General's Office.
    As a part of its development assistance strategy for Africa, USAID 
has championed good governance practices for well over a decade. As 
corruption has become a more visible issue in development and is being 
more openly discussed, USAID has been able to tackle the issue more 
directly. We are convinced that, with the advent of this new openness 
and willingness to confront corruption issues on the part of our 
African partners, civil society can have a significant effect on a 
government's will to enact and sustain anti-corruption reforms.
    We have learned several critical lessons from our past experiences 
in the global and regional fight against corruption. We have learned 
that:

   Government regulation and enforcement activities alone are 
        insufficient anti-corruption strategies.

   Corruption is a universal problem, but each country's 
        corruption challenge is shaped by its own particular 
        circumstances and requires a tailored approach to successfully 
        combat.

   Achievements of anti-corruption reform programs--economic 
        and social--are vulnerable to non-democratic regime changes and 
        to the conflicts that are often generated by those changes.

   Civil society must be engaged as a critic of existing 
        corruption and as a watchdog against emergent corruption.

   Donors must work together against the ``culture of 
        corruption'' and coordinate our anti-corruption efforts.

    Based on what we have learned in the past, USAID has developed a 
two-track response to the problem of corruption in Africa, as well as 
other regions:

      -- Firstly, we work to change the environment in which the public 
and private sectors interact. Our programs are designed to minimize 
opportunities for corruption and to change the incentive structures 
that often encourage corrupt behavior. Corruption is likely to flourish 
where public officials have wide authority, little accountability, and 
work within a distorted incentive framework. USAID's responses to 
corruption seek to address this imbalance by:

   Supporting legal and regulatory reform to reduce a 
        government's involvement in areas better handled by the private 
        sector;

   Streamlining government procedures to reduce the 
        opportunities for corruption;

   Improving accountability mechanisms; and

   Introducing incentives that will encourage officials to act 
        in the public interest.

      -- Secondly, we support efforts to mobilize public support for 
change. We recognize that an empowered citizenry is the best safeguard 
against corrupt officials at all levels, and the best guarantee of the 
sustainability of our programs. Therefore, we work with civil society 
and the private sector to raise awareness about the problems that 
corruption poses to development and to society in general. USAID 
missions promote active engagement by all sectors of the public in:

   Monitoring government activities;

   Advocating changes in attitudes and practices;

   Raising awareness about the costs of corruption;

   Decreasing tolerance for corrupt behavior and changing the 
        expected norms of ethical behavior; and

   Raising public awareness about their rights and entitlements 
        as citizens.

                    USAID ANTI-CORRUPTION RESOURCES
    USAID's democracy and governance and economic growth sectors both 
include anti-corruption measures as part of their larger program 
activities in bilateral missions as well as through regional 
initiatives.
    Our democracy and governance programs emphasize the transparency 
and accountability of governments through increased local government 
and citizen participation in decision making, more effective and 
independent legislatures and judiciaries, and enhanced civilian control 
over the military and police forces. USAID programs have trained judges 
and court administrators to prevent tampering with records and reduce 
delays in hearing cases; worked with national assemblies to create 
ethics committees and codes of conduct for public officials, and 
supported the media in developing skills in investigative journalism. 
USAID also provides technical assistance and training to audit 
institutions to increase fiscal accountability and improve capacity to 
detect and prosecute the misappropriation of funds.
    Additionally, since its inception in 1997, the Africa Bureau's 
leading economic growth activity, the President's Initiative, Africa 
Trade and Investment Program (ATRIP), has concentrated heavily on 
regulatory reforms that will reduce the opportunities for the 
solicitation of bribes from private businesses. Major goals of the 
program include: removal of regulatory red tape, improvements in the 
commercial laws and processes, establishment of transparent, pro-
competitive regulatory bodies, and reform of the tax and customs 
systems that currently give too much discretion to individual 
officials.
    Calculating actual dollar figures that go towards fighting 
corruption specifically is difficult since initiatives to improve 
transparency and accountability crosscut many of our programs. 
Governance activities in Africa that are specifically labeled and 
tracked as anti-corruption totaled $833,000 in FY 1999 bilateral 
assistance. That figure has nearly tripled in FY 2000. The number of 
countries with specific anti-corruption objectives in the democracy and 
governance sector has also increased from four to seven in a one-year 
period. On the economic growth side, USAID has funded more than 25 
ATRIP activities, both bilateral and regional, that are expected to 
reduce opportunities for corruption in Africa. Total funding for this 
set of ATRIP activities reached $10.3 million in FY 1999 and 
approximately $15.8 million in FY 2000. However, we believe that 
freedom of speech, independent media, freedom of association, and free 
and transparent elections combine to lessen the impact of corruption in 
Africa. Therefore, when adding in all Africa Bureau regional programs 
and bilateral activities designed to improve accountability, 
transparency, and good governance more generally, the total USAID funds 
invested in fighting corruption in Africa is well into the tens of 
millions.

                    AFRICA ANTI-CORRUPTION PROGRAMS
    I would like to highlight just a few of the many activities our 
overseas missions are implementing either through international non-
governmental organizations, U.S.-based technical assistance or other 
implementing mechanisms. First, however, I believe it is important to 
note that all of our Africa programs are coordinated with other donors 
and organizations working in the anti-corruption arena. No one 
organization or institution can shoulder all the responsibility for 
fighting corruption. Nor can anyone take all the credit for the many 
improvements made over the past few years in the quality of governance 
region-wide. USAID has been working closely, for example, with 
Transparency International, the Global Coalition on Africa, and the 
World Bank in the effort to curb corruption on the African continent. 
In addition, through the Consultative Group mechanism, we maintain a 
dialogue with other bilateral donors and African host countries on 
issues of importance to development, including corruption. Consultative 
group meetings provide a forum for frank discussion of the issues 
related to transparency and accountability, and enable the donors to 
engage host country governments in the issues of corruption affecting 
their development and the effectiveness of international aid. It has 
resulted in stronger anti-corruption efforts in a number of countries.
    USAID and its partners work in some of the most challenging 
development environments including countries with long-standing, 
endemic corruption problems. For instance, Nigeria, one of the Clinton 
Administration's top four priority countries, recently dropped to the 
last position in Transparency International's Corruption Index, 
released September 13, 2000. Despite this ranking, however, positive 
prospects now exist to improve governance and the investment climate by 
fighting corrupt practices in the public and private sector. Nigeria's 
President Obasanjo has taken some bold moves including introducing the 
Anti-Corruption Bill which signals a strong commitment to deal with one 
of Nigeria's most difficult development problems. USAID puts top 
priority on anti-corruption measures in its Nigeria program and will 
stay the course to help President Obasanjo build a broad commitment to 
transparency and accountability in his country.
    Examples of USAID anti-corruption activities in Nigeria include the 
following:

   The USAID mission in Nigeria is working to increase the 
        transparency of government institutions, particularly focusing 
        on the National Assembly and six state assemblies (one in each 
        of Nigeria's geopolitical zones).

   USAID is partnering with local Nigerian institutions to 
        establish the foundation for a fair and competitive electoral 
        system, including the development of a code of conduct for 
        political parties.

   At the local level, the USAID mission in Nigeria is 
        supporting the work of Transparency International to develop a 
        manual that will be used to train communities in the roles that 
        they can play in fighting corruption.

   At the request of President Obasanjo, USAID-funded the 
        International Republican Institute (IRI) to sponsor a 
        conference for 150 future cabinet ministers and senior 
        administration officials last year which produced key 
        initiatives, such as the establishment of the Anti-Corruption 
        Commission.

    In addition to its Nigeria program, USAID supports a wide spectrum 
of anti-corruption measures in many other African countries. The kind 
of corruption targeted, as well as the results vary widely. The 
following are provided as illustrative examples of USAID-supported work 
in fighting corruption in Africa:

    BENIN: The USAID mission in Benin has provided technical and 
institutional support to the country's Supreme Audit Institutions, both 
at the Chamber of Accounts of the Supreme Court and the Inspector 
General Office of the Ministry of Finance. As a result of their 
increased capabilities, the Supreme Audit Institutions have started, 
for the first time, to audit electoral campaign expenses and have 
developed a manual for transparent financial and procurement 
operations. In addition, the Transparency International chapter, 
supported by USAID, conducted an extensive anti-corruption awareness 
campaign during the parliamentary elections in March 1999. This 
included televised sketches, radio and television ads, comic strips in 
local newspapers, and a poster campaign.

    MOZAMBIQUE: The ATRIP program supported the Confederation of 
Mozambique's Business Associations in its efforts to reduce red tape 
and to provide an effective forum for the private sector to examine 
policy issues. This activity resulted in the passage of a new 
industrial law and revisions in the industrial and commercial licensing 
regulations that greatly simplified the registration process, and the 
transfer to a single agency of all responsibility for import and export 
controls. The Confederation has also worked to prominently display the 
new commercial and industrial licensing requirements to promote 
transparency and awareness of the rules for both government and 
business. These reforms will greatly reduce bureaucratic delays caused 
by bribe seeking.
    In addition, with USAID support, NDI conducted a civic education 
program throughout Mozambique designed to raise awareness about the 
rights and responsibilities of citizens in a democracy. Many 
participants soon put their newly acquired democratic skills into 
action and tried to make improvements within their communities. In 
Sofala province, for example, participants wrote a letter to the 
District Office of Education complaining about the disappearance of 
funds the community had pooled for the construction of a school. The 
school administration was forced to pay the money back, and this 
encouraged the community to provide additional funds, which enabled the 
school to be built.

    MALI: The USAID mission in Mali was involved in organizing for 
regional workshops on ``illicit taxes'' that the custom and police levy 
from livestock exporters in Sikasso, Segou, Mopti, and Koulikoro. The 
workshops provided opportunities for livestock exporters and government 
officials to interact and jointly develop a plan for eliminating 
illegal taxes. As a result of these workshops, livestock exporters 
decided to-create border livestock markets that will tremendously cut 
down the opportunity for local officials to demand unwarranted payments 
that negatively affect export revenues.

    KENYA: In the past, when emergency food aid was required in Kenya, 
there were two parallel emergency food programs--the Government of 
Kenya (GOK) system and the UN's World Food Program (WFP) and their 
implementing partners. The GOK system used to be highly corrupt with 
high losses and little or no impact, as the food aid went to too many 
districts and too many people due to political reasons. However, as a 
result of a USAID-funded workshop facilitated by the Famine Early 
Warning System (FEWS) project staff, augmented by additional USAID and 
British-funded analyses, the GOK has made some dramatic changes in its 
emergency aid program by moving towards a more transparent and 
efficient community-based distribution system. The new system allows 
for district and divisional level decisions to be made locally, and 
PVOs have a much larger role in the allocation of all emergency food.

    Targeting of households can now be done based on need rather than 
on political factors; while improved and transparent accounting 
procedures make unauthorized diversions harder. Kenya's remote Turkana 
District, the area hardest hit by the country's recent drought, 
demonstrates the improvements for the poorest households brought about 
by a new community-based food aid targeting system. During a recent 
visit to the region, observers noted that poor households were 
receiving a monthly distribution of up to twenty-two pounds of corn, 
dramatically more than the two pounds they received previously. The new 
targeting system provides a more accountable and transparent 
distribution mechanism to ensure than food aid goes to those most in 
need.

                               CONCLUSION
    We continue to make strides to reduce corruption in Africa, 
although decreases in corruption are difficult to quantify. It is not 
easy to count the number of bribes not taken, or solicited. Spectacular 
results are not quickly available. However, since USAID began 
addressing systemic corruption several years ago, there has been 
progress on many fronts, including the degree to which citizens and 
governments are aware and engaged in fighting the corruption, the 
number of elected officials exposed to ethics training, and the depth 
and breadth of regulatory and judicial reforms in several countries. We 
should be heartened by those successes. Yet, we can only help support 
efforts that Africans themselves wish to undertake. The change must 
come from within and not be externally imposed. Corruption is a 
critical issue that requires diligent attention by African governments 
and donor partners to forestall its debilitating impact. We in the 
Africa Bureau will continue to work with other donors and with our 
African partners, as well as with multilateral and regional 
organizations, to ensure that the successes achieved thus far are 
sustained and expanded.
    Lastly, we all know that reducing corruption is a long-term 
process, as is the promotion of democracy and good governance. However, 
we are increasingly required to make difficult decisions regarding 
program funding due to reductions in democracy and economic growth 
resources. If we are to collaborate with the larger donor community in 
mutually supportive capacities, support our US private sector in 
emerging African economies, protect our on-going assistance programs, 
and support Africans in their quest for sustainable development, the 
Administration's requested resources are needed. We have, we can, and 
we will make a positive difference but the support of the Congress is 
absolutely necessary.
    Thank you.

    Senator Feingold.  Thank you, Ms. Lowery-Derryck. As we 
turn to Simon Taylor, director of Global Witness, let me just 
reiterate the 5-minute target, if we could, so we have some 
time to have some back-and-forth.

   STATEMENT OF MR. SIMON TAYLOR, DIRECTOR, GLOBAL WITNESS, 
                        LONDON, ENGLAND

    Mr. Taylor.  Good afternoon. As an NGO based in London it 
is quite a privilege to come and do this, so I would like to 
start by saying thank you very much for having us. I will just 
very briefly tell you about Global Witness. We are a London-
based investigative campaigning organization that looks at the 
link between natural resources, the role of natural resources 
and the funding of conflict. My expertise in the African 
context is Angola, and so that is what I am going to focus my 
discussion on. I hope that is okay.
    I do not want to paint an utterly bleak picture of Angola, 
but I think I would be interested in having more of a debate 
about just how far the reforms have come in Angola. Whilst we 
see, certainly, the start of the IMF staff monitoring program 
as a very positive move, we also see that the program itself, 
from our perspective, is quite flawed in that it does not quite 
go as far as it could have done. Especially given the fact, I 
think, that many of the objective commentators in discussions 
with the IMF prior to the agreement, in addition to the 
availability of public information, raised exactly what was 
going wrong in Angola vis-a-vis corruption--information was 
well available quite a long time prior to the finalization of 
the agreement.
    But I think from our perspective, whilst we see the staff 
monitor program as a positive move forward, we think, well, it 
was almost like aiming here instead of here, so that they have 
not quite obtained what they could have done. I will come back 
to that.
    I will just very briefly run through where we see the key 
problems in Angola. I think we have a situation where there is 
literally top-down corruption that is endemic the whole way 
through the structure of society, mainly I think because once 
you get below the top levels there is actually no other way to 
function. It is the only way to live.
    There is no alternative access to revenue to survive unless 
you have become part of the system, so to varying degrees, 
depending on where you are on the ladder of the structure, the 
hierarchy of society, you have corruption, but at the top end 
you have control over virtually everything. Everything, as they 
would say in Luanda, is an ``eschema,'' a scam.
    So everything from--we have noted rotten container loads of 
beef being imported from Lisbon, to weapons that do not roll 
off container ships, that have to be literally dragged off, the 
sole purpose of their acquisition seemingly to acquire the 
commission attached with having made the deal in the first 
place.
    We have mentioned briefly Angola is a major conflict zone. 
Some people here may be aware that we have been looking at the 
issue of conflict diamonds, and it was our work through this 
report, which we published in December 1998, which kind of, 
together with other moves by the U.N. Sanctions Committee 
precipitated a lot of the coverage and moves to deal with the 
conflict diamond issue.
    And for us the other side of the coin is the fact that 
although you have got a war which is clearly draining the 
revenue base for the country, for development and so on, it is 
the massive scale of corruption, perpetrated by top-level 
people, particularly within the presidency and other areas, 
which is also siphoning off a vast proportion of the wealth.
    And I think the most serious aspect of it is what we would 
define, I think, as the de facto privatization of the war, 
which took place around 1997-1998. I would like to be more 
candid, if you like, but it is a bit hard because naming people 
might stand me up for a little bit of grief when I go home, not 
the least of which might be in a courtroom, or worse, I might 
add.
    But the bottom line is that in 1993 Luanda was in 
difficulty in the conduct of the war. The war was going very 
badly. There was not the revenue to fight it. There was not the 
weapons supply and so on, and basically what happened is an SOS 
call went out in the direction of France, and certain 
individuals in France provided contacts with certain other 
individuals, which I will not name now, who saw to it that 
introductions were made with certain banks who provided oil-
backed loans.
    The same individuals also provided the connections for the 
``lifting of the oil,'' as it is known, to pay back the loans 
and also provided the weaponry, and these individuals basically 
monopolized the weapons supply to Luanda, whether directly 
themselves or at least on the basis of orchestrating others to 
do it.
    This carried on until about 1997, and the deals they did 
went through an Angolan parastatal company, a State company, 
and there were obviously kickbacks of quite some magnitude. 
What happened in 1997-1998? Top people in the presidency 
removed the contract from the parastatal and gave it to a 
private enterprise which is basically owned by these same 
individuals, so what we have seen is an escalation of the kick-
back process to kick-backs plus profits, because they own the 
very structure that is being deployed.
    Some of the other areas that I think are of concern--and 
this really brings us to the oil companies, and the role of the 
oil companies. In 1999, in July of 1999, three oil blocks were 
finalized. These are respectively blocks 31, 32, and 33. 31 
went to BP-Amoco, 32 to ELF, which is now TotalFina ELF, and 33 
to Exxon, and within the equity structures of Blocks 32 and 33 
are some very strange partners, which we believe are basically 
payments in kind for services rendered, the services being the 
provision of weaponry and financing and so on. They certainly 
do not appear to be companies that the international oil 
industry is familiar with as ultra deep water oil- drillers.
    I think the more disturbing aspect of the three blocks was 
that some $870 million was paid over in signature bonuses, of 
which we reckon at least $400 to $500 million disappeared 
straight into the presidency for deployment through this 
structure I described before, and has simply not been accounted 
for. It has disappeared. I think the picture of all of this is 
that a significant proportion of everything that is wrong with 
what is going on in Angola is that it takes place off-shore.
    So what we have in the Angolan staff monitoring program of 
the IMF is a very positive step. It is miles ahead of where we 
would have been, say, last year. But the bottom line is that it 
has no retrospective analysis of what took place in 1998 and 
1999, and as far as we are concerned these represent some of 
the most corrupt years in terms of practices. And also it is 
only looking at money from companies to Government, no 
subsequent deployment of that revenue, so some of the key areas 
of where it then disappears are simply not going to be looked 
at at all. It is great that the companies are now being hired. 
I think that is very good that we are moving forward, but are 
they going to find out all the convoluted pathways of money 
through, for example, the Cayman Islands, through all sorts of 
different structures you might imagine, where that stuff is 
going, and I seriously doubt it.
    So if the end objective is to bring transparency to the 
country, such that oil revenue provides some sort of revenue 
for the development of the country and is actually going to the 
people of the country, at least a bit, which it currently 
clearly is not, then we need something more, and I think we 
need at the very least some form of retrospective analysis of 
what went on before, for the simple reason that we need to get 
to the bottom of the structures that have been created, which 
will continue to be created unless such an analysis is brought 
to bear.
    So somehow we need to go and readdress this side, and I 
think that is something that the committee might be able to 
help with, to go the administration, if that is at all 
possible, to readdress this problem.
    There is another strategy which we have been working on for 
a while, and which seems to be bearing some fruit, and that is 
to do with the role of the companies themselves and what they 
can do. It is very clear that in Angola there is no 
transparency from the companies themselves.
    Whereas you and I can go to our respective tax offices and 
find out what our companies pay to our Governments from tax 
revenue for the activity they do, Angolans cannot do that, so 
it is impossible to work out exactly how much is coming in to 
the State coffers in the first place. If you want to hold your 
Government to account, you have to know how big the pie is in 
the first place, and so I think that leads us to a fundamental 
point that the companies could do, and that is to follow the 
best practice they would have to do in any developed country, 
and that is to publish what they pay to the Angolan Government 
in their annual accounts.
    With that regard, we have now got an agreement from the 
Foreign Office in London for Peter Hain, Minister of State for 
Africa, to host a meeting on October 12, at which the London 
representatives of the various oil companies in Angola--because 
the focus will be Angola--will be attending together with some 
NGOs, and obviously the Foreign Office itself, and the purpose 
of that meeting is to examine this whole issue of what the 
companies could do to live up to what one might quite 
legitimately, I think, expect of them in any developed society.
    The purpose of that meeting hopefully will be to lead to a 
third meeting--a second meeting, really, in this context, at 
which we would hope that the U.K. Government might start to 
involve the U.S. Government and other Governments, together 
with the head office senior representatives of the companies, 
so another thing I would really like to ask, if that is at all 
possible, is if the committee, together with the 
administration, could help to deliver the top executives of the 
companies from this end to that second meeting, which should be 
scheduled hopefully towards the end of October.
    So I think if we can get to that stage, we can see a 
scenario where the companies could basically publish what they 
pay in all the countries they operate in, then you would see a 
situation where you would de-Angolanize. It would cease to be a 
problem for them, and I think what I am suggesting is the 
companies could literally have their cake and eat it, if you 
like.
    This should be an utterly painless process, where there is 
no come-back to them because they all do it, and if they do it 
everywhere, no one country can blame them, and I think what 
would be true of Angola in terms of providing this basic 
information for civil society to finally ask the question and 
hold the Government to account would actually be very 
beneficial in places like Gabon and Cameroon, and Nigeria--
Nigeria is improving and so on, but a whole host of other 
places.
    So that is the kind of strategy that is coming, and I would 
very much like to ask for your assistance. Thank you very much.
    [The prepared statement of Simon Taylor follows:]

                   Prepared Statement of Simon Taylor

               INTRODUCTION--BACKGROUND TO GLOBAL WITNESS
    Global Witness is a not-for-profit London based NGO, which focuses 
on the role of natural resources in the funding of conflict. Global 
Witness was established in 1993, by myself and 2 others--Chairman Gooch 
and Patrick Alley.
    Although this hearing is aimed at corruption and the continent of 
Africa, my discussion will focus on Angola. Despite this quite narrow 
focus, the importance of Angola to the region, both strategically and 
because of its potential economic weight, and the sheer scale of 
corruption--perhaps one of the worst examples of corrupt government in 
Africa (if not globally), with no accountability to its people--all 
conspire to make Angola an ideal focus.
    There are always two sides to corruption--the corrupted and the 
corrupter, and many of the corrupters in Angola are the very same 
individuals and companies which have operated in a similar fashion in 
countries such as Gabon, Congo-Brazzaville, Cameroon, and Nigeria, etc. 
Angola also provides upwards of 8 percent of US oil imports (set to 
rise massively over the next few years), and so it is of immense 
strategic value to the United States. In addition, it is important that 
these issues, though of course relating to Angola, are not considered 
solely as Angolan problems. This is due to the fact that the war 
economy is intimately connected to corrupt deals, which in turn likely 
play a significant role in the capacity for Angolan military 
involvement in the Democratic Republic of Congo (DRC).
    Global Witness has considerable information relating to the role of 
certain key individuals and companies in this situation. However, due 
to safety and legal considerations, it is difficult to be as candid as 
I would desire. Having said that, I am very keen to provide additional 
detailed information to key interested parties in private, outside of 
the context of this Hearing. For this hearing, I will attempt to be as 
candid as possible within these constraints.

 CORRUPTION AND LACK OF TRANSPARENCY AND THE DE FACTO PRIVATISATION OF 
                           THE WAR IN ANGOLA
    In December 1998, Global Witness published the report A Rough 
Trade, focusing on the role of the international diamond trade in the 
financing of UNITA's war in Angola. As many of you will know, this 
report with its key finding that UNITA generated a conservative US$3.7 
billion between 1992 and 1998, and subsequent press coverage was a 
major precipitator of significant International Community focus on the 
issue of ``conflict diamonds.'' International attention and focus on 
this issue then received a major boost through the very pro-active 
involvement of both the US and UK Governments, which in turn took on a 
greater urgency following the events of earlier this year in Sierra 
Leone itself. I have of course not referred to the activities of 
various individuals within the US Congress and other NGOs.
    In December 1999, Global Witness published A Crude Awakening, which 
sought to examine the other side of the Angolan conflict; the role of 
massive corruption on the government side, and the effect of a 
considerable lack of transparency on behalf of the oil companies 
operating in Angola, and lastly the role of the international banking 
industry which has provided numerous loans, against future oil 
extraction. In the latter case, the resultant monies being subject the 
same lack of transparency, and being passed through opaque channels, 
resulting in funds being siphoned off through secret arms deals. It is 
the corruption aspect of the Angolan tragedy that I wish to address 
here today--and it is this issue which is significantly affected by US 
and other countries' foreign policy to Angola.
    In late 1997, or early 1998 (the exact timing is not clear), the 
contract for arms (and other procurement efforts) was removed from an 
Angolan parastatal company and given to a private company--company X. 
This decision was made by certain top level officials in the 
Presidency, known as Futungo.
    Company X is connected to certain individuals who have been 
instrumental in the provision of oil-backed loans. These same 
individuals also organised the ``lifting'' of the oil (in order to pay 
back the loans) by a very well known oil trading company which was 
notorious during the 1980's as a leading oil sanctions buster to 
Apartheid South Africa. These same individuals, who have been the 
quasi-monopoly weapons suppliers to Angola since around 1993/1994, also 
provided weapons through this new supply structure.

           WHAT ARE THE IMPLICATIONS OF THIS NEW ARRANGEMENT?
    This new method of supply has resulted in a number of changes. 
Whereas, the suppliers referred to above previously benefited from 
large kick-backs sometimes amounting to 30-40 percent and which were 
shared with top-level officials, the margin of profit has escalated. 
This is because whilst previously they profited from the kick-backs 
alone, they now benefit from both these kickbacks and the profits 
generated from their joint ownership with Angolan officials of Company 
X.
    This removal of the contract from the Angolan parastatal to Company 
X represents a de-facto privatisation of the current phase of Angola's 
civil war. This is because every item from bombs and bullets to 
clothing and food generates money for those who are involved in Company 
X. If, as most objective commentators once again recognise, there is no 
military solution to the current conflict in Angola, then the current 
scenario represents a serious conflict of interest, given that those 
who should be seeking a peaceful outcome to the war, are in fact making 
money from its very continuation.
    It is clear that frequently supplies of weapons and other 
commodities purchased through these individuals, both prior to and 
after the involvement of Company X, were not always up to the job. 
There have been many occasions where weapons including tanks and other 
heavy weaponry were literally dragged off the supply ships, because 
they were unable to be driven off under their own power. This purchase 
of inadequate military equipment has made up a significant percentage 
of overall supply in recent years, and is consistent with imports of 
other commodities, such as rotting meat from Portugal, which appear to 
have been obtained for the commission alone.
    The mid-1999 successes of the Angolan Armed Forces in part relate 
to the fact that these and other suppliers finally delivered weaponry 
(involving the same kick-backs) of sufficient quality and quantity to 
do the job.
    Whilst it is obvious that the war in Angola has been a massive 
drain on the State's finances, and hence capacity for development, it 
is also very clear that corruption has taken a vast percentage of 
potential State income, of which in recent years, over 90 percent of 
been derived from oil. Given that oil (in fact all state natural 
resources) is enshrined in Angola's Constitution as belonging to the 
people of Angola, it is very difficult to see where any benefit has 
been derived by Angolans from their resource. This is clearly 
illustrated by Angola's free-fall from position 73 (out of 172 
countries assessed) in the UN's Human Development Index (HDI), when 
daily production was 482,000 barrels, to position 160 by 1999, when 
production had reached 770,000 barrels per day. It should be noted that 
the volume of oil production in Angola has since increased, with no 
appreciable change to the country's HDI position.
    The capital, Luanda, is a vastly over-populated (due to the influx 
of war refugees) sprawl, which some describe as the second most 
expensive city in the world. It is a city of utter squalor, mixed with 
a smattering of very expensive boutiques, available only to the elites. 
Whilst hordes of children sift through the garbage, the elites 
sometimes drive past in their limousines. Many of the other major towns 
in the countryside resemble Dresden after World War II.

            WHAT IS THE VALUE OF OIL TO THE ANGOLAN ECONOMY?
    Angola is sub-Saharan Africa's second largest oil producer, 
following Nigeria, with recent discoveries suggesting it soon become 
the largest. Oil revenue makes up over 90 percent of state income. One 
might presume that for such a significant sector, it might be 
relatively easy to determine the actual dollar value of this resource 
to the economy--this of course would not be difficult in any developed 
country. But in the Angolan case, as for many developing countries 
where resource revenue is siphoned off to benefit an elite class, the 
lack of transparency makes this task almost impossible.
    Global Witness conducted investigations in an attempt to uncover 
raw data to calculate the dollar contribution of oil to the Angolan 
economy. The results, not only demonstrate the difficulty of such a 
task, but also clearly indicate the difference between the access 
provided to civil society in developed countries regarding transparency 
of tax contributions of major business' to developed country economies, 
and the lot meted out to Angolans. I will return to this theme later.
    From the best available data, Global Witness calculations indicate 
that Angola generated between US$1.8 billion and US$3.0 billion 
annually for the period 1990-1999. Clearly there is considerable 
variation year on some of which is reflected in global oil price 
fluctuations, but a significant source of this variation is due to the 
lack of available and accurate data. In other words, this estimate is 
not one that should be considered as particularly accurate. In 
contrast, by late 1999, analysts were predicting an annual income from 
oil of US$2.9 to US$3.2 billion for the years 2003 through to 2010, 
with other forecasts suggesting that the industry is set to invest some 
US$ 18 billion over the next four years in Angola.
    Global Witness has also made its own calculations of estimated 
income from oil in Angola over the period 2000 through to 2006. This 
forecast is based on analysts' predictions for oil volume extraction 
compared to two different, but conservative estimates of global oil 
price--of US$ 12 and US$ 18 per barrel. Given these current forecasts, 
we estimate that Angola will receive between US$1.4 billion and US$2.7 
billion respectively over the next six years. It is worth pointing out 
that for much of 1999 and this year, the global price of oil has 
hovered nearer to the US$30 per barrel level (now over US$32). Clearly, 
it is unrealistic to suggest that this price will be maintained in the 
long term, but it is worth noting that these high levels and therefore 
higher than estimated income levels have been maintained for a 
significant proportion of the period we are looking at.

                  THE ROLE OF CIVIL SOCIETY IN ANGOLA
    Angola's growing civil society is gradually escalating its 
opposition to the war, and is also seriously questioning the scale of 
corruption that is governing the country. However, NGOs and the press 
in Angola are facing an enormous up-hill battle against seemingly 
impossible odds. Those that have dared to challenge the current 
situation, and who have publicly voiced their concern over corruption 
by state officials have been ruthlessly dealt with--perhaps the best 
known case is that of Rafael Marques who has been tried for 
``defaming'' President dos Santos because he accused him of corruption. 
His case should in no way be considered in isolation, and the response 
has been to pursue such cases on a criminal basis, rather than through 
the civil courts. Although there is a growing independent press in 
Angola, they are severely limited in their capacity to cover 
contentious issues--Folho 8, which attempted to cover the launch of 
Global Witness' Crude Awakening report in December 1999, found its 
printer threatened, which then refused to print the first four pages of 
the paper--the banner headline front page leads with the launch of the 
report, but inside, the reader is treated to four pages of blank 
columns interspersed with photographs of oil rigs.
    It is very clear that in addition to the almost complete lack of 
available data concerning the true value of oil production to the 
Angolan State, it is also not possible for Angolans to question any of 
the decisions of the state, as to its conduct of the war, or the 
economy. Despite the constraints placed on a state at war, this 
situation is clearly unacceptable, especially given the implications 
for the Angolan people and the vast benefit being generated by the 
elite few through the continuation of current practices, at the expense 
of the population. There is no accountability of government in Angola 
today.

                  THE ROLE OF OIL COMPANIES IN ANGOLA
    Currently, there is no significant transparency by the oil 
companies in Angola. In stark contrast to the availability of tax and 
royalty data to the general public in developed countries, through the 
standard process of filing annual accounts by companies, such data is 
not available in Angola. Given that Angolans have no recourse to the 
data that they would require to at least begin the process of holding 
their government to account for its use of this resource, this 
situation of lack of oil company transparency is also clearly 
unacceptable.
    In July 1999, the three oil companies BP-Amoco, Elf (now 
TotalFinaElf) and Exxon, finalised their agreements with government for 
the three ultra-deep water oil blocks, respectively Blocks 31, 32 and 
33. The three companies paid a total of US$ 870 million dollars in 
signature bonuses, of which Global Witness estimates that between US$4-
500 million was ``disappeared'' through the Presidency.
    Global Witness believes, due to the lack of oil company 
transparency, that the companies are complicit in the plunder of Angola 
by the country's elite. This is not to say that the companies are 
directly involved in the paying of bribes, though some clearly are. 
But, it is saying that the companies are playing the key role in the 
provision of over 90 percent of Angola's State income, and given that 
it is this income which is being stolen, they cannot absolve themselves 
from that relationship and responsibility without taking every step to 
ensure that it is as hard as possible to siphon off such revenue, It is 
therefore clear that the companies can only escape from such a charge 
through all the companies collectively publishing all payments they 
make to government, just as they would be required to do so in any 
developed country.

                        THE ROLE OF THE BANKING
    The international banking sector has played a key role in the 
provision of short-term, high interest loans, which have severely 
exacerbated the effect of oil price fluctuations on Angola's economy, 
and which have significantly increased the national debt.
    Many of these loans have been negotiated in secret, and the 
resultant monies have been utilised through the same opaque system as 
oil derived state income. The value of the loans which have been 
provided against future oil extraction have been so vast that by 1998/
1999, Angola actually derived little physical income from then volumes 
of oil production, because the vast bulk of this revenue was needed to 
service the expanding debt. Of course, the conduct of the war, required 
continued funding, and so new loans have continued to be negotiated, 
greatly assisted by the high oil price; many of the negotiations 
involving the same individuals already referred to above, who are 
intimately involved in the supply of weapons to Angola.
    The Angolan parastatal oil company Sonangol is one of the main 
routes of loan repayment, often involving the direct selling of oil, 
with resultant revenues being directed through off-shore accounts. One 
of the implications of such a significant proportion of state revenue 
being directed via off-shore financial systems, is the development of a 
set of parallel financial systems within the Angolan economy. This 
simply adds to the lack of state transparency, providing ample 
opportunity for further misappropriation. It has also allowed for 
Sonangol to discount is tax liability to treasury, with the result that 
a large proportion of the Angolan economy being run through a set of 
foreign bank accounts--this set of off-shore parallel finances being 
controlled by the various elites within Angola, with the vast bulk by 
the Presidential clique.
    Given not only the scale of the loans which have been provided, but 
also the level of secrecy surrounding their negotiation and the 
subsequent control which is being exercised by the elite over the off-
shore repayment structures, there is clear complicity of those 
international banks which are involved, in the plundering of Angolan 
state revenue. As for the oil companies, the international banks should 
publish full details of existing and any new loans that are made 
available, and they should insist that full transparency concerning 
future loans be a condition of agreeing further financing. Given the 
risk of providing loans to Angola, it would also be in the interest of 
banks considering loans to Angola, to insist on a radical change in the 
level of transparency exercised by Angolan State institutions.

                 THE ROLE OF THE IMF AND THE WORLD BANK
    For some time the IMF has been trying to restart a programme in 
Angola. It came close to an agreement with the government in 1998, when 
the international oil price fell below US$10 per barrel. This was 
because Angola was close to defaulting on its international debts due 
to the low oil price. The Government was becoming desperate to secure 
new and preferential rate loans, which would only become available 
through an IMF agreement. In early 1999, the government did make some 
positive changes to the state financial systems, by posting Aginaldo 
Jaime as the new head of the National bank of Angola (BNA). This was a 
significant improvement, because the BNA had been a major partner in 
the system of state robbery, and Mr. Jaime is well respected in the 
international community.
    However, despite the improvements that Mr. Jaime continues to 
implement to operation of the bank and various other structural 
changes, there are still significant improvements required. These 
concern not only the fact that a vast percentage of Angola's economy 
(as already described) takes place entirely off-shore, but also the 
role of both Sonangol and the role of the Presidency in the deployment 
of state revenue.
    In April 2000, the IMF finalised its Staff Monitoring Programme 
(SMP) agreement with the Angolan Government. This agreement is a 
positive step forward that Global Witness welcomes as a useful first 
stage towards improving transparency in Angola. However there are 
serious flaws in what is being proposed. These include:

  1. There is no provision for any significant retrospective analysis 
        of the oil accounts and subsequent expenditure for the period 
        1998 to the present day--perhaps the worst period for massive 
        corrupt arms deals, involving both oil and loan revenue, in 
        Angola's history.

  2. The agreement appears to be only contemplating an analysis (from 
        July 2000 onwards) of oil revenue to government--as far as the 
        treasury--with no analysis of subsequent expenditure.

  3. This analysis (known as the oil diagnostic) was originally 
        intended to run until the end of 2000--for six months only. 
        This now appears to be extended until late 2001. However, there 
        appears to be no consideration as to what happens after that.

  4. Given that a vast proportion of plundered revenue has been 
        siphoned off through a convoluted system of off-shore companies 
        and accounts, it is extremely doubtful if the team hired to do 
        the oil diagnostic will be able to deal with this problem; 
        meaning that the structures which have served the purpose of 
        state robbery so well, will likely remain in place.

    The World Bank had pulled all of its country staff in 1999, leaving 
a token office representation in Luanda. The Bank is now tasked to hire 
the international accountancy company which will undertake the ``oil 
diagnostic,'' according to the IMF's SMP agreement. To date, the 
company of choice has not been finalised, though we understand this is 
imminent. It seems likely that once the diagnostic team is in place, 
that the Bank will resume its activities in Angola.
    It is imperative that international pressure is brought to bear to 
ensure that the IMF's SMP programme is truly a programme worth having. 
Global Witness appreciates that there is a balance to be drawn between 
having the programme, and pushing too hard and losing it all--however, 
if the price of having the programme is such that it will not deliver 
transparency, that it remains severely compromised as described above, 
then it seems likely that the IMF's programme will be insufficient for 
the job required.
    This is of major concern, because if the Angolan Government does 
perform according to what is required of this flawed programme, leaving 
significant areas of corrupt activities in place, which the diagnostics 
team is simply going to miss, then the logical next step is a likely 
resumption of international aid. Whilst in the long run, Angola does 
desperately need international assistance, Global Witness believes that 
such an outcome will send the wrong message and will allow for a 
continuation of current practices.

           THE ROLE OF THE US AND THE INTERNATIONAL COMMUNITY
    It is very hard to be precise about the role of the US in the 
continuation of current corrupt practices in Angola. On the one hand 
the US Government has played a very valid role in pushing the 
``conflict diamond'' issue to date. Here congratulations are certainly 
due. This is of course another area where corruption is also an issue.
    However, it is very difficult to escape from a perspective of the 
US, although it has gone on the record stating on various occasions 
that this is an issue which needs remedy, that the issue of corruption 
on the Angolan Government side also relates to oil--and of course, 
unlike diamonds which are a non-essential commodity, oil is the 
``untouchable'' item. There is a very strong perception amongst the NGO 
community and beyond, that the US and other governments with oil 
interests in Angola (especially France which fits into a category all 
of its own), because of the nature of oil, will make all the necessary 
``token'' noises about corruption, how bad it is, etc., but in the end 
will do nothing, because it does not want to upset the elite in Luanda, 
which may have repercussions for US oil companies. The US-Angola 
chamber of Commerce, which could be seen ostensibly as a positive 
vehicle, may in fact be contributing to the impression that the primary 
concern appears to be business interests regardless of other factors.
    Despite having had the opportunity to brief IMF officials directly 
involved in the SMP negotiations with Angola as to some of the 
essential areas which desperately need addressing, and having similarly 
done so with the other key oil interest countries, all of whom have 
significant influence at the IMF Board, we have been left with an SMP 
agreement which is flawed, as described above. To what extent if any, 
US and other countries' policies, or their lack, may have led to this 
situation is not clear.

             WHAT NEXT--SOLUTIONS TO THE CURRENT SITUATION
    Regardless of what may or may not have been undertaken by the 
various governments involved in the past, there is an area which I have 
briefly focussed on which has not yet been tried out. This involves all 
the major oil companies which are present in Angola and which, I hope, 
can also include a significant involvement from the US Government, 
together with the initial moves which are being made by the UK 
Government, and which will hopefully also involve other governments as 
the strategy moves forward.
    As I have already described above, there is clear complicity of the 
oil companies in Angola in the looting of state assets. Many of the 
companies are clearly and genuinely concerned about this situation, I 
think both in terms of the implications for the Angolan people, but 
also because it does not make sound business sense to be operating in 
an utterly corrupt environment. There are others, unfortunately who are 
directly involved in this problem, and I would like to provide more 
detail in private.
    However, there is strategy being put together by the UK Government 
right now and which is in its first stages. Minister of State Peter Ham 
MP, who is Minister for Africa at the Foreign & Commonwealth Office in 
London, is hosting a meeting of oil companies and some key NGOs with 
both experience in this issue (including Global Witness) and those who 
are working in the development field in Angola. The purpose of the 
meeting is for a full and frank discussion about the issue of 
corruption in Angola and to explore ways forward for the companies to 
be able to help by becoming more transparent in their operations in 
Angola. This meeting has been confirmed as taking place on October 
12th.
    In terms of the oil companies, the meeting is intended to include 
London based executives of all the majors--so this will we hope include 
Exxon, Chevron and Texaco. It is also intended that this meeting should 
lead to a second meeting within a few weeks, at which there should be 
participation from head office executives of the companies, together 
with the US government, and other governments if possible.
    Global Witness strongly believes that this strategy represents a 
genuinely positive way forward for the companies. Whilst it is clear 
that no one company alone wishes to incur the wrath of the Angolan 
government by publishing its payments of taxes and royalties to the 
Angolan Government (and neither would that be desirable, because such a 
move would only produce a fraction of the data required), if all the 
companies were to do so, there is not much the Angolan government could 
do in response.
    Things could be made even easier for the companies if they were to 
adopt such a strategy for all their countries of operation, as this 
would ``de-Angolanize'' the issue--the companies could easily explain 
their move as part of a global move to reform accountancy practice to 
adopt highest standards in order to act as ``responsible global 
citizens'' regarding issues of corruption and lack of transparency. If 
such a move was adopted, no one country could blame a company for its 
actions, since these would take place internationally. It is certainly 
clear that a similar move would be of immense value in countries such 
as Nigeria, Gabon, Cameroon, Congo-B, and the DRC, to name just those 
in Africa.
    I hope this is a strategy which appeals to the sub-Committee and 
that Global Witness might be able to ask for your assistance, together 
with that of the US government to take this forward. Angola desperately 
needs a radical change, and although this will not cure the ills, such 
a move would provide the necessary data (at no cost to the companies), 
which would at least allow Angolans to start the process of holding 
their government to account for its actions. In addition, I strongly 
believe that genuine transparency on behalf of the companies, together 
with a real focus on this issue from the international community would 
be a major help to the IMF in its efforts through the SMP and any 
subsequent agreements.
    Thank you for your time and consideration.

    Senator Feingold.  I thank you, Mr. Taylor, and I think it 
is very appropriate to focus on Angola. If it is not Exhibit A, 
it is Exhibit B in terms of this concern. The first country I 
ever visited in Africa was Angola in 1994, and I was appalled, 
but what really appalled me is to return there in December 1999 
and to see that--
    Mr. Taylor.  It is unbelievable.
    Senator Feingold.  Unbelievably to me, things seemed worse.
    Mr. Taylor.  They are.
    Senator Feingold.  And I think it was helpful to hear that.
    Mr. Taylor.  Thank you.
    Senator Feingold.  Let me now turn to Ms. Aileen Marshall, 
the senior advisor of the Global Coalition for Africa.

   STATEMENT OF MS. AILEEN MARSHALL, SENIOR ADVISOR, GLOBAL 
             COALITION FOR AFRICA, WASHINGTON, D.C.

    Ms. Marshall.  Thank you very much, Mr. Senator, and thank 
you very much for scheduling this meeting and allowing me to 
come and join you in this discussion. In the interests of time, 
I am going to try to make abbreviated comments.
    Both African countries and the international community 
should be concerned about corruption, because a peaceful and 
prosperous Africa is to the benefit of us all, and to the 
extent that corruption threatens stability and economic 
progress, it impedes the development of the continent. And lack 
of development will mean that African countries, instead of 
becoming real partners in an increasingly integrated global 
economy, will remain marginalized and dependent on development 
assistance.
    Others have already indicated some of the consequences of 
corruption, but I think it is very important to note that 
efforts to reduce poverty and improve the well-being of African 
populations simply will not be successful unless corruption is 
addressed. But it is not only the direct negative effects of 
corruption which are cause for concern, but corruption can also 
lead to or worsen other problems, including crime and conflict, 
which have also been mentioned.
    Because of the poverty and the weakness of their 
institutions, African countries are particularly susceptible to 
the activities of organized crime syndicates, be it Colombian 
drug cartels or the Russian mafia, and while international 
crime is increasingly sophisticated and well- financed, most 
African countries lack either the resources or the capacity or 
the technology to combat it.
    It has already been mentioned that in countries like Sierra 
Leone, Congo, Angola, corruption has helped to fuel and 
perpetuate conflict. There can obviously be no development or 
progress where there is conflict, and war has devastated some 
of the potentially richest countries on the continent.
    But there have been tremendous changes in Africa over the 
past few years as far as corruption is concerned, as other 
people have mentioned. Whereas once it was regarded as taboo, 
it is now openly discussed. Throughout the continent, the 
economic and social costs of corruption are being recognized, 
and people are speaking out against it.
    The press is uncovering and reporting corrupt business 
deals. Questions are being asked in parliaments. A multiplicity 
of civil society organizations dealing with corruption have 
been created. In some cases, ministers and senior civil 
servants have been censured or dismissed because of corrupt 
practices. All of this would have been unthinkable just a few 
years ago.
    A good many African Governments are making a genuine effort 
to counter corruption, and some lessons have been learned. I 
think chief among these is that corruption in Africa, like 
elsewhere, is a complex problem that requires a variety of 
actions to be undertaken and political will is a fundamental 
necessity. And that political will has to be encouraged.
    It has also become clear that purely legal solutions are of 
limited effectiveness, as we mentioned, and that Government 
actions alone are insufficient. Effective coalitions between 
Governments, civil society, and the private sector are needed, 
and anticorruption efforts must have some demonstrable impact 
if public confidence is to be sustained.
    The primary responsibility for addressing corruption 
obviously lies with individual countries, but collaboration and 
cooperation between and among countries is also important. Mr. 
Senator, you yourself mentioned the principles to combat 
corruption, which Mr. Schneidman also mentioned, and progress 
in implementing these principles will be discussed at the 
forthcoming GCA policy forum in Abuja in October, where other 
countries will also be invited to adopt them. Some countries, 
including Nigeria, have already expressed an interest in doing 
so.
    We in the GCA are very grateful for the assistance the 
United States Government has provided to this initiative of 
developing principles and possibly an anticorruption 
convention. All of the African countries involved were very 
much encouraged by the active interest and support of both the 
State Department and USAID.
    As other speakers have indicated, the United States is 
already supporting African efforts to address corruption, and 
over the long term this assistance will make a difference. I 
think specific support for reforms in public procurement, 
taxation, and customs could be very useful. These are areas 
identified by most African countries as major sources of 
corruption.
    This sort of assistance is obviously important and should 
be continued, but another type of support is also needed, and 
that is the moral encouragement to those forces within African 
countries which are committed to fighting corruption. I think 
the U.S. should take a public stance against corruption and 
ensure it is part of its policy dialogue with African 
Governments. The United States should also actively encourage 
the continuation of political and economic reform. Corruption 
cannot thrive in open, competitive societies, where there are 
multiple power bases.
    Support for African anticorruption initiatives is 
necessary, but we also have to recognize that corruption in 
African countries is not merely a domestic issue, and I would 
just like very briefly to suggest some areas where 
international cooperation is needed.
    Forceful action is obviously needed to sever the links 
between organized crime, corruption, and other activities such 
as drug trafficking. Corruption and conflict, as has already 
been noted, converge in the arms and diamond industries, and 
much greater transparency and accountability is essential. But 
sustained progress on issues such as these is beyond the 
control of individual countries and demands international 
collaboration. International business transactions that are a 
source of corrupt practices also require attention, and the 
private sector really has got to become a partner in the fight 
against corruption.
    Action at the global level is also needed with regard to 
money laundering. The United States has taken a leadership role 
in promoting changes within the international banking system, 
but current provisions need to be strengthened and expanded, 
and individual banks must be required to exercise due diligence 
and fully comply with regulations.
    It is important that OECD countries ratify and implement 
the provisions of the recent anticorruption convention, but 
pressure should also be brought to bear on countries in Asia 
and the former Soviet Union to increase their vigilance with 
regard to corruption in Africa. To the extent that individuals 
and companies based in these countries engage in corrupt 
practices in their dealings with Africa, the anticorruption 
efforts put in place by individual African countries will be 
undermined.
    Mr. Senator, to conclude, combatting corruption in African 
countries is not easy, and there are no quick fixes. It 
requires political will and constant effort. It also requires 
the encouragement and support of the international community. 
To date, the United States has actively provided this 
encouragement and support, and we in the GCA hope that it will 
continue to do so. We also hope that the United States will 
work to promote greater international collaboration and action 
to counter corruption.
    Once again, thank you very much for allowing me to join 
you.
    [The prepared statement of Ms. Marshall follows:]

                 Prepared Statement of Aileen Marshall

    Mr. Chairman, members of the Subcommittee, I appreciate the 
opportunity to appear before you today to discuss anti-corruption 
efforts and African economic development. I congratulate you on 
scheduling this session and for devoting time to an issue that is of 
concern to Africans and friends of Africa alike.
    Before commenting specifically on anti-corruption initiatives I 
would like to emphasize that corruption is no worse in Africa than in 
other parts of the world. Nor is the situation the same throughout the 
continent. While at one extreme there is a country like the former 
Zaire where wholesale corruption threatened the political and social 
fabric of society, there is also the example of Botswana, noted for its 
record of sound governance and lack of corruption. However, African 
countries simply cannot bear the costs of corruption, which, left 
unaddressed, threatens to undermine the very real gains that many 
countries have made in recent years as a result of political and 
economic reforms. It is for these reasons that combating corruption has 
become a development imperative for the continent.

                          CORRUPTION IN AFRICA
    Both African countries and the international community should be 
concerned about corruption because a peaceful and prosperous Africa is 
to the benefit of us all. To the extent that corruption threatens 
stability and economic progress, it is an impediment to the development 
of the continent. And lack of development will mean that African 
countries, instead of becoming real partners in an increasingly 
integrated global economy, will remain marginalized and dependent on 
development assistance.
    Corruption in Africa, as elsewhere, damages the political, social, 
and economic systems of countries. It erodes the legitimacy of 
governments, undermines the effective functioning of institutions, 
slows economic progress, impedes the development of the private sector, 
and limits the ability of people to get ahead as a result of their own 
endeavors. Moreover, efforts to reduce poverty and improve the 
wellbeing of African populations will not be successful unless 
corruption is addressed.
    But it is not only the direct negative effects of corruption that 
are cause for concern. Corruption can also lead to, or worsen, other 
problems. I would just like to mention two--crime and conflict. 
Entrenched corruption undermines law and order, and thus facilitates a 
rise in criminal activity. Because of their poverty and the weakness of 
their institutions, African countries are particularly susceptible to 
the activities of organized crime syndicates, be it Colombian drug 
cartels or the Russian mafia. And while international crime is 
increasingly sophisticated and well financed, most African countries 
lack the capacity and technology to effectively combat it.
    In countries like Sierra Leone, the Democratic Republic of Congo, 
and Angola, corruption has also helped to fuel and perpetuate conflict. 
There can obviously be no development or progress where there is 
conflict, and war has devastated some of the potentially richest 
countries on the continent. Although the burden has to be borne 
principally by the countries themselves, conflict in Africa has also 
imposed a cost on the international community. Resources that could 
otherwise have been devoted to development have been diverted to 
providing emergency assistance, peacekeeping, and post-conflict 
reconstruction.
    In short, Mr. Chairman, combating corruption is essential for the 
economic development and political progress of the continent. Most 
African countries are in transition--from authoritarianism to 
multiparty democracy, and from command to market-based economies. They 
are societies in flux, where one set of norms has broken down, but 
another has not yet been fully institutionalized. They need the 
assistance and support of the international community to sustain the 
process of transition, and to ensure that the opportunities it provides 
are acted upon.

                  AFRICAN ANTI-CORRUPTION INITIATIVES
    There have been tremendous changes in Africa over the past few 
years as far as corruption is concerned. Whereas once it was regarded 
as taboo, it is now openly discussed. Throughout the continent, the 
economic and social costs of corruption are being recognized, and 
people are speaking out against it. The press is uncovering and 
reporting corrupt business deals. Questions are being asked in 
parliaments. A multiplicity of civil society organizations dealing with 
corruption have been created. In some countries, national anti-
corruption coalitions have been formed, corruption diagnostic surveys 
undertaken, and anti-corruption action plans formulated. In some cases 
also, ministers and senior civil servants have been censured or 
dismissed because of corrupt practices, and there has been a marked 
increase in the number of corruption cases brought before the courts. 
All these would have been unthinkable only a few years ago.
    There are obviously some governments that are not at all interested 
in seriously combating corruption. But there are also a good many that 
are making a genuine effort. Most of them have adopted a combination of 
legislation, public awareness and investigation. Several have 
established specialized anti-corruption agencies. Although these 
efforts are relatively recent, some lessons have been learned. Chief 
among these is that corruption in African countries--like elsewhere--is 
a complex problem that requires a variety of actions to be taken, and 
that combating corruption takes time and sustained effort. It is also 
evident that political will is a fundamental necessity, and needs to be 
encouraged in most countries.
    It has become clear that purely legal solutions are of limited 
effectiveness, particularly in countries where the independence of the 
judiciary is not yet fully established and where legal institutions are 
weak. Similarly, specific anti-corruption bodies can be useful, but 
they need to have sufficient independence, resources and authority to 
successfully perform their functions. It is increasingly recognized 
that government actions alone are insufficient, and that effective 
coalitions between governments, civil society and the private sector 
are needed. It is also important that anti-corruption efforts have a 
demonstrable impact, if public confidence is to be sustained.
    The primary responsibility for addressing corruption obviously lies 
with individual countries. But collaboration and cooperation between 
and among countries is also important. In February 1999, eleven African 
countries--Benin, Botswana, Ethiopia, Ghana, Malawi, Mali, Mozambique, 
Senegal, South Africa, Tanzania, and Uganda--met under the auspices of 
the GCA and agreed to adopt a set of Principles to combat corruption. 
The Principles are intended to support the efforts of individual 
countries. But if implemented by sufficient countries, they could also 
form the basis of a regional anti-corruption convention, similar to 
that adopted by the OAS.
    We in the GCA are grateful for the assistance the United States 
Government has provided to this initiative. All of the African 
countries involved in the process were very much encouraged by the 
active interest and support of both the State Department and USAID. 
Progress in implementing the Principles will be discussed at the 
forthcoming GCA Policy Forum in Abuja, in October 2000, where other 
countries will also be invited to adopt them. Some, including Nigeria, 
have already expressed an interest in doing so.
   proactive measures to support african anti-corruption initiatives
    The United States is already supporting African efforts to address 
corruption, as other speakers have indicated. Over the long-term, the 
assistance of USAID and other development partners to strengthen 
institutions of state and civil society, streamline government 
procedures and build effective legal systems will make a difference. 
Specific support for reforms in public procurement, taxation, and 
customs could also be very useful, as these are areas identified by 
most African countries as major sources of corruption.
    Mr. Chairman, the sort of assistance that is already being provided 
is obviously important and should be continued, or even expanded. But 
another type of support is also needed. This is the moral encouragement 
to those forces within African countries that are committed to fighting 
corruption. The United States and other donor governments and agencies 
should take a public stance against corruption and ensure that it is 
part of their policy dialogue with African governments. They should 
also actively encourage the continuation of political and economic 
reforms. Corruption cannot thrive in open societies and competitive 
economies where there are multiple centers of power.
    Support for African anti-corruption initiatives is necessary, but 
we also have to recognize that corruption in African countries is not 
merely a domestic issue, and that measures are required at the 
international level. Forceful action is needed to sever the links 
between organized crime, corruption and other activities such as drug 
trafficking. Corruption and conflict in Africa converge in arms and 
diamond trading, and much greater transparency and accountability is 
essential in both industries. Sustained progress on issues such as 
these is beyond the control of individual countries, and demands 
international collaboration.
    International business transactions that are a source of corrupt 
practices also require attention. Major investment in Africa is largely 
concentrated in a few countries with substantial mineral or oil 
deposits. These are countries where corruption presents a significant 
problem. But less visible business transactions in other countries can 
also encourage corruption. The private sector has to become a partner 
in the fight against corruption. Companies should be encouraged to 
exercise good corporate governance and promote transparency in their 
interactions with governments and individual officials.
    Action at the global level is also needed with regard to the 
illicit transfer of funds to western financial institutions. The United 
States has taken a leadership role in promoting changes within the 
international banking system to help prevent money laundering. But 
current provisions need to be strengthened and expanded, and individual 
banks must be required to exercise due diligence and fully comply with 
international regulations. Pressure could also be brought to bear on 
financial institutions for the effective and timely recovery of funds 
found to have been obtained as a result of corruption.
    It is important that OECD countries ratify and forcefully implement 
the provisions of the Convention on Combating the Bribery of Foreign 
Public Officials in International Business Transactions. At the same 
time, sanctions such as blacklisting of companies that engage in 
corrupt practices could be an effective deterrent, provided they are 
enforced by sufficient countries. But pressure should also be brought 
to bear on countries in Asia and the former Soviet Union to increase 
their vigilance with regard to corruption in Africa. To the extent that 
individuals and companies based in these countries engage in corrupt 
practices in their dealings with Africa, the anti-corruption efforts 
put in place by individual African countries will be undermined.
    To conclude, combating corruption in African countries is not easy 
and there are no quick fixes. It requires political will and constant 
effort. It also requires the encouragement and support of the 
international community. To date, the United States has actively 
provided this encouragement and support, and we in the GCA hope that it 
will continue to do so. We also hope that the United States will work 
to promote greater international collaboration and action to counter 
corruption.
    Mr. Chairman, once again I congratulate you on raising this 
important issue, and thank you for allowing me to contribute to your 
deliberations.

    Senator Feingold.  Thank you very much, Ms. Marshall, and 
finally, we will turn to Mr. Miguel Schloss, the executive 
director of Transparency International. Mr. Schloss.

     STATEMENT OF MR. MIGUEL SCHLOSS, EXECUTIVE DIRECTOR, 
          TRANSPARENCY INTERNATIONAL, WASHINGTON, D.C.

    Mr. Schloss.  Thank you very much, Mr. Chairman. First and 
foremost, I want to thank you and compliment the chairman of 
the subcommittee for calling this roundtable. In a way, having 
an international civil society NGO testify in the U.S. Congress 
is emblematic of how far this world is globalizing, how small 
it is becoming and, very importantly, the open and important 
role that this very country can play in the destiny of entire 
continents like Africa.
    I am not going to go fully through my statement. I will 
leave it here on the record. It also will have an attachment of 
a brief report which we have prepared in the context of a very 
valuable grant we have received from USAID on activities we 
have undertaken in Africa in selected countries. Nor am I going 
to repeat any of the very well-made points, in fact, very 
articulately, by those who spoke before me.
    I would like to address four questions, if I may. First, 
why Africa, second, then what should be done, thirdly, why now, 
and finally, what next?
    Why Africa? Africa has enormous unexploited and unexplored 
potential in resources, in processing and manufacturing, and 
considerable growth potential. The continent has barely tapped 
the potential of its people and, in Transparency International, 
we have no question whatsoever that with sage policies, 
adequate human and financial resources, improved delivery of 
technical assistance, and market access, the continent can 
unlock its potential, no question whatsoever. But, very 
important, giving people a stake in this development can help 
reduce regional conflicts that one day could spill over beyond 
this region's confines.
    I do not need to go into why Africa finds itself in the 
current state of economic development. Many of the points have 
already been made on the underinvestment that has taken place 
in the human and physical infrastructure, the policy context, 
but I would like to stress one point, just to bring somewhat of 
a different angle to what has been said in some ways by those 
who spoke before me. Perhaps more fundamentally, the 
marginalization, both locally and internationally, of Africa is 
one of the causes of the problems which has resulted in 
assistance programs to Governments that oftentimes hardly 
represented the people they were supposed to serve.
    All this has resulted in programs for which there has been 
weak demand, fledgling civil society organizations that have 
had limited possibilities to demand transparent and accountable 
administrations, the buildup of vested interest that used 
public office for private benefit, and the consequent debt 
overhang and high levels of corruption. According to our index, 
year after year the continent ranks last in our corruption 
perception index. I do not need to go into the economic 
consequences of it. They have been stated very clearly by those 
who spoke before me.
    Then, what should be done? Of course, as you yourself 
pointed out, the whole continent is not engulfed in these types 
of problems. There are countries, like Mauritius, Botswana, 
Namibia, have done quite well and are developing at an 
astonishing pace. I would say Mauritius is becoming a Singapore 
very rapidly. Despite quotas in textiles and so on, they find a 
way. By the same token, countries like Nigeria are at present 
making a credible effort to redress the policy environment and 
deal with the corroding scourge of corruption.
    What should be learned from these experiences? First, 
development has to come from within, and foreign and post 
conditionality is more often than not a poor substitute for 
efforts that have to be home-grown from both leadership of the 
country and its people.
    Second, under the wrong conditions, foreign assistance can 
in fact bankroll misguided Governments, and there are times 
where very hard decisions and wrenching judgments have to be 
made between continuing such assistance, at the risk of 
perpetrating inefficient or ineffective or corrupt 
administration, or walking away to facilitate the creation of 
conditions within the countries themselves for more fundamental 
reforms. Of course, one has to always keep a minimum basic 
support for institutional reforms so that when that moment 
comes, the countries are ready to deal with the problems that 
they have.
    What I am trying to say is that, all in all, much greater 
attention is needed on buildup of civil society, supporting it, 
buildup of oversight mechanisms with proper civil society 
representation, including independent legislatures and, I must 
say, it will be very good for the U.S. Congress and Senate to 
have regular exchanges with their counterparts in the countries 
concerned, a free press, access to information, enhanced 
financial management, auditing, and disclosure practices. As 
the old proverb states, the Sun is the best disinfectant.
    And last but not least, remove the incentives for 
corruption, particularly those coming from unchecked and 
unwarranted discretionary powers of public officials, 
monopolistic practices, either public or private, and measures 
of this type.
    In sum, Africa can develop. It can do it with economic 
policies that have proven successful in other parts of the 
world, but the reform agenda must also deal with the resource 
allocation arrangements through greater empowerment of civil 
society, shifting the decisionmaking and monitoring authority 
so that the intended beneficiaries which hitherto have tended 
to be excluded can take proper role in holding accountable 
their authorities for results.
    No amount of technocratic solutions, or no amount of money 
can substitute for a society that demands what it needs. Above 
all, leveling the playing field for civil society will be a key 
ingredient to combat the pervasive and wasteful effects of 
corruption.
    Why now? I think we have two very big factors why it should 
be done now. One, with the cold war behind us, Africa no longer 
has to be one of the ideological battlegrounds where so-called 
strategic allies receive foreign assistance regardless of their 
record of governance or economic performance.
    Second, similarly, with the OECD convention to combat 
bribery of foreign officials, the supply side of corruption can 
also be tackled by capital-providing countries. On both counts, 
however, serious efforts are needed to move from words to 
deeds, but the basic conditions are in place to do so.
    At Transparency International, we do our share, and we have 
the various programs throughout the continent that are aimed at 
putting and supporting the buildup of civil society, adapting 
approaches that exist elsewhere to the local institutional and 
cultural conditions based on home-grown strategies among the 
people themselves.
    We have a major program starting now in Francophone Africa. 
We are supporting very heavily Governments that want to move 
forward like Nigeria, and so on. In time, we would hope that 
this should set the foundation for a stronger, locally grounded 
TI presence in the continent, and the basis for a better-
focused assistance as well.
    What next, and here I sum up the three final points. We 
would like to encourage the donor community, and that includes 
the United States, first to mainstream and raise the issue of 
corruption higher on the policy agenda dialogues with the 
countries in all the things that are done, foreign assistance, 
trade, et cetera. This is not something like a ghetto that you 
can treat on its own, but you have to deal with it across the 
board.
    Second, bring to the forefront, to the development of civil 
society and its representative organizations to bring about 
accountable administration. There is nothing--and you should 
know this better than I--that helps more than having a review 
of what authorities do so that we see that they are being 
checked. We have done a number of experiments in other 
continents that show clearly that when such monitoring exists 
the performance changes very significantly, and measurably.
    And last but not least, be more selective in supporting 
countries. Do not help those that cannot help themselves, and 
be more responsive, conversely, to those who address these 
issues. These issues, which are at the core of nation- 
building, as several of my colleagues have said over here, are 
not simple. If they were, we would not be talking about them 
today.
    Thank you very much.
    [The prepared statement of Mr. Schloss follows:]

                  Prepared Statement of Miguel Schloss

    I want to thank and compliment the Chairman of this subcommittee 
for calling this hearing. In a way, having an international civil 
society NGO testify in the U.S. Congress is emblematic of how far 
globalization has come, and the open and important role this country 
can play in the destiny of entire continents like Africa.
    I am an Executive Director of Transparency International (TI), an 
NGO formed in 1993 to combat corruption around the world. TI's 
headquarters are in Berlin, Germany, and we now have a network of 
national chapters in over 75 countries, including in 20 Africa. I have 
attached to my written statement a report on TI activities in Africa, 
which are supported by a grant from USAID. I would like to take this 
opportunity to thank USAID for its support to Transparency 
International and other civil society organizations.

                              WHY AFRICA?
    Africa has enormous unexploited and unexplored potential--in 
resources and in processing and manufacturing--and considerable growth 
potential. The continent has barely tapped the potential of its people, 
and with sage policies, adequate human and financial resources, 
improved delivery of technical assistance and market access, the 
continent can unlock this potential. Giving people a stake in this 
development can help reduce regional conflicts that one day could spill 
over beyond this region's confines.
    But developing the region requires an understanding of where it 
stands at present. It will come as no surprise to this subcommittee 
that the region has:

   The greatest backlog of under investment in human and 
        physical infrastructure;

   A large, though in some cases diminishing, burden of policy 
        distortions, including oversized and oftentimes unmanageable 
        public sectors, which have tended to ``crowd out'' private 
        initiative; and

   But, perhaps more fundamentally, the marginalization both 
        locally and internationally of Africans, resulting from 
        assistance programs to governments that oftentimes hardly 
        represented the people they were supposed to serve.

    All this has resulted in public programs for which there has been 
weak demand, fledgling civil society organizations that have had 
limited possibilities to demand transparent and accountable 
administrations, the build-up of vested interests that used public 
office for private benefit, and the consequent debt overhang and high 
levels of corruption (the highest of all continents according to TI's 
Corruption Perception Index).
    I do not need to stress to this subcommittee the pernicious effects 
of corruption. Suffice it to say that survey after survey, the evidence 
shows that corruption increases the cost of public works, and reduces 
the level of public services, maintenance expenditures and surpluses to 
invest in social services--all the key ingredients of long term and 
sustained economic growth. Not surprisingly, Africa is beset by 
economic problems, and whatever progress one can observe is fragile and 
halting.
                       THEN, WHAT SHOULD BE DONE?
    It would be wrong to assume that the whole continent is engulfed in 
these types of problems. There are countries, like Mauritius and 
Botswana that have done quite well, and are developing at an 
astonishing pace. By the same token, countries like Nigeria are at 
present making a credible effort to redress the policy environment, and 
deal with the corroding scourge of corruption. What should be learned 
from these experiences is that:

   Development has to come from within, and foreign imposed 
        conditionality is, more often than not, a poor substitute for 
        efforts that have to be home grown, from both the leadership of 
        the countries and its people; and

   Under the wrong conditions, foreign assistance can in fact 
        bankroll misguided governments, and there are times where hard 
        and wrenching judgments have to be made between continuing such 
        assistance at the risk of perpetuating corrupt or ineffective 
        administrations, or walking away to facilitate the creation of 
        conditions within the countries themselves for more fundamental 
        reforms. Minimum support may of course be needed on a sustained 
        basis, to assist in developing basic institutional reforms, in 
        preparation for the times when more fundamental reforms become 
        feasible.

    On both counts, what is clear is that Africa can develop, but that 
much greater attention is needed in supporting civil society 
organizations, such as those that have helped this country to prosper 
and flourish--i.e. professional organizations, chambers of commerce, 
NGOs, to help shape and articulate opinion, build alliances, provide 
technology, and monitor public administrations.
    By the same token, much greater attention is needed on build up of 
oversight mechanisms, with proper civil society representation--i.e. 
independent legislatures, ombudsmen's offices, a free press, access to 
information, enhanced financial management, auditing and disclosure 
practices. As the old proverb states: ``the sun is the best 
disinfectant.''And last, but not least, remove incentives for 
corruption, particularly unchecked or unwarranted discretionary powers 
of public officials, monopolistic practices, either public or private, 
and the like.
    In sum, Africa can develop. It can do so with economic policies 
that have proven successful in other parts of the world. But the reform 
agenda must also deal with resource allocation arrangements through 
greater empowerment of civil society and assignment of 
responsibilities--shifting the decision-making and monitoring authority 
so that intended beneficiaries, which hitherto have tended to be 
excluded can take a proper role in holding authorities accountable for 
results. No amount of technocratic solutions can substitute for a 
society that demands what it needs.
    Above all, leveling the playing field for civil society will be a 
key ingredient to combat the pervasive and wasteful effects of 
corruption.

                                WHY NOW?
    With the Cold War behind us, Africa no longer has to be one of the 
ideological battlegrounds where ``strategic allies'' receive foreign 
assistance, regardless of their record of governance or economic 
performance.
    Similarly, with the OECD Convention to Combat Bribery of Foreign 
Officials, the supply side of corruption can also be tackled by capital 
providing countries.
    On both counts serious efforts are needed to move from words to 
deeds, but the basic conditions are in place to do so.
    We, in Transparency International will do our share in the 
continent--as we are doing elsewhere. As our presence is particularly 
weak in Francophone Africa, we have just started a major effort to link 
National Chapters and contacts with various professional and other 
associations to adapt and tailor best practices and tools from other 
continents into the institutional and cultural context of this region.
    Similarly, in Anglophone Africa, greater efforts are being focused 
on awareness raising and, in the case of Nigeria, on the adoption of 
codes of conduct and other practices adapted from other parts of the 
world to create a more responsive and effective government.
    In time, we would hope, this should set the foundation for a 
stronger, locally grounded TI presence in the continent, and the basis 
for better-focused assistance to Africa.

                               WHAT NEXT?
    To sum up, we would like to encourage all donors to:

   bring to the forefront the development of civil society and 
        its representative organizations, to bring about accountable 
        administrations; and

   be more selective in supporting countries and more 
        responsive to those who address these issues.

    These issues, which are at the core of nation building, are not 
simple. If they were, we would not be talking about them today.

              Additional Material Submitted by Mr. Schloss

              special integrity improvement program (sip)
                  usaid grant # aep-5466-g-00-5028-00
                            progress report
                             december 1999

                                 BENEN
1. Achievements to date:
    As planned and as previously reported, members of TI-Benin co-
organized and actively participated in a Forum for the Mobilization of 
Civil Society Against Corruption in 1998.
    The main priority of the Chapter in the period has been to 
strengthen its institutional capacity in order to function effectively 
as a competent and operational organization. In 1999, with the 
assistance of a grant of $100,000 from USAID, Benin, the Chapter was 
able to set up an office with a staff of four and adequate equipment. 
Two members of the chapter were trained in the meetings on developing 
integrated country strategies organized by the World Bank Institute. 
Two other members of the chapter participated in the TI-S organized 
capacity-building workshop in Accra, Ghana in May 1999. TI-Benin also 
finalized a detailed plan of action and budget for the period 1998-
2000, with a major focus on awareness raising and advocacy activities.
    As part of this strategy, the Chapter conducted an anti-corruption 
awareness-raising campaign during the parliamentary elections in March 
1999. This included televised sketches, radio and television ads, comic 
strips in local newspapers and a poster campaign. Members of TI-Benin 
also participated and facilitated various anti-corruption workshops in 
Benin, Ghana, Mali. A TI-Benin member was a panelist in the workshop on 
Corruption and the environment at the 9th IACC.
    The main achievement in the period has been the Chapter's active 
involvement in the extensive consultation process that took place to 
review existing legislation on public procurements. From early 1999, 
members of the Chapter participated with government representatives in 
a committee whose work led to the adoption by the government in June, 
1999 of a decree introducing a code of ethics for public procurement 
that integrates a comprehensive integrity pact into the existing 
legislation.
2. Targeted Achievements for 2000:
   Continue to strengthen the capacity of the Chapter through 
        training, elaboration of a manual of procedures, etc.;

   Develop and implement a media strategy including production 
        of TV spots, organization of a seminar on investigative 
        journalism, production of a play on corruption;

   Conduct various awareness activities such as publication, 
        translation into 4 national languages and dissemination of a 
        volume of anti-corruption texts, organization of a national 
        anti-corruption day, implementation of an awareness program in 
        schools, organization of a competition on the fight against 
        corruption, publication of a trimestrial bulletin, etc.; and

   Collaborate with the government anti-corruption office and 
        lobby for implementation of the recommendations of the anti-
        corruption office, promote respect for the GCA principles, 
        contribute to the Commission on the misappropriation of public 
        funds.

   Participate in conducting a survey on corruption in the 
        country.

                                 GHANA
1. Achievements to date:
    As described in the previous TI-S report to USAID in early 1999, 
TI-S supported in 1998 the work of an influential group of Ghanaians 
who prepared a National Integrity Workshop which took place 20-21 
October, 1998. That workshop produced an action plan which included the 
strengthening of networking and collaboration among civil society 
organizations in Ghana as one of its objectives.
    A core group of key stakeholders began to meet after the National 
Integrity Workshop to discuss next steps in setting up a anti-
corruption coalition. The Centre for Democracy and Development (COD), 
headed by one of the group's convenors, E. Gyimah-Boadi, served as 
secretariat for the organizing committee. The process of setting up 
formal structures was delayed by other demands on the time of important 
members. E. Gyimah-Boadi, for example, is much in demand as a 
consultant on issues relating to governance in Africa (e.g. to the 
African Development Bank) and as a contributor to fora such as the 
World Bank meetings on integrated country strategies. Emile Short, 
Commissioner for Human Rights and Administrative Justice, another 
convenor of the group has extensive demands on his time both in his 
function as Commissioner and as a participant in international 
discussions on governance issues.
    The formation of the group was also slowed down by efforts to 
arrange with an earlier TI contact that he withdraw his registration of 
the Transparency International name in Ghana. Nonetheless, the 
organizational work has now sufficiently progressed that the group In 
Ghana has launched their organization, to be called the Ghana Integrity 
Initiative (GII), on 6 December 1999. The launch was the occasion for a 
public meeting, which highlighted the corruption problem in Ghana and 
initiatives to combat it; Mr. Emile Short is Interim Chair. DANIDA-
Ghana has funded the launch.
    Yaw Asamoa, a lawyer, is interim General Secretary operating from 
the CDD and probably will continue to function as paid executive after 
the Chapter is launched. Members of the GII have also been engaged in 
several anti-corruption activities during 1999. In May 1999, several 
members of the group attended a TI-S-organized capacity building 
workshop hosted in Accra by the Centre for Democracy and Development. 
Four members of the group made important contributions as speakers at 
the 9th International Anti-Corruption Conference in Durban, South 
Africa, 10-15 October. 1999 and the group also Sent a representative to 
the TI Annual General Meeting prior to the Conference.
    Recently, in November, members of the group were involved in the 
organization of an anti-corruption demonstration in Accra.
2. Targeted Achievements for 2000:
   The launch will unveil the GII strategy, which will focus on 
        public awareness-raising; and

   The General Secretary will continue to work from CDD for the 
        foreseeable future.

                               MOZAMBIQUE
The Context
    Mozambique is a difficult, yet successful case of transformation 
and nation building. Coming out from independence and a bloody civil 
war, the country has demobilized and disarmed some 80,000 troops, and 
is at present going through the long road towards democratization, 
stabilization, and economic adjustment.
    After flirting with Marxist policies, the government had in 1994 
multiparty elections and initiated rapid liberalization. As a result, 
the Mozambicans seem to have got a hold of their affairs, and 
succeeding in generating high rate economic growth rates, with rapidly 
declining inflation for the past two years. Not surprisingly, though, 
the country is heavily dependent on external assistance--financially, 
institutionally, and in every other respect.
    There is hardly any tradition, let alone institutions or sufficient 
numbers of people who could easily manage the many initiatives and 
advice that is being showered on the country. The obverse of this is 
that the country is falling prey to massive corruption--from issues of 
land distribution to the absence of a professional judicial system. It 
is only a question of time that the environment in civil society, will 
be such that conditions will be ripe for building up a coalition 
against corruption. Such moment has not yet arrived, but as soon as it 
does, a proper coalition could be formed and supported.
1. Achievements to date:
    A TI-mission visited the country in March 1999, contacts have been 
established with both members of the government and representatives of 
civil society. This two-fold approach seems to be of crucial 
importance, since there still appears to exist a widespread ambivalence 
of talking on the issue openly, organizing civil society or taking more 
forthright actions, for fear of government cooption of such movement, 
reprisals, and the like, In that sense the fact that TI was engaging 
the Administration in discussions on anti-corruption efforts, including 
the formation of a civil society group to address the issue, is giving 
legitimacy to the latter. This has been instrumental in the formation 
of an informal ``founding group'' of four people, headed by the former 
Chairman of the first Election Commission and currently Chancellor of 
Mozambique's Eduardo Mondlane University. The group has agreed that, in 
light of the Government's preparedness to cautiously accept a civil 
society group in this field, and their concerns with growing corruption 
in the country, they would help work towards the establishment of a 
wider group that may in time develop into a Chapter.
2. Targeted Achievements for 2000:
    Working in Mozambique is the equivalent of ``starting from the 
scratch,'' which is why the whole process will require considerable 
time, support and follow up. At this stage the founding group is still 
at the very beginning of a process of defining future programmes and 
bringing in other people. Once the group is more openly formed, even in 
a fledgling fashion, the stage will be set for a more engaged civil 
society input into the subject, and thus the carrying out of more 
active work in the field.

                                 ______
                                 
                              ATTACHMENT I
                                 BENIN
Civil Society
    Civil society is organizing itself slowly and steadily on key 
issues such as election monitoring. The active civil society groups 
include religious, business and professional organizations, and youth 
groups.
    In September 1997, a group of civil society organizations met to 
establish the basis for greater collaboration in combating corruption. 
They included Transparency International-Benin, Nouvelle Ethique (New 
Ethics), l'Association des Femmes Juristes du Benin (Association of 
Women Jurists of Benin), Association de lutte contre le racisme, 
l'ethnocentrisme, le regionalisme (ALCRER--Asssociation for the fight 
against racism, enthocentricity and regionalism), le Centre Africa-
Ogbota (CAO), and l'Association ``Franchir le Cap.'' These 
organizations initiated, in collaboration with the President's Office 
for the Moralization of Public Life (Cellule de la Moralisation de la 
Vie Publique), the preparation of the National Forum for the 
Mobilization of Civil Society Against Corruption (FONAC), which took 
place on 26-28 March 1998. This Forum brought together some 240 
participants representing about 70 civil society organizations and 
about 50 government representatives. Through working groups focusing on 
different themes, the Forum developed an action plan for combating 
corruption in Benin, and formulated the framework for an umbrella anti-
corruption organization. At subsequent meetings, an organization was 
established with TI-Benin member, Maximillien Sossour-Gloh, as 
president. According to information received by us, this organization 
is considered to be under the control of the government. A rival 
organization has now been established by TI-Benin member Lucien Agbota, 
founder of Nouvelle Ethique, and a group of businessmen called Savoir-
Agir. Agbota is believed to have political ambitions.
    Two socio-economic factors appear to limit the ability to mobilize 
civil society in Beam, which is one of the poorest countries in the 
world. The first is the high level of illiteracy. Among the 5 million 
population, the rate of literacy is 26 percent, with only 16 percent of 
the women being literate. While the small, better educated, elitist 
Francophone population in the cities, especially Cotonou, is served by 
a press that is articulate, relatively free, and occasionally 
irresponsible, the majority of the population is less well served by 
radio which is generally state-controlled and often not in their native 
language. The second is that traditional hierarchal structures are 
interwoven with the modern state. In the villages, the local patronage 
system means that rural people do not have a habit of questioning their 
superiors and often do not identify with structures beyond the local 
level. Under the system, as it has developed, the ``clients'' have no 
automatic claim to state services but must secure them by payment.
Anti-Corruption Activists
    TI-Benin is a small (about 12-15 members) group of respected 
individuals from different segments of society. The President is the 
highly regarded Archbishop of Cotonou, who played a prominent role in 
the transition to democracy in 1990. It also includes three prominent 
lawyers, including a former Minister, a sociologist, a cardiologist, a 
prominent journalist, a businessman, a government employee and 
representatives of a number of NGOs including GERRDES and Nouvelle 
Ethique. The group is very cautious about expanding, given the danger 
of attracting the wrong sort of people.
    TI-Benin has a reasonably good working relationship with the 
Government. The President of TI-Benin, the Archbishop of Cotonou, has 
some access arid influence due to his Stature and to the fact that in 
his personal capacity he supported the election campaign of the current 
President Kerekou. The President established the ``Cellule'' (see 
above), and has expressed a wish for more action by TI-Benin. At the 
international level, TI-Chairman Peter Eigen was a member of a mission 
to Benin in September 1997 which was received by President Kerekou and 
which introduced to him the TI Integrity Pact concept for government 
procurement which the President subsequently endorsed for procurement 
in Benin. In January 1999, a team of TI Senior Advisers visited Benin 
to assist the government with the implementation of the Integrity Pact.
Political Will
    In June 1998, prior to a change in the composition of the 
government, the declared political commitment of the President to fight 
corruption was seriously questioned by many. While the President 
himself was credited with wishing to see some change, the question was 
posed why he surrounded himself with corrupt Ministers. How much the 
situation has now changed remains to be seen, but the Industries 
Minister M. Pierre John Igue is said by some to be a potential ally in 
the fight against corruption, while the woman heading the Ports and 
Customs from early 1998 is also said to have a commitment to cleaning 
up the massive corruption within her domain.
    The donor community is exerting heavy pressure for progress in 
combating corruption. For example, the World Bank, USAID and UNDP are 
supporting anti-corruption programs, and meet regularly under the 
chairmanship of the Swiss to discuss governance issues. USAID has given 
support to the Chamber of Audit (an audit body) and to the Office of 
the Inspector General in the Ministry of Finance, while the World Bank 
is supporting administrative reform and the strengthening of the 
Cellule de la Moralisation de la Vie Publique.
Nature of Corruption
    Corruption in Benin is said to be so pervasive as to have become a 
socially accepted norm, There is said to be considerable social 
pressure on members of the civil service to engage in corruption. 
Corruption includes both the high level and petty varieties. Some of 
the areas most affected are the port and customs services, but other 
areas of activity involving government expenditures and government 
licensing and policing are involved, as well as the judiciary.
Previous Anti-Corruption Activities
    Combating corruption has been on the political agenda in Benin 
since the movement for democratization in 1990. It has been addressed 
in a number of national conferences on reform of the public sector and 
the judiciary, and in a workshop on good governance which was held as 
part of the National Economic Conference in December 1996. It was then 
that President Kerekon signed a decree creating the Cellule de la 
Moralisation de la Vie Publique which reports directly to the 
President. The Cellule, a type of anti-corruption bureau with a 
potentially broad mandate has just recently increased its two-person 
staff to seven. The World Bank is providing assistance to the Cellule 
to help increase its effectiveness. Another recent development is the 
effort to reform the judiciary, including revival of the office of the 
Inspecteur General Judiciaire. Measures have also been introduced to 
revive the public accounting and auditing functions, including the 
appointment of the Chambre des Comptes under the Supreme Court and the 
increased staffing of the office of the Inspecteur General des 
Finances. Civil service reforms are also in progress. A new Procurement 
Code in the form of an Ordinance was signed by the President on 31 
January, 1996. Draft decrees for its implementation have still not been 
made effective, and the Code is, therefore, not in force.
    The government played an important role in co-organizing the Anti-
Corruption Forum in March 1998. In the same month, a new head of the 
Port of Cotonou was appointed in order to clean up the endemic 
corruption there. This new appointee has convened a roundtable with 
business, NGO and government representatives to discuss how to deal 
with the corruption problem. However, existing anti-corruption penal 
legislation and disciplinary measures for government employees not 
appear to be enforced.
1997-2001 Integrity Improvement Programme
    The Integrity Improvement Programme for Benin is still in the 
process of development. In February 1998, we received the broad 
outlines of a plan of action for 1998-2001, with an attached budget of 
approximately US$200,000. It envisaged:

    1. TI-Benin participation in the Forum in March 1998--DONE.
    2. Awareness-raising activities, including: (a) conferences; (b) 
television programmes; (c) training of TI-Benin members and others in 
conducting research on sensitive sectors; (d) television ads and 
banners; and (e) creation of videos or using theatre groups for 
awareness-raising campaigns throughout Benin.
    3. Lobbying activities:
                  (a) re: Parliament--to initiate new laws on 
                corruption, create a code of conduct, and encourage 
                parliamentary commissions of inquiry;
                  (b) re: Executive--to obtain government support for 
                the TI-Integrity Pact concept, to pressure for the 
                introduction of anti-corruption instruments, and too 
                make the control structures more functional;
                  (c) re: Judiciary--to review the question of the 
                reserve obligation, to persuade judges to act on 
                certain corruption dossiers, to institute an effective 
                mechanism of control of the assets of persons entering 
                and leaving government employment;
                  (d) re: Political Parties--to secure a commitment to 
                the use of anti-corruption instruments, including the 
                Integrity Pact, in their manifestos;
                  (e) re: All Citizens--to organize public telephone 
                lines to facilitate citizens recourse, and to encourage 
                the media to introduce programmes to enable citizens to 
                denounce acts of corruption.
    4. Publications:
                  (a) dissemination of texts on the law of corruption;
                  (b) periodic reporting of the results of 
                investigations and of the activities of TI-Benin;
                  (c) a national anti-corruption index.
    5. Institutional Support for TI-Benin, including renting 
headquarters in short-term and constructing headquarters in medium-
term, and recruiting personnel.

    The budget submitted by TI-Benin was heavily weighted towards 
institutional support and gave little indication of estimates of 
expenditure for particular projects. The TI-Secretariat's policy at the 
time was not to provide institutional support, while not opposing it if 
it was offered in the form of add-ons from USAID-Benin. TI-Benin, 
however, indicated that its highest priority was institutional support, 
followed by awareness-raising.
    In March 1998, two TI-Secretariat representatives visited Benin and 
met with TI-Benin and USAID-Benin to discuss the integrity improvement 
programme. It was agreed that TI-Benin would prepare a document 
prioritizing and detailing the proposed projects, describing their 
goals, and indicating both costs and time-frames. This was not 
forthcoming, and that unfortunately held up the development of a TI 
programme for Benin. Meanwhile, USAID-Benin submitted its own programme 
for Benin, incorporating its own add-ons to the global grant. That 
proposal, sent to headquarters in April 1998, was formally submitted to 
TI-S for its approval in December 1998. By then, USAID-Benin was 
interested in decommissioning the money it had sent to Washington for 
the add-on's, and this was agreed to by TI-S on the understanding that 
the money would go directly to TI-Benin through the local USAID office. 
In January 1999, TI-S transferred US$10,000 from the global grant to 
TI-Benin for use during the period January-April 1999 for awareness-
raising activities. TI-Benin has been encouraged to use part of this 
amount to commission a consultant to prepare the supplementary document 
which has been requested by TI-S. It has also been agreed that at the 
end of April 1999, TI-S would review the question of Benin's inclusion 
in the USAID global programme.
    The difficulties of four-way communications (USAID)/TI-S/USAID-
Benin/TI-Benin) across three continents and two languages have meant 
that problems associated with TI-S's request for clarification and 
elaboration have only recently been ironed out. TI-S requested more 
information from TI-Benin out of a desire to be a responsible 
fiduciary, but the request appears to have raised with TI-Benin 
unpleasant memories of colonialism and World Bank conditionality. 
USAID-Benin also apparently failed to see the need for more 
information, and may have been frustrated by the resulting delay in the 
disbursement of the add-on funds which they had made available.

                                 GHANA
Civil Society
    Since the return to constitutional rule (The Fourth Republic), 
civil society has emerged as a major player in economic and social 
fields. It is also gaining visibility in the political sphere. However, 
it is subject to severe impediments. Economically, it is handicapped, 
especially due to the weakness of the private and non-state sectors 
from which it could secure an independent financial base, and is 
therefore susceptible to governmental co-optation. Politically, it is 
inhibited by a combination of governmental co-optation and repression. 
The prevailing political culture inhibits anti-state and anti-hegemony 
civil society activism, and compels many to adopt positions of 
defensive political neutrality. Culturally, it suffers from ethnic, 
regional and religious fragmentation, and sometimes considerable 
parochialism. Consequently, many CSQs are not active in the civic area.
    The press exhibits features of extreme irresponsibility, 
immaturity, docility, and self-censorship. The state media is better 
endowed and has a national reach. The independent media (with a few but 
notable exceptions) is aggressive but materially and professionally 
inept. Anti-corruption activity in general, and investigative 
journalism in particular, are severely constrained by the active 
application of criminal defamation laws and an anti-press judicial 
temperament. Over 50 prosecutions against independent media editors and 
publishers are now pending. Most of the complainants are government 
functionaries, and the complaints relate to newspaper reports arising 
out of journalistic investigations.
Anti-Corruption Activists
    Identifiable activists in the anti-corruption field include the 
Commission on Human Rights and Administrative Justice (Chairman: Emile 
Short), which is constitutionally mandated to uphold ethics in public 
l1fe and which conducted high profile investigations into allegations 
of corruption against senior members of the government in 1995-1996; 
the Catholic Church, which has been active in voicing opinion against 
corruption. In late 1997 it issued a Pastoral Letter against the 
phenomenon; in July 1998 it declared a Moral Crusade against corruption 
at a Bishops Conference in Koforidua and later that month 
representatives of the Catholic Church met with the Head of State to 
discuss and mobilize opinion against corruption in the country; and the 
Christian Council which, in collaboration with Islamic organizations, 
has formed an Inter-Faith Group to work towards the elimination of 
corruption. The efforts of the Catholic Church are relatively broad-
based, are cross-gender, and cross-ethnicity. However, there has so far 
been only a token involvement of the Islamic community and of the 
Charismatic churches in these anti-corruption activities.
    Of the personalities in government, the Head of State, FLT. LT. 
J.J. Rawlings has always expressed abhorrence of corruption. This 
appears to be genuine. He believes quite strongly that opposition to 
corruption is his principal political legacy to Ghana, despite all 
appearances to the contrary. But he has also demonstrated considerable 
inconsistency and ambivalence in this area. He has protected persons in 
his government against whom serious allegations of corruption have been 
made, and he has demonstrated downright hostility towards persons from 
outside his inner political circle, and especially opposition figures, 
who have made allegations of corruption against members of his 
government. Vice-President John Atta-Mills, is generally considered to 
be clean and has publicly declared his commitment to combat corruption. 
However, he is not a forceful personality and his base within the 
ruling party is rather weak. The Minister for Local Government, Kwamena 
Ahwoi, appears to be interested in combating corruption. He had been 
one of the principal figures involved in the extra-anti-corruption 
measures of the early PNDC years, i.e. the Citizens Vetting Commission, 
the National Investigations Commission, and Operation Hawk which, in 
the early 1980s, exposed embezzlement in second cycle institutions. In 
recent years, his interest in combating corruption has been confined 
mainly to the district Assemblies and especially their use of the 
Common Fund. Abwoi's interest in combating corruption has, however, 
been widely perceived as a partisan ploy to undermine other factions 
within the NDC, and to promote the agenda of a faction dominated by the 
members of the Fanti tribe of which he is a leading figure. On the 
other hand, he was very supportive of the CHRAJ initiative to hold an 
integrity workshop, and was instrumental in persuading the executive 
branch/Attorney General to nominate two representatives for the 
planning group for the workshop (Mrs. Betty Mould-Iddrisu, Head of the 
International Law Division of the Attorney-General's Office and wife of 
the long-serving Minister of Defence, and Sarfo Sampong, senior public 
prosecutor in the Attorney-General's Office).
    The likely members of the Board of TI-Ghana in formation are:

   Emile Short, Chairman of the Commission on Human Rights and 
        Administrative Justice.

   Dr. E. Gyimah-Boadi, Associate Professor at the University 
        of Ghana and Regional Coordinator of the Regional Office of the 
        Center for Democracy and Development (CDD), an NGO dedicated to 
        the promotion of transparency, accountability, good governance 
        and civil society support in Ghana and the West Africa sub-
        region. He is the coordinator of TI activities in Ghana and was 
        secretary of the planning group of the Integrity workshop.

   Dr. S.K.B. Asante.

   Dr. Angela Ofori-Atta, lecturer in clinical psychology at 
        the University of Ghana Medical School.

   Audrey Gadzekpo, a journalist.

   Justice F. Apaloo, former Chief Justice of Ghana and Kenya.

   Rev. Dr. Charles Palmer-Buckle, Catholic Bishop of Koforidua 
        and an outspoken commentator on national economic issues, 
        especially anti-corruption issues.

   Mauvi Wahab Adam, Head of the Ahmadiya Muslim Movement.

   Ms. Nana A. Apt, Professor of Social Policy at Legon.

   Kwasi Abeasi, Director-General of the Private Enterprise 
        Foundation; a widely respected person who was active in mooting 
        the issue of corruption at the National Economic Forum in 
        September 1997.

   Prof. Kasim Kasanga, of the University of Science and 
        Technology (Land Management), a young, well-respected 
        representative of the Northern Regions.

   Ms. Alima Mahma, another representative of the Northern 
        Regions.

    In addition to these persons, others active in combating corruption 
include William Nyarko, the young and dynamic chief investigative 
journalist for The Chronicle (an independent newspaper) who received 
the Ghana Journalist Association Award for the Best Investigative 
Journalist in 1998; and Yaw Asamoa, a young lawyer with the General Law 
Group involved with anti-corruption work under the auspices of the 
Africa Leadership Forum.
Relations with Government
    TI-Ghana is still in formation.
Political Will
    The Government's will to combat corruption can best be described as 
ambivalent. On the one hand, it appears to be willing to admit that 
there is a problem with public sector corruption and to express a 
desire to combat it. On the other baud, it suffers a great deal of 
cognitive dissonance and often exhibits a denial in this mailer. It 
tends to see corruption as something which was rampant under regimes 
that preceded the PNDC and NDC, and which, if even occurring now, is 
much smaller in scale than in the past. At the same time, it has 
expressed official support for anti-corruption initiatives, including 
the Integrity Workshop. On the whole, the Government's response to 
allegations of corruption appear to be far stronger when such 
allegations are made by external agencies such as the Control Risk 
Report.
Nature of Corruption
    The nature of corruption in the country is largely disorganized, 
and takes the form of kick-backs, inflated costs for official projects, 
graft, bribery, nepotism, extra legal fees, illegal exemptions, 
insider-trading, conflict of interest, and especially improper 
tendering and corrupt execution of government contracts. To a 
substantial extent, grand corruption is linked to the financing of the 
ruling party and its political machine. The involvement of the military 
is indirect and may be inferred from the fact that it allows only a 
partial audit of its books. There is also a pervasive practice of 
corruption in the society at large, mainly due to grossly inadequate 
official wages, and cultural practices such as lavish outlays for 
marriages, funerals and other extraneous social activities.
Previous Anti-Corruption Activities
    Activities carried out by previous governments include:

   Commissions of Inquiry into allegations of bribery and 
        corruption since 1954; after the 1966 coup; and after other 
        coups.

   Public inquiries, such as the one which examined the affairs 
        of R.T. Briscoe Company (dealers in German automotives).

   Populist outbursts against industry and senior management.

   Anti-profiteering measures against traders.

   The so-called ``House Cleaning Exercise,'' including the 
        establishment of the Citizens Vetting Committee.

   The National Investigations Committee.

   The One-Man-One-House and other confiscatory exercises led 
        by J.J. Rawlings in 1979 and in the early 1980s.

   Sporadic anti-corruption initiatives in the mid and late 
        1980s targeted at specific institutions such as the banking 
        sector and secondary schools (Operation Hawk).

    It must be noted that many of these efforts were conducted in 
defiance of due process, and were widely perceived as political witch-
hunting. The trials of persons accused of corruption were often held 
before extra-legal public tribunals, and punishments included 
executions and confiscation of property. No person considered to be 
closely allied to the PNDC regime was ever tried or punished in that 
manner.
    There is no history of civil society based anti-corruption activity 
in Ghana, except perhaps in the form of church sermons against the 
practice. However, since 1993, the independent media has been extremely 
active in this respect; in particular, The Ghanaian Chronicle, The 
Dispatch, The Public Agenda, and The Independent. More recently, the 
Public Enterprises Foundation has raised the issue nationally, and 
other civil society organizations are beginning to take a greater 
interest in the subject. TI-Ghana will be the first formal civil 
society organization initiative in the area of combating corruption.
1997-2001 Integrity Improvement Programme
    Following two preparatory missions undertaken by TI Resource 
Person, Neville Linton, and Programme Officer responsible for Ghana, 
Gillian Dell, it was agreed that Emile Short, Chairman of the 
Commission on Human Rights and Administrative Justice (CHRAJ) and Prof. 
E. Gyimah-Boadi, Regional Director of the Center for Democracy and 
Development (CDD) be the convenors of TI-Ghana.
National Integrity Workshop
    The programme commenced with the National Integrity Workshop on 20-
21 October 1998. TI-S contributed US$19,637 from the USAID global grant 
towards the expenses of the workshop which was organized by CHRAJ in 
collaboration with CDD, with support from USAID and DANIDA. Under the 
theme Toward a Collective Plan of Action for the Creation of a National 
Integrity System, the workshop brought together over 150 
representatives from government, the private sector, and civil society. 
The government offices represented included the President's Office, the 
Attorney-General's Office, the National Commission on Civic Education, 
the Bureau of National Investigations, and the Customs, Excise and 
Preventive Service. Civil society representatives included the Ghana 
Bar, Journalists Associations, the Private Enterprise Foundation, the 
National Union of Ghana Students, several women's organizations, and 
Christian and Muslim religious institutions. The keynote address was 
delivered by the Vice President of Ghana, Prof. Atta Mills, and the 
closing address by the Minister for the Interior, Nii Adamafio. Non-
Ghanaian speakers included Bertrand de Speville, former Head of the 
Independent Commission Against Corruption, Hong Kong; Adolf Hirschfeld, 
Assistant Director of Corruption and Economic Crime, Botswana; and 
Nibal Jayawickrama, Executive Director, Transparency International, 
Berlin.
    A major component of the workshop was the small group sessions in 
which aspects of the problem and the impact of corruption on specific 
sectors (such as land administration, customs, excise and prevention, 
education, and health) were examined. The results of a nation-wide 
survey on Public Perceptions of Corruption in the Delivery of Health 
Care and Education Services were presented. The role of the media, 
civil society, private sector, and public agencies in combating 
corruption was also analyzed.
    In addition to expressing an interest in forming a national chapter 
of TI, participants at the workshop adopted an action plan which 
included:

   Revamping and actively enforcing codes of conduct for 
        professional bodies;

   Concerted awareness raising by relevant public agencies and 
        civil society organizations;

   The institution of annual integrity awards;

   Strengthening networking and collaboration among civil 
        society organizations and nongovernmental organizations 
        dedicated to fighting corruption;

   Fostering greater transparency in governmental processes, 
        especially the public procurement process;

   Campaigning for the enactment of a Freedom of Information 
        Act and the repeal of criminal defamation and other laws that 
        impede access to information;

   Creation of mechanisms to promote ``whistleblowers.''

    As an awareness-raising measure and as a mechanism for bringing 
together many segments of Ghanaian society interested in combating 
corruption, the workshop was a significant success. During the workshop 
and in the days immediately preceding it, considerable time and space 
was devoted by the media to the subject of corruption. At the workshop 
itself, discussions were free, lively and vibrant. However, at a 
critical evaluation conducted some weeks later, it was noted that there 
had been insufficient time for in-depth discussion; that discussions 
would have been stronger if the papers had been circulated in advance; 
that a combination of named invitations as well as institutional ones 
would have induced a stronger response rate; that more people and 
institutions should be brought into the integrity process and future 
workshops; that chairs for working groups must be pre-selected to 
facilitate meaningful discussion; and that the absence of the police, 
military and regular security agencies was a matter for regret.
Formation of TI-Ghana
    The preliminary steps towards the formation of TI-Ghana were taken 
immediately after the national integrity workshop. The potential 
candidates for the Board have been approached, and a 100 percent 
acceptance rate recorded. The Center for Democracy and Development will 
serve as the secretariat for the national chapter, and it is hoped to 
employ an executive director. An informal meeting of the Board is 
scheduled for January 1999 when a three-year plan for integrity in 
Ghana is expected to be discussed. A problem has arisen in regard to 
the registration of TI-Ghana as an NGO. Two registrations in the names 
of TI-Ghana and TI already exist, having been made on 4 March 1997 and 
12 September 1997, by individuals in Accra and Barekum. These have been 
made without any reference to, or authority from, TI-S. Efforts are 
being made to have these registrations withdrawn.

                               BANGLADESH
Civil Society
    The NGO component of civil society in Bangladesh is quite active, 
focusing mainly on poverty alleviation, rural development, relief and 
disaster management, gender issues and human rights. More than 15,000 
NGOs are currently operating in Bangladesh. Among them, more than 1,200 
NGOs are reported to be directly involved in development activities and 
about 900 are operating with assistance from foreign donors. Besides, 
the business community has of late become quite vocal.
Anti-Corruption Activists
    Anti-corruption activists in Bangladesh are still mostly male, 
belonging to professions such as law, teaching, business, and 
journalism. However, some watchdog groups willing to network with TI-
Bangladesh on integrity issues are women's organizations. Ethnically, 
they are Bengalee; religion wise, they are mostly Muslims. Politically, 
TI-Bangladesh adheres to the principle of being independent and non 
partisan in its approaches.

                           FRANCOPHONE AFRICA
    Consultation with TI contacts and National Chapters in Francophone 
Africa indicated three constraints to more effective NCs in these 
countries: insufficient outreach to relevant professional and civil 
society associations in the region; lack of materials on corruption in 
the French language; and low resonance of the operational strategies 
contained in the TI Source Book and other documents for the political, 
legal and administrative structures in Francophone African countries.
    Based on these consultations, an operational work program has been 
developed to establish more systematic contact with relevant 
professional and civil society organizations and involve them in 
analyzing the nature and causes of corruption and in adapting the TI 
Source Book to the Francophone African context. Specifically, the 
proposed program of activities would focus on three areas:

   Improvement of the general awareness of the issues and 
        enhance professional contacts in Francophone Africa, through 
        corruption surveys and increased outreach;

   Compilation of best practices and preparation and 
        dissemination of materials especially adapted to the 
        Francophone African context, through translation and discussion 
        workshops; and

   Expanded activity of TI NCs and national contact points in 
        Francophone Africa, through discussion workshops to adapt and 
        disseminate the TI Source Book and follow-up missions to 
        countries interested in expanding their fight against 
        corruption.

    Senator Feingold.  I thank you, and first let me say I will 
never forget Ambassador Holbrooke and I met with President dos 
Santos in his office in Angola. The main purpose of the meeting 
was to discuss the conflict in Congo, but I did choose to use 
my brief time to ask him a bit about corruption in Angola.
    I will never forget him citing the rating that they had 
received that year by Transparency International. I do not 
think he will be brandishing this year's rating, but it was 
quite an interesting thing to see the impact that an 
organization like yours and the others represented here today 
have, and it was very enlightening for me.
    Secondly, I wanted to tell you that I certainly take to 
heart your suggestion that legislators, especially at the 
Federal level, but perhaps even at the State level, can do a 
lot by, when they go to one of these countries, not just meet 
with the President and the Cabinet ministers, but seek out our 
colleagues, compatriots in those countries.
    We did this in Mali and with some of the SADAC countries, 
and then when some of the new Nigerian legislators came here, I 
believe it was on defense issues, these are very, not only 
productive but inspiring meetings in some ways, for me as well 
as for the legislators, and in addition I would mention--you 
referenced a meeting with a civil society group. I remember one 
of the only bright moments I felt in Angola was an opportunity 
to meet with some of those groups. I think that is all very 
helpful.
    Let me just ask one question. Senator Frist is still not 
able to be here, but I assure you it is for a very, very 
compelling reason that he is stuck. We are in a very difficult 
time of year here, but let me indicate that I will now direct 
questions at different individuals, but unlike a hearing, I 
think we can be a little more free to comment, so I hope people 
will feel free to chime in and respond, so we will not get into 
heavy duty debates, but I would like to hear some exchange.
    So let me begin by asking Mr. Schneidman, what is your 
reaction to Mr. Taylor's proposal that the United States 
Government should encourage the major oil companies to disclose 
the taxes and royalties they pay to Governments around the 
world?
    Mr. Schneidman.  Well, Senator Feingold, I think that the 
issue of transparency and accountability and fighting 
corruption can never be sought enough, and I think in this 
regard we should engage our friends in the private sector and 
in the oil companies to do as much as they can to increase 
transparency and accountability to the degree that they can. I 
do not think we should limit it just to the private sector.
    Mr. Taylor brought up the issue on the staff monitoring 
program, and I think it is not just in Angola, but I think this 
issue of making more public what an IMF program is all about, 
or a World Bank program, what these are all about in all 
countries in sub-Saharan Africa is a very important thing to 
do, because I think once civil society, once the different 
stakeholders in society understand what the Governments have 
committed to, they can better understand why they may be taking 
on some hardships, what the short-term pain is for the long-
term gain, as it were.
    So I think these steps are to be commended, and I think 
this is something we have tried to do through our bilateral 
consultative commission, because the U.S. private sector is 
very much a part of this, and we meet together with the Angolan 
Government and we discuss issues of transparency, and we have 
discussed the issues of the payments by the oil companies to 
the Government with the Government and with the private sector, 
and what has happened to that money.
    To be candid, the answers are not yet satisfactory to us, 
but it is an issue that we will continue to dig away at because 
we feel that it is essential to do so.
    Senator Feingold.  Could you say a little bit more about 
how the State Department has been working with the major 
American corporations involved in Angola to combat corruption 
and to ensure that these companies are not shaken down for 
bribes as a part of doing business in Angola? What is the 
actual process you go through?
    Mr. Schneidman.  Well, most fundamentally we have to rely 
on these companies to comply with the Foreign Corrupt Practices 
Act, and to the best of our knowledge they are doing so.
    As Mr. Taylor pointed out, the problem is not so much their 
dealings with the Angolan Government. It is what happens to 
that money when it is paid to the Angolan Government, where 
does it go, and clearly it does go for illicit purposes.
    We referenced the oil audit in the staff monitoring 
program. That is important, but I think we have to recognize 
that this is just a first step, a significant step but a first 
step. There is still the diamond sector and the lack of 
transparency there, and the interface between payments for 
diamonds and the purchase of arms. It is totally opaque, and if 
Angola's going to take its place as a full member of the 
international community, that opacity is going to have to be 
rectified.
    We have taken some interesting developments with our oil 
companies through our BCC on the issue of HIV/AIDS, and U.S. 
companies have agreed to put up several million dollars over 
the next 2 or 3 years to help the Angolan Government address 
the issue of HIV/AIDS, and at our last meeting in Luanda in May 
we were able to compel the Angolan Government to seed the money 
that the U.S. companies had put up. It is not much. We are 
talking, like, $1, $3, $4, $5 million. From our point of view 
it is a start, and we are going to have another meeting in 
October and we are going to continue this dialogue.
    Senator Feingold.  Where does that money go?
    Mr. Schneidman.  We have not yet received a full proposal 
from the corporales on how they are actually going to spend it, 
but the Angolan Government made it clear to us that they do not 
yet have a full accounting of the infection rate in Angola.
    Senator Feingold.  Is the money spent directly by the 
corporations, or is it given to the Government?
    Mr. Schneidman.  It will be spent directly by the 
corporations to NGOs.
    Senator Feingold.  Mr. Schloss, do you want to respond to 
that?
    Mr. Schloss.  If I may just add on the issue, let me just 
make two points. Hydrocarbons trade is by far the largest item 
in the balance of payments, of all the sub-Saharan African 
countries, be it in the import or the export side, and it is 
either the first or the second item in the fiscal revenues, so 
we are talking about big money, big resources for all of the 
countries.
    Some 5 years ago some colleagues of mine have done a survey 
about what happens at each of the stages from point of 
production, refinery, transportation, and distribution of the 
hydrocarbons in all of the sub-Saharan African countries. To 
get that information, what was very important was to get all 
the oil industry, not only the American but all of it together. 
Only then, at least as far as I could see, were they prepared 
to provide the information for us to make these price 
comparisons.
    At the time, what these surveys indicated was that Africa 
was losing something on the order of $1.5 billion a year on 
account of how hydrocarbons were traded, which at the time was 
higher than the total gross disbursements of the whole World 
Bank Group put together to that same continent, so we are 
talking about very large resources, and certainly this is an 
area that merits careful review.
    Senator Feingold.  All right. If there are no other 
comments on that, I guess I would like to focus, Mr. 
Schneidman, on if countries in Africa require their Government 
officials to disclose their assets, and does the United States 
Government encourage this kind of asset declaration?
    Mr. Schneidman.  We certainly do. I am not aware that this 
practice is continent-wide, but for instance, when I was with 
the Government of Cameroon, which does not do very well on the 
TI index, I brought this issue up in the context of talking 
about the African Growth and Opportunity Act. They assured me 
that Government officials were required to make these kinds of 
facts known, and we will follow that up through our embassy to 
see if that is happening.
    But I think one of the issues that we have been discussing 
with the Global Coalition on Africa in the context of the 
principles and thinking about an anticorruption convention is 
the issue of peer review, where African countries would get 
together to assess each other and to establish models and 
levels of transparency, because at the end of the day it is 
going to be the Africans themselves that are accountable to 
themselves and to their own people, and we will continue to be 
as helpful as we can in that respect, but we cannot do it for 
them.
    Senator Feingold.  Does anyone else know the extent of the 
practice of requiring this kind of disclosure? Ms. Marshall.
    Ms. Marshall.  Quite a few countries have legislation which 
requires the disclosure. The problem is that it is not usually 
complied with, and that is something that within the GCA we 
have been trying to push--you have already got a law saying 
that you should do this, it should be done and, more 
importantly, it should be public and publicly available.
    There has been some movement on this, but still it is 
really very few countries that actually do it and do it 
properly.
    Senator Feingold.  Is there an example or two? I mean, you 
are talking about annual disclosures like we have here?
    Ms. Marshall.  Yes.
    Senator Feingold.  Are there any that do that and have it 
public?
    Ms. Marshall.  South Africa has started, and Botswana. 
Uganda is supposed to, and I do believe they actually do it, 
but it is not usually made public. Other countries like Kenya, 
which again are supposed to, really are not doing it yet, but I 
think this is something that, you know, in the policy dialogue, 
this could be encouraged.
    Some countries, like South Africa, in fact have gone 
further than many western countries, and parliament is also 
expected to submit this disclosure.
    Senator Feingold.  Yes, Ms. Derryck.
    Ms. Lowery-Derryck.  Thank you, Senator. I think also that 
countries can be encouraged to make sure that they fulfill 
their own obligations by regional programs that can reinforce 
one and another. There is the East and Southern African 
Antimoney Laundering Group, for instance, and it helps if 
countries see that their neighbors or others are beginning to 
comply and be absolutely free and open in publishing this kind 
of information, so I think that that is something that we 
should support as well.
    Senator Feingold.  Good. Perhaps, Mr. Schneidman, you could 
say a bit about the anticorruption bill recently enacted in 
Nigeria. You alluded to it. Would you say a little bit about 
it, and the difficulties that you see in implementing that?
    Mr. Schneidman.  Well, I think it is important to remember 
that Nigeria is been through 20 years of military rule, where 
there has been no accountability whatsoever, and I think this 
is a situation where corruption has become endemic, and 
President Obasanjo from the first day, when he canceled some 
oil contracts that had been concluded by his predecessor, 
showed a willingness and a determination to fight corruption.
    But this bill is generally very comprehensive. It is 
designed to put in place a money laundering regime. It is 
designed to reform the criminal code. It is designed to reform 
the police, among others. Our Justice Department is providing 
an attorney to advice the Government of Nigeria on the 
implementation of this, but we should have no illusion that it 
is going to be easy, or that it is going to happen overnight.
    I think it is quite instructive that we all see President 
Obasanjo as a genuine reformer, but this year Nigeria ranks 
lower than Angola on the corruption perception index of 
Transparency International. It is a very complex issue, and one 
that has to be tackled in a number of ways.
    One other thing that we did when President Clinton was in 
Nigeria, President Clinton announced that we are going to 
establish in our embassy a position that will help to address 
the issue of corruption and corporate governance in the delta 
region, and this is where we are going to seek to bring 
together representatives from the oil companies, 
representatives from civil society, representatives from the 
Nigerian Government, representatives from State governments, in 
an effort to stimulate the kind of dialogue that will lead to 
more progress and upliftment of living conditions there.
    Senator Feingold.  Thank you. Let me turn to Ms. Derryck. 
The answer that Ms. Marshall gave me about disclosure made me 
think about the role of a free press. When she says that they 
require these reports but they are not public, obviously that 
is a little bit alien to somebody who is asked instantaneously 
to turn over to the press these filings. Could you comment a 
bit on the role of a free press in combatting corruption, and 
how does USAID work to make this connection in its democracy 
and governance program?
    Ms. Lowery-Derryck.  Yes, Senator. Our programs really 
focus, as I said, on changing the environment and building 
institutions and working with civil society, and clearly one of 
the institutions that we think is particularly important is the 
free press.
    For instance, in Angola, to go back to that example, we 
have worked with the radio stations and have tried to support 
journalists because we believe that this is the way that you 
get the information out. We are concerned about transparency, 
and there is no better way than to have this information that 
is available to journalists.
    We also encourage free press in countries like Uganda, and 
particularly when there was a discussion, there were the 
hearings in parliament on corruption issues, to see those, the 
reports of the results of those meetings in the paper every day 
was really a very, very effective way to encourage public 
dialogue and to build civil society support for this, and the 
fact that the journalists were not arrested, and there is no 
consequence, bad consequence to that action, also helps to 
reinforce the fact that this is an area with which we can deal, 
that it is important and appropriate, and that there is 
support, even tacit support within Government and certainly 
within the broader civil society.
    Senator Feingold.  Thank you. Yes, Mr. Taylor.
    Mr. Taylor.  Just, I hope to bring a copy of a December, I 
think 8th, copy of Foya Oyta, which is one of the supposedly 
free press in Angola that was produced in response to this, but 
I could not find it. I do not know if you were in Luanda when 
that came out, but what we deliberately did was to target press 
coverage through Lisbon, because we knew that various Lisbon-
produced newspapers would end up on the plane to Luanda whether 
they liked it or not, bearing in mind it might open a bit of 
space up for the Angolan press to run with it.
    Foya Oyta produced a beautiful front page saying, Witness 
accuses the Government of blah, blah, blah, blah, and you 
opened up the front, and the first four pages were blank 
columns with oil rig photographs, and I have never seen 
anything like that in my life, and it really brought it home to 
me that there is no accountability for anything that is being 
decided by the top end. If the top end does not want it to come 
out, it does not come out, end of story.
    And we have also seen what has happened to, amongst others, 
Raphael Marquez and people like that, so I think it is a 
serious problem that I am very happy to hear AID is working on, 
but it is a long way off getting to the point where I think 
civil society can really challenge Government to live up to 
what it should be doing.
    Senator Feingold.  I thank you for saying that, and I know 
that Mr. Schneidman needs to leave in a few minutes, so let me 
just say I think Mr. Taylor's idea about public oil industry 
disclosure is a very good one, and I would encourage you to 
work to get the administration to take it seriously, and I will 
do the same.
    Mr. Schneidman.  We certainly will, and Mr. Taylor and I 
have met before, and I am sure we will meet again, and we can 
talk about how we can do this together.
    Senator Feingold.  Thank you. Let me turn to Mr. Schloss 
again. I understand that the World Bank is working on a black 
list of corporations that have been involved in bribery and 
corruption incidents in developing countries. Firms on the list 
will be banned from contracting for AID projects sponsored by 
the bank and other organizations.
    My question is about other organizations. As I understand 
it, currently it is not difficult for firms barred from 
participating in bank contracts to evade that restriction by 
covering themselves with the umbrella of other development 
banks. Will firms banned from participating in the World Bank's 
projects also be banned from the regional development banks? 
How would that work?
    Mr. Schloss.  Certainly the World Bank is much more 
advanced than all the other organizations in every respect in 
terms of the issue of combatting corruption, particularly in a 
project that it, itself finances. It has a high-level committee 
which goes through the--what is the term called? They don't 
call it bans, but there is a list of growing companies that now 
can no longer, because they have been discovered associated 
with corruption on the World Bank projects, that they can no 
longer bid for projects financed by the World Bank. I think 
this is a very good step. It sends a very clear signal.
    It is, of course, a number of rather smaller type firms 
that are so far on this list, but it is a growing one, and I 
certainly feel that it would be very desirable that this 
practice be extended to the other multilateral development 
banks and, more broadly, even to the bilateral community, but 
this is a list that operates, only so far as I know, in the 
World Bank.
    Senator Feingold.  Thank you. Let me look at this issue in 
another way. In Rwanda and elsewhere I understand that charges 
of corruption appear to be exchanged between political 
opponents regularly, regardless of their veracity. Is there a 
danger that as corruption becomes a more common part of 
political discourse in Africa, efforts to condemn it will be 
used chiefly as a political weapon? How can the manipulation of 
this issue be avoided?
    Mr. Schloss.  Ideally, and this is what I have been trying 
to convey with such difficulty, one should depoliticize the 
issue to make it more technical, to provide hard data.
    I would say, for instance, the listing of companies in the 
World Bank is not done very lightly. There has to be some 
pretty serious evidence for that to happen, and this is not 
decided at a lower level. This is decided at a very senior 
level, because this is something that is a step that has 
consequences for the rest of the life of that enterprise as far 
as the World Bank is concerned.
    I would say that the more one moves in the direction of 
having greater disclosure, providing evidence put together, et 
cetera, in the mechanisms that build in the country, the 
better. In other words, a simple accusation should not be 
enough. Still a certain amount of burden of proof rather than 
benefit of doubt should be on those who say there has been 
corruption.
    For instance, there has been a wider use of--and I say this 
only as illustration--of integrity packs as a way of providing 
contracts, where the different contending parties to a contract 
look at each other and see the evidence and bring it up, and 
once it is brought up and it is there to be seen, then it is 
acted upon. Those mechanisms help.
    I think this needs to be institutionalized. It cannot be 
done simply by accusing. There have to be mechanisms to do 
that.
    Senator Feingold.  Let me ask both you, Mr. Schloss, and 
Ms. Marshall if there is any momentum-building in Africa to 
develop a convention similar to the OAS Inter-American 
Convention Against Corruption. I have been interested in the 
convention's attempt to capture behavior on both sides of the 
bribery question.
    Ms. Marshall.  Yes, as was mentioned earlier, these 
anticorruption principles which African countries themselves 
developed last year were an attempt to put in place some sort 
of collaboration, collaborative mechanisms which could form the 
basis of a convention, and there are a number of countries that 
are seeking to join that, to broaden the number that are 
involved, but of course beyond that they have got to work on 
harmonizing legislation and that kind of thing to make them 
really work.
    But in addition, within SADC there are discussions to have 
SADC-wide agreement, which would be like a sort of regional 
convention. That also could help build momentum, and the OAU 
itself is interested in working on the convention. They have 
just started--they have just hired some people to start putting 
together something in draft. There is going to be an experts 
meeting on that, hopefully in the first quarter of next year.
    The real issue is pulling all of these things together to 
get something that is workable, that is implementable. If you 
get something that is too complicated it is never going to 
work, and we are going to get back into the situation of people 
signing it but not doing anything about it, so the idea--and 
this is what we were trying to come up with in principles, was 
things that would benefit the countries themselves and would--
the collaboration with each other would help to support what 
they were doing already, and I think this is the way to go.
    But there is certainly tremendous interest in Africa on the 
part of Governments and also on the part of civil society. A 
lot of civil society organizations, a lot of the TI chapters 
are very interested in trying to get this, because they see it 
as a legal mechanism that they can use.
    Senator Feingold.  I would be interested in whatever I can 
do or this subcommittee can do to encourage that kind of 
direction.
    Ms. Marshall.  Thank you. That would be very, very helpful.
    Senator Feingold.  Do you want to comment at all, Mr. 
Schloss?
    Mr. Schloss.  Just a broad point. If one observes different 
conventions that deal with a subject, I would say there are at 
least in my mind three things that have to stand out. First, 
how focused and implementable the convention is. If I look, for 
instance, at the OAS convention as against the OECD, the OECD 
very focused on one particular subject, whereas the OAS, which 
covers the whole waterfront--clearly the more focused, the 
better the chances that this can be implemented.
    Second, monetary. There has to be some way of determining 
who is performing in what way, and some element of peer 
pressure as a result, and last but not least, targets. There 
has to be some teeth to it in order for that to be commended.
    I am afraid that in questions of conventions there have 
been many words, many papers, and perhaps these three 
principles are so vital that anything that can be done in this 
direction would be extremely helpful.
    Senator Feingold.  I have one more question for Mr. Taylor, 
and then, unless Senator Frist is able to come, if any of you 
would like to make brief concluding remarks I would welcome 
that.
    Mr. Taylor, in May of this year the World Resources 
Institute and the World Wildlife Fund released a report finding 
that in Cameroon, Gabon, Congo, the Central African Republic, 
and Equatorial Guinea, multinational companies have paid bribes 
to circumvent environmental regulations and gain access to 
forest areas for logging that are protected by local 
regulations. In some cases the logging took place in parks, 
where donor countries have invested significant resources in 
protection.
    What can be done to ensure that corrupt practices do not 
undermine efforts at environmental protection in Africa?
    Mr. Taylor.  You have raised a very--an interesting 
example, which brings me back to sort of my earlier stage at 
Global Witness, where we were looking at logging in--we still 
are, in fact--in Cambodia, and where we are now--well, as of 
December last year, the independent monitor of Cambodia's 
forestry reform process.
    And the reason I wanted to raise that is not so much to 
flag what we have been doing, but the principle of there being 
an independent monitor came out of the donor process, so with 
legislatures backing that up through the annual World Bank 
Consultative Group process for Cambodia, and basically it was 
made as a condition of resumption of assistance that there 
would be--because the Government basically had agreed to these 
reforms taking place, that they would implement the various 
reforms, and the donor said great, but you told us that for 5 
years in a row and we want to see performance, so we insist on 
there being an independent monitor.
    Now, it took quite a long time for that to go past the 
stage of simply hiring a large commercial organization with 
huge overheads, and then a couple of ambassadors said, why 
don't you do it, to us, and we had not really kind of thought 
about it in that context, but then we said, why not.
    So we are (a) committed, because that is what we were doing 
anyway, (b) we knew more about it than anyone else because we 
had been everywhere, and (c) we were much cheaper than anyone 
else, so it made sort of commercial sense, apart from anything 
else, to go in that direction.
    Now, we are on the cusp right now of DIFID in London, the 
equivalent of AID--I think that is right, isn't it? Yes--
putting forward, together with some other donors, some 
assistance which has been tied to overall assistance to 
Cameroon, that there should be an independent monitor of 
Cameroon's forestry reform process.
    Now, it strikes us that certainly in our limited experience 
as the monitor since December last year that being able to be 
the official monitor, and a monitor that is not going to bury 
anything, so if there is dirt to be found we will find it and 
it will come out, has moved the concept of forestry reform 
forward far quicker and far further than any other process than 
we have seen to date.
    And so my answer to what you asked was that, I think 
actually the principle of independent monitoring, just like 
looking at the standards by which companies adhere to things 
like the U.S. Foreign Corrupt Practices Act, for example, or 
other things like that, is that the monitoring principle, there 
should be an independent monitor, is, I think, extremely valid 
and very valuable, and I would encourage that that should be 
examined as a way to mitigate against this kind of thing, and 
if companies are caught out, they should go, end of story, out 
the door.
    I mean, it brings me to another issue. You raised the issue 
of a black list. We for some time in the Cambodian context 
thought about creating a list of companies, the idea being to 
make it absolutely internationally unacceptable if businesses, 
if you repeatedly catch them out doing things.
    There are a number of big international timber companies 
that come from various countries in Southeast Asia who have the 
worst practices, and they are responsible for some of the worst 
misdemeanors in forestry in protected parks and so on, and 
nothing ever happens to them, ever. They never get fined, they 
never get kicked out, they never get penalized.
    So I think through a willingness of donors to put pressure 
on Governments who are in receipt of international assistance 
as a condition--you know, if they have a monitor, and the 
monitor catches people out and it is--you know, it is 
absolutely blatant, then some action should be taken, and I 
think that is somewhere where donors could have a big impact.
    Senator Feingold.  Thank you. Anyone like to respond to 
anything, or other any other remark? Yes, Ms Derryck.
    Ms. Lowery-Derryck.  Thank you. I think I just want to 
emphasize a couple of points. We are talking about usually 
countries with weak institutions and weak civil societies, and 
there are two aspects of civil society that we are concerned 
with.
    One is the role of women. Because they have not had the 
opportunity accorded to some to be involved in some of the more 
egregious aspects of corruption, and because they are very 
often willing to speak out against it, then this is a way that 
civil society can be harnessed, and so we are supported of 
women's efforts.
    And secondly, the petty corruption that we see in many 
countries is really endemic, and we have talked largely today 
about a grand corruption, but the petty corruption really does 
insidiously erode confidence in Government and in institutions, 
and I think that we have to be careful to make sure that some 
of our activities really do focus on the smaller aspects of 
corruption.
    Those are my two points. Thank you, Mr. Chairman.
    Mr. Schneidman.  Senator Feingold, I would just like to 
thank you for holding this roundtable. It is an issue, I think 
we have tried to convey, of great importance to us, and there 
is no question that it is really at the key of socioeconomic 
development in Africa, and certainly our ability to work 
together as Government agencies and NGOs is vital, and just two 
points.
    I think, first, we have to keep a proper perspective, 
because I think what we see in Africa, as has been stressed, is 
more openness to reporting corruption, so on the one hand it 
makes some countries appear more corrupt, and I think we have 
to be able to separate out what is being reported and what is 
coming out in the sunshine from what is really happening.
    And second, just to go back to a point that my colleague, 
Vivian Derryck, concluded her remarks on, and that is the 
resources that we as the executive branch need to do what we 
are able to do and work with Congress, and there is no question 
that we depend upon you for those resources, and I hope in that 
context and in many other contexts we can continue to have a 
very close relationship on this issue, so we can make sure that 
we are doing the most that we can do in forging new 
partnerships, be it with our private sector, addressing the 
environmental issues that Mr. Taylor just addressed.
    It is clear we have got a very big agenda. We cannot do it 
by ourselves, and we look forward to working with you on it.
    Senator Feingold.  Well, I thank you. Yes, Mr. Taylor.
    Mr. Taylor.  I am sorry. I do not want to hog this thing, 
but there is one thing that I had not raised so much, but more 
at a tangent in the course of what I was saying before, and 
that is the role of organized crime. I briefly hinted at the 
privatization of the war, that--well, it is not just the role 
of organized crime.
    There is a very large European company, which I shall not 
name, who is intimately involved and connected with individuals 
who have been monopolizing this main weapons supply and who are 
part of the process of, on the one hand, acquisition of equity 
stake within the resources, and the real key thing, key aspect 
of this is, somebody needs to do something about the activity 
of this very big company, because it is, as far as I am 
concerned, totally unacceptable, and it pales--it is 
extraordinary what they have been doing. I would like to 
elaborate on that in private.
    But the other characters who I have been alluded to are 
very well-connected to, shall we say, Russian oligarchs and 
other well-connected individuals in that part of the world, and 
because of the activities that I know that they have been 
involved in in terms of weapons supply not just to Angola but 
to Zimbabwe, being used in DRC, to Uganda, being used in the 
top end of the DRC, possibly with connections to people who 
have been named who are suppliers to UNITAS.
    So that means that they are supplying both sides in the 
Angola conflict, also to Ethiopia we think, probably the main 
suppliers to the Bosnian Serbs, and we have also heard, also 
supplied helicopters to SLORK in Burma, as a condition of 
another company getting a deal with that regime.
    The end point I am trying to make here is that I think what 
these people represent on the one hand is an attempt by those 
same oligarchs who ripped off, at the last count I heard, some 
$130 billion out of Russia in the mid-nineties, to do exactly 
the same thing in Central and Southern Africa, and these people 
are using the banking facilities provided by countries like 
South Africa, they are using our banking facilities in London, 
here, the Cayman Islands, off-shore accounting structures and 
convoluted companies and so on.
    Somebody desperately needs to start looking seriously at 
the activities of the off-shore banking centers around the 
world and penalizing them for lack of transparency in terms of 
who they are dealing with, and I think to actively pursue what 
some of these people are doing, because if the IMF thing does 
not deliver what I do not think it will deliver, and if none of 
this changes, the structures that are being created will stay 
in place, and what we will all wake up to in a few years time, 
when Angola's oil production peaks, when the country will 
desperately need all it can to rebuild, we will find that these 
people own basically everything, and I think that is a pretty 
sad outcome after 30 years of killing each other.
    So if I could urge the committee to perhaps think about how 
it might look into that--I would also be considering that. I do 
not know what rapport we can have and come back to you on that, 
but if that is an area you could think about it would be very 
valuable I think.
    Senator Feingold.  Well, let me just thank all of you very 
much for providing this opportunity for me and the other 
committee members. We will look at this information. The 
comments were good.
    There were some specific ideas that I think will be 
helpful, and the perspective of making sure we do not look at 
this just as some kind of a failure of African Governments or 
African peoples, especially your comments, Mr. Taylor, when we 
talk about the companies, the international syndicates and 
others that have so much to do with this, are a critical part 
of this, and we have to make sure as a committee and as a 
Senate that we think of it in those terms.
    But when we turned to the individual African countries, I 
was struck by Mr. Schneidman's remark and the remarks of Ms. 
Marshall about how at first, when a country gets involved in 
this business, it might make them look bad. It reminds me of 
how Uganda decided to get out in front on the AIDS issue. I had 
the impression for a while, because I was not well-informed, 
that Uganda was the place for AIDS, and it turned out that 
Uganda was willing to discuss this, be open about it, and as a 
result is relatively speaking a leader in reducing the AIDS 
problem in Africa.
    I think the same thing applies here. It is probably going 
to be painful at first to have the disclosure of this kind of 
information, but I think when one country in Africa starts 
succeeding in this regard, and sees the investment and other 
things that come as a result of it, the peer pressure and even 
the desire to emulate those other countries will be a very 
valuable thing.
    I do think this issue is starting to come of age. In terms 
of the Senate's look at it, there was some discussion of this, 
too brief, I think, but some of it in the context of our debate 
on the African Growth and Opportunity Act.
    So I look forward to reviewing your comments and your ideas 
and I again want to especially thank Dr. Frist for making this 
hearing possible. It was extremely difficult to schedule at 
this point, and I am very glad we could get it done this year 
so we can take advantage of some of your good ideas.
    Thank you very much.
    [Whereupon, the public meeting ended.]

                                    

      
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