David Pallister
The British salesman sank with evident relief into his club-class seat as the plane prepared to take off from Murtala Muhammed airport.
Doing business in humid, chaotic Lagos, even selling defence electronic equipment to the military junta, was never the easiest of jobs.
In answer to the question, “So how much commission do they really take?” his reply was: “Oh, anything up to 30%.”
It is from random remarks that the kleptomania of Third World elite is revealed. If the estimates of Nigeria’s military spending are anywhere near accurate that means hundreds of millions of rands finding their way into overseas bank accounts.
Of course, it takes two to cut a corrupt deal: the briber and the bribed.
But reading between the lines of the latest World Bank annual report it is also clear that lack of transparency in procurement and contract placement and poor monitoring of projects can result in loans being siphoned off by corrupt regimes and their bureaucracies.
Transparency International, a Berlin-based group formed by former World Bank officials to campaign against corruption, has a useful guideline: “Five per cent of $200 000 will be interesting to a senior official below the top rank; 5% of $2-million is in the top official’s area; 5% of $20-million is real money for a minister and his key staff; 5% of $200-million justifies the serious attention of the head of state.”
The usual candidates are well-known. The late president Mobutu Sese Seko of Zaire ran up a foreign debt of $5-billion, almost equivalent to his personal fortune. In 1983 president Miguel de la Madrid of Mexico deposited $163-million in a Swiss bank.
General Ershad of Bangladesh was in the habit of diverting World Bank funds to his supporters. The Marcos regime in the Philippines and three decades of nepotism and crony capitalism in President Suharto’s Indonesia have led to a massive haemorrhage of national resources.
In the mid-Eighties, Morgan Guaranty Trust Company made a study of this “capital flight”. It calculated that in one year $198-billion disappeared off-shore from 18 developing countries, with $31-billion deposited in secret American bank accounts. “The problem,” a member of the United States Federal Reserve once remarked, “is not that Latin Americans don’t have assets. They do. The problem is, they’re all in Miami.”
Ironically much of this money is used to finance commercial bank loans to the Third World, recycling the stolen dollars in an ever- vicious debt circle. By its very nature bribery and corruption is difficult to quantify with any degree of accuracy. Transparency International uses a set of data bases and surveys to work out what are the perceptions of businessmen.
The index for 1997 for 52 countries puts Nigeria as the most corrupt country followed by Bolivia, Colombia, Russia, Pakistan, Mexico, Indonesia, India, Venezuela, Vietnam, Argentina, China, Philippines, Thailand and Turkey. Europe enters next with Romania. The top five least corrupt were Denmark, Finland, Sweden, New Zealand and Canada. The United Kingdom comes in at 14.
The Yactreta Dam on the Rio Parana River between Argentina and Paraguay is a classic example of the way a project’s costs spiral out of control with no real accountability.
When work began in 1978 by Italian and French contractors, the cost was put at $1,5-billion. Twenty years later, it is still not finished and the bill stands at $10-billion. Much of the money is believed to be in the bank accounts of Argentinian and Paraguayan officials. But some World Bank staff cynically suggest that Yactreta was “the dam that financed the Falklands War”.
Defence exports are one of the more notorious engines of corruption since they, more than civil projects, are surrounded by secrecy especially when they are made government-to-government.
The Al Yamamah defence deal between Britain and Saudi Arabia, signed in 1986 and still running, was always said by ministers to involve no agents and no commissions. But investigations over the past few years have shown that commissions of up to 15% were paid on a whole range of armaments in the deal which may be worth 40-billion.
International efforts are being made to tackle the problem and as more countries adopt open, democratic practices the disease should diminish.
Last year the industrialised countries in the Organisation for Economic Co-operation and Development drew up the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. With 34 countries signed up, it is expected to come into force later this year.
National governments will be expected to introduce legislation, just as the US did in 1977 after the bribery scandals involving the big aerospace companies, Lockheed and Northrop.
The World Bank, under James Wolfensohn, is beginning to address the problem. A recent World Bank policy document says: “Corruption violates the public trust and corrodes social capital. Unchecked, the creeping accumulation of seemingly minor infractions can slowly erode political legitimacy to the point where even honest officials and members of the public see little point in playing by the rules.”
Last year the Group of Seven countries issued a communique about the “corrosive effects of bribery and corruption generally on the achievement of sustainable economic development, growth and stability”. In particular it called on countries to stop allowing bribes to foreign officials to be tax-deductible. Incredibly this is allowed in Australia, Canada, Spain, Austria, Switzerland and Germany. France has recently decided to change its law.
In Britain, the Home Office is working on a new anti-corruption Bill to deal with both public officials and members of the business community. It is likely to make it a criminal offence to bribe a foreign official if the practice is unlawful in the country where it is made.
Given the increasingly competitive nature of international business, it will be an onerous law to enforce. For as anyone who sells in many parts of the developing world will tell you: “That is the way business is done.”