From: 	rachel[SMTP:ehrenfeld@worldnet.att.net]
Sent: 	Tuesday, October 26, 1999 2:35 PM
To: 	Yvonne Engel
Subject: 	Re: Inquiry

Dear Yvonne,

I've been away and could not respond earlier.  Instead of mailing it, I'm
enclosing our letter herewith. I've also taken the opportunity to add a
recent article, and our model project (here, for Indonesia). Please, forward
it to Mr. Joyce. The State Dep. is interested in this model  and they are
now considering a base line analysis by the CSC in Russia and Indonesia.
Thus, operational funds for the CSC and for the development of its Integrity
Index, are essential.

I look forward to hearing from you.

Best,

Rachel Ehrenfeld
----------
The International Law Institute (ILI)

The Center for the Study of Corruption  (CSC) and the Rule of Law

The Rule of Law: Good Governance and Public Integrity.

>
>"With the passing of the Cold War, it has become clear that the growth of
>state corruption will pose one of the most important challenges...in the
>21st Century." Ambassador Robert S. Gelbard.
>
>
>Executive Summary
>
>Introduction
>
>The Center for the Study of Corruption ("CSC") is part of the International
>Law Institute (ILI) in Washington, D.C. Its work is fact based analysis of
>existing laws and their implementation. The findings serve the design of
>pragmatic strategies for necessary changes, reform and training, taking
>local conditions into consideration.  It is directed by Dr. Rachel
>Ehrenfeld, an acknowledged expert on corruption, money laundering,
>transnational organized crime, international terrorism, drug trafficking,
>and substance abuse.  Her resume is attached to this proposal.
>
>The CSC/ILI work is different from and complementary to programs such as
>The World Bank's diagnostic surveys, the OECD's monitoring groups,
>Transparency International's perception polls, Freedom House_s " Nations in
>Transition" survey, and others. Unlike other organizations engaged in the fight
against corruption, CSC specializes in systematic, country-specific analyses
of existing laws with a special focus on their practicality, monitoring and
implementation. Based on its findings, CSC then develops a program for
reform and helps to
design and conduct the training programs necessary to implement the changes.
In
addition to examining anti-corruption laws, the CSC/ILI analysis will
include:
evaluation of existing legislation and the implementation of laws regarding
good governance, civil
rights, procurement, liberalization and privatization, and laws governing
the financial sector, as referred to in the Integrity Indicators. The CSC_s
annual Integrity Index will be based on a comprehensive evaluation of
national and international corruption. Of course, the CSC/ILI will rely on
and cooperate with other national and international anti-corruption
activities.
>
>Legal reform programs have been the primary goal of ILI since its founding
>in 1955 at Georgetown University Law Center.  An independent,
>not-for-profit organization since 1983, the ILI is actively engaged in
>providing technical assistance to countries, through law reform, new
>regulations, improved procedures, and developing expanded local training
>capacity in procurement and many other areas. The ILI works through
>research , training, and publishing programs to find solutions to the legal
>and financial problems of the international community. The ILI has received
>funding from The World Bank, USAID, IMF, and regional banks and individual
>governments.  The Institute has trained over 8,000 professionals from 175
>countries such as: Indonesia, Saudi-Arabia, Brazil, Colombia, Vietnam,
>South Korea, Ukraine, Russia, Lebanon, Zimbabwe, and Argentina, to name a
>few. International Procurement -- a key battleground in the war on
>corruption -- is a particular area of expertise for ILI's  faculty and
>staff, and the ILI has drafted procurement laws for a number of countries
>and provided training for their procurement officials.  In addition to
>training, ILI's faculty and staff is dedicated to the promotion of economic
>and human development, the rule of law, and the development of open
>markets.  All this makes ILI the ideal and partner for the Center for the
>Study of Corruption.
>
>The CSC/ILI will conduct case studies lasting 3 - 4 months each. These will
>identify and analyze local laws regarding governance and economic
>accountability (such as ethical conduct rules, public integrity laws,
>anti-money laundering, and procurement laws, to name a few) and their
>implementation. These findings will serve to design programs to address the
>special needs of each country, and provide the appropriate training
>mechanisms to correct and control those problems detected. The studies will
>be conducted in countries which have been identified as having a real
>opportunity for change: Indonesia, Colombia, Georgia, Hungary, Brazil and
>Egypt, to name a few. At the same time the CSC/ILI will conduct a
>comprehensive evaluation of national and international corruption for the
>development of an annual Integrity Indicators. This Index will provide a
>comparative measure on a country - by -  country basis of corruption and
>anti-corruption measures and the effectiveness of their implementation.
>Following the case studies and the development of models for reform, the
>CSC will concentrate on training for government officials, corporate
>executives, international organization personnel,  public interest groups,
>the media and the like, in ways of fighting corruption. The  CSC/ILI will
>continue to monitor and reinforce national and international integrity by,
>among other things, updating and publishing the annual Integrity
>Indicators.  The CSC's infrastructure budget for the first two years will
>be $1,499,000. Case Studies will be budgeted appropriately. Details are attached.
>
>Background
>Organized crime, drug trafficking, and terrorism are recognized as global
>threats to civil society. However, until recently the international
>community often seemed oblivious to an equally insidious and related
>threat. Corruption subverts democratic institutions and destroys the free
>market system. For example, it transformed Colombia from Latin America's
>oldest Democracy into its first Narcocracy. Corruption paves the way for
>international economic catastrophes such as the Asian and Russian financial
>crises, and it produces economic turmoil as it has in Japan.  Unchecked,
>corruption undermines stability -- as one can see in Indonesia -- thus
>creating security concerns for the U.S. and other democracies.
>
>International agreements regarding the corruption control have often been
>written with diplomatic niceties in mind.  Most attempt to correct the
>situation but still lack effective mechanisms for identifying,
>investigating, and punishing corruption. Hence the need for an independent,
>specialized institution that will codify, measure, and study the most
>prevalent forms of corruption in the public and private sectors. For
>example: Kleptocracy, Narcocracy, and Corruption of
>International organizations.  It will also suggest the appropriate
>strategies to monitor, reform and control the problem.
>
>The Project
>The Center for the Study of Corruption ("CSC") at ILI, will be the first
>center of excellence specializing in strategic anti-corruption research and
>analysis.  The CSC/ILI will establish programs to broaden public
>understanding of the types and scale of corruption. CSC/ILI will tap the
>expertise of our international advisory board.  It will develop strategies
>to address the problems, and will provide training for government
>officials, executives of  corporations, public interest groups, and
>international organizations committed to combating corruption.
>
>The Center will conduct several case studies from which a model for
>comparative analysis will be generated. This will require visits to foreign
>capitals to research first-hand the effectiveness of anti-corruption
>measures. In addition, the Center will develop an annual Integrity Index
>designed to publicize the problem and address the threat of corruption.
>Conducting case studies and developing the index will provide the Center
>with a unique understanding of the requirements for the development of
>special strategies and training to correct the situation. The CSC will
>produce various publications that will include the annual Integrity Index
>as well as interim and annual progress reports and articles in magazines,
>newspapers, and on the Internet.
>
>Project Implementation
>The Center will undertake a comprehensive evaluation of national and
>international corruption, study its various forms and review existing
>national laws and international conventions. It will begin with national
>public integrity and anti-corruption laws, their implementation and related
>enforcement measures. This analytic approach will be used to design
>pragmatic strategies -- taking  different local conditions into
>consideration -- for better monitoring and reform, and develop the
>methodology and parameters for appropriate training. This data will be
>included in the Integrity Index. The Index will list factors such as the
>political system, location, type, scale, technique, international
>connections, and compliance and enforcement with national laws and
>international conventions. The CSC/ILI will provide training for government
>officials, executives of corporations, public interest groups, and
>international organizations. The Center will continue to monitor, study,
>advance, and reinforce national and international integrity by updating the
>annual Integrity Index -- in effect, providing a highly visible "report
>card" on how well the international community is doing.
>
>
>Long-term Goals
>The CSC/ILI will become the acknowledged international authority and
>repository of expertise concerning national and international corruption
>and the pragmatic strategies to change corrupt systems.  In addition to
>studies, training and publication of the annual Integrity Index, the Center
>will continue to monitor compliance with and enforcement of public
>integrity and anti-corruption laws. It will issue policy proposals for
>national and international legislation/sanctions, focusing on countries
>identified as poor performers. The ultimate objective of the CSC/ILI is to
>promote standards of national and international integrity. To do so it has
already begin to
>develop and maintain a data bank, monitoring corruption and anti-corruption
>efforts on the national and international levels. This data bank will be a
>unique resource for governments, multinational corporations, and others
>interested in this project.

The  Proposal

The Central Issue:  National and International Corruption

Efforts to halt the world's economies from sliding into the late 20s-style
depression dominated the World Bank and the International Monetary Fund 1998
Annual Meeting in Washington, DC.  Unwise and unsustainable economic
policies were identified as  causes for the spreading of global financial
instability, and accountability, transparency and reform were urged by most
speakers.  Remarkably, the role of corruption as a driving force
jeopardizing economies worldwide was barely mentioned.  James D. Wolfensohn,
The World Bank's President, launched his "war" against corruption nearly
three years ago, in October 1996.  His statement expressed the growing
international concern over the spread of corruption, and was followed two
month later by the  UN General Assembly's "Declaration on Corruption", and
the OECD's "Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions", which entered into force on December
17, 1997. Following these developments and Wolfensohn's call for "the
international community...[to] deal with the cancer of corruption, because
it is a major barrier to sustainable and equitable development," a whole new
industry to fight corruption has emerged, but little has been done to change
the systems.

Most policy makers consider corruption too abstract to translate into a
concrete foreign policy issue.  As a result, they overlook the extent to
which corruption undermines democratic institutions and destroys the free
market system.  Russia is a case in point.  There, according to Venyamin
Sokolov, director of the Chamber of Accounts, an "alliance between
government officials and crony capitalists has been raiding the public
treasury and depriving the Russian people of a secure and democratic
future."  Closer to home, corruption, fueled with drug money, helped to
convert Colombia, Latin America's oldest Democracy, into its first
Narcocracy.
Despite all this, the international community seems slow to recognize how
corruption paves the way for international economic catastrophes such as the
ongoing Asian and Russian financial crises.  Unchecked, it produces economic
turmoil as it has in Japan, and undermines stability as in Indonesia, thus
creating financial and security concerns for the U.S. and other democracies.
  Nonetheless, Western businessmen and multinational corporations -- often
sanctioned by their governments --  are willing to meet corrupt demands in
order to continue the process of globalization.  Corruption flourishes with
impunity.

Corruption is not an abstract concept.  Rather, there are today several
clearly identifiable types of international corruption.  For example:
Cronyism and Nepotism -- impeding free competition via favoritism or
patronage within a family or tribe or ethnic group, as practiced in Asia,
the Middle East, some parts of Europe (e.g. Italy under Andreotti), Africa,
and Latin America.
Governments for Hire -- influencing policy and legal decisions by bribing
public officials through illicit campaign contributions, illegal lobbying
(as in France, Italy, the United States, etc.), or through sanctioned
bribery and intimidation (as in many Third World countries).
Kleptocracy -- the sale at less than market prices to favored customers of
state assets, particularly prevalent in the former Communist countries, new
democratic states, and developing countries.
Narcocracy -- subverting the economic and the political system with the huge
profits from the illicit drug trade, via organized crime and terrorism (as
in Colombia, Mexico, Burma, etc.).
Corruption of International Organizations -- subversion and manipulation of
legitimate international organizations - the UN and its specialized
organizations such as the International Organization Of Criminal Police
(INTERPOL), and the International Olympic Committee (IOC) by corrupt
governments abusing their power to influence the working of the
organizations, or by illegal groups that, in return for bribes, can use the
organizations or their instruments to further their corrupt aims.

Corruption in any of the above forms, or in combination, threatens the
foundations of any civil society:  its judicial and/or financial systems,
its legislative body, and/or its military. Ultimately, international
corruption, unchecked, endangers the stability of all democratically elected
governments. Indeed, "given the mounting evidence of the costs of
corruption," the World Bank has called for "more coordinated efforts at both
country and international levels...to address the issue." Yet, the
international community's response to the growing hazards of corruption can
at best be described as inept and inadequate.

Every international agreement regarding the control of corruption lacks
teeth.  Neither the UN General Assembly's "Declaration on Corruption", nor
the OECD's "Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions", contain effective monitoring and
enforcement mechanism.  This weakness is compounded by the absence of:  a)
solid international political leadership or direction;  b) a central
information gathering body; and c) rational, uniform international legal and
ethical definitions.

Mission
The Center for the Study of Corruption (CSC) at ILI will undertake strategic
and comprehensive anti-corruption research, analysis, education and
training.  No such institute currently exists, despite the attention that is
being focused on the issue.  The principal aim of the Center is to review
existing conventions and national public integrity and anti-corruption laws,
 their implementation and enforcement measures, and to codify, measure,
evaluate, and analyze the most prevalent forms of corruption.  The findings
will provide the base for devising effective strategies to reform and
control the problem, and to bring the findings and suggested strategies to
the attention of policymakers, the international business community,
international organizations, the media, and the public through training and
other programs.  This would be accomplished through:
a) Comprehensive research and analysis of corruption, assessing its sources,
economic cost, extent and impact, starting with national case studies.
b) Specially commissioned studies and workshops to assess, devise, and
discuss strategies for countering the problem.
c)  Training for executives of corporations, public interest groups,
governments, and international organizations, and assisting organizations,
whether public or private, to fight corruption.
d) Publication of papers, articles, progress reports, and an annual
Integrity Index (Report Card), in print and on the Internet.
e) Development of a data bank that will contain information on corruption
and anti-corruption measures on a national and international level. This
data bank will be available to those with interest in the subject, such as
governments, international organizations and multinational corporations.

The CSC/ILI's agenda
At first, the CSC/ILI will conduct a series of case studies to assess
national public integrity and anti-corruption laws and their implementation,
and the compliance with existing international anti-corruption conventions
(money laundering, anti-bribery, etc.).  The results will be analyzed by
different expert study groups:
1. The first group will establish the framework for developing the Center's
annual Integrity Index.  It will address the most prevalent forms of
corruption based on case studies of countries in different regions, and
discuss the best methodology to further research, analyze, and reform them.
2. The second group will study Cronyism and Nepotism, probably the most
commonly practiced deep-rooted forms of corruption.  This type of corruption
results in inflated costs of goods, low wages, and a dearth of public sector
services.  The key for the successful implementation and enforcement of all
reform strategies to fight corruption will be the giving of special
consideration to different cultural customs attached to these forms over
decades of practice while devising measures to reverse it.
3. Governments for hire, or bribery of public officials, is one of the more
traditional forms of corruption.  The third group will study public
integrity laws and their implementation, as well as the escalation of the
problem since the early nineties, and it will also develop strategies to
curb this phenomenon.
4. The fourth group will study Kleptocracy ," a relatively new form of
corruption which is also the most widespread method of plundering state
assets.  Special attention will be given to the development of reforms
needed to change the situation that undermines the development of democracy
and free markets in the former communist states and developing countries.
5. The fifth group will consider the corrupting effects of Narcocracy
worldwide.  It will study the interaction between the illicit drug trade,
organized crime, terrorism, illegal arms trade, and economic and political
destabilization, and will develop viable strategies for establishing and
enforcing reform.
6. The sixth group will study the threat of corrupting international
organizations.  The abuse of international organizations by corrupt states
and the penetration and subversion of such organizations by criminal
entities could in effect turn those organizations into tools to further the
unlawful activities of rogue countries, as well as the illicit activities of
criminal organizations, while corrupting the organizations and the countries
affiliated with them.  The group will develop strategies to prevent and
control this menace via legal reform.

The CSC/ILI will conduct studies of countries with special strategic
importance to the US, and a real opportunity for change such as: Indonesia,
Brazil, Colombia, Georgia, and Egypt. The Center will also conduct case
studies in specific regions that share common characteristics, such as
Indonesia, South Korea (and Singapore), Chile and Argentina, Hungary and the
Czech Republic, Turkey and Italy, Norway and Switzerland. These comparative
studies will help to develop models for reform.

A Conference at the end of Center's first year will discuss the findings of
the various case studies, and will launch the publication of the first
annual Integrity Index which will include a "Report Card" measuring the
progress of individual countries and the international community in
combating corruption.  The links between the absence of public integrity
laws and/or their enforcement, the various types of corruption, the tools
used to enhance them, their threat to democracy, to national and
international security, the free market system, and policy initiatives to
control these problems, will be presented.  Emerging trends in corruption
will be documented and published in the Index.

With the completion of its basic framework, the CSC/ILI will continue its
studies, training and analysis for updating the annual Integrity Index. The
CSC/ILI will become the international clearing house for information on
corruption, and the source for reform policies to control the problem.  This
will facilitate monitoring and cooperation, and broaden CSC's international
connections in both the public and private sectors. The Center will continue
to study and analyze the many manifestations of corruption, and will
recommend policy initiatives that will assist organizations, whether public
or private, to fight corruption.

The annual unveiling of the CSC's annual Integrity Index, will take place
every September15, in a well publicized event.  An annual conference will
take place at the same time.  This conference will discuss and evaluate
trends in the Integrity index.  Through a series of papers, and surveys of
trends, the conference will review national and international responses and
recommend policy initiatives to strengthen control, prevention and
cooperation in the fight against the spread of corruption.

We believe it will take two years of support to establish the credibility of
the annual Integrity Index and the other CSC/ILI's programs.  Once that
credibility is established, the Center will seek continuing funding for its
training from the business community in order to reduce its reliance on
foundation support.  For instance, the Institute could obtain funding of
special projects by multinational organizations.

Organization
The Center for the Study of Corruption is based at the International Law
Institute (ILI), in Washington DC. Legal reform programs have been the
primary goal of ILI since its founding in 1955 at Georgetown University Law
Center.  An independent, not-for-profit organization since 1983, the ILI is
actively engaged in providing technical assistance to countries, through law
reform, new regulations, improved procedures, and developing expanded local
training capacity in procurement and many other areas. The ILI works through
research , training, and publishing programs to find solutions to the legal
and financial problems of the international community. The ILI has received
funding from The World Bank, USAID, IMF, and regional banks and individual
governments.  The Institute has trained over 8,000 professionals from 175
countries such as: Indonesia, Saudi-Arabia, Brazil, Colombia, Vietnam, South
Korea, Ukraine, Russia, Lebanon, Zimbabwe, and Argentina, to name a few.
International Procurement -- a key battleground in the war on corruption --
is a particular area of expertise for ILI's  faculty and staff, and the ILI
has drafted procurement laws for a number of countries and provided training
for their procurement officials.  In addition to training, ILI's faculty and
staff is dedicated to the promotion of economic and human development, the
rule of law, and the development of open markets.  All this makes ILI the
ideal and partner for the Center for the Study of Corruption.

The CSC consists of a Director; one Fellow -- a young Ph.D., with research
and writing skills; one Administrative Assistant -- for secretarial work and
coordination of conferences; one Editor -- to prepare all publications; two
research assistants, and selected experts.

The Center will identify and invite the participation of key experts in the
relevant fields, and will draw on the expertise of its international
Advisory Board, and the faculty of ILI. Guided by the annual Integrity
Index, and through training, workshops, seminars, and specially commissioned
 research, the Center will continue to devise tools aimed at addressing the
threat of corruption.

----------------------------------------------------------------------
The CSC's Integrity Index: Measuring laws and their implementation

The following laws (implemented) and their combination are necessary for
self-sustaining democratic society.

1.   Identifying the most prevalent forms of corruption (within the general
 meaning of "abuse of public office for private  gains").

2. State laws: Fair, Transparent, and Predictable

3. Public Officials :  a)Rules of Ethical Conduct: conflicts of interest,
financial disclosure, including immediate family (wife, children);
verification and monitoring; adequate compensation
b)Procurement: national and international competitive bidding; advertising;
 pre-qualification; examination;         evaluation; award
c)Transparency; Accountability; Anti-Bribery laws: Receiving and Giving

4. Legal System: Independent Judiciary: civil procedure; criminal law;
Administrative Tribunals; Anti-Drug Laws; Law Enforcement;  Security
Services; Oversight Bodies: inspector general, auditor general,
anti-corruption committee or commission, independent counsel

5.     Civil Rights: Human Rights, Religious Rights, Property Rights, Free
Media, Freedom of Information

6.     Free and Fair Elections: Illegal Campaign Financing.

Economic Governance

7. Privatization and Liberalization: National and International Competitive
Bidding; Advertising; Pre-Qualification; Examination; Evaluation; Award

8. Market Liberalization: Tariffs, Quotas, Exchange Rate Restrictions, Price
Controls,
        Export/Import Permits

9. Financial Industry: The Banking System and Capital Market:
accountability, transparency, and anti-money laundering laws

10. The Private Sector: Anti-Corruption Laws; Anti-Money Laundering
Measures.

11.  Ombudsman: Whistle-Blower Legislation; Hot-Lines; Awards; Witness
Protection Programs

12.  Compliance with International Organizations Requirements: Review of
Multilateral Conventions to Eradicate Corruption: OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions; Inter-American Convention Against Corruption; WTO Agreement on
Government Procurement; APEC Collective Action Plan: Non-Binding Principles
on Government Procurement

©Ehrenfeld, R. Ph.D. April, 1999
----------------------------------------------------------------------------
----------
The Center for the Study of Corruption (CSC) a the International Law
Institute
(ILI), Washington DC.

Advisory Board
Prof. Don Wallace, Jr.; Dr. Norman A. Bailey; John Bolton, Vice President,
American Enterprise Inst.; Roy Clark, Deputy Commissioner, Metropolitan
Police, London; Chris Cook, Chief Executive, Off-Exchange Trade Clearing,
London; John Featherly, DEA, Country Attachü, England; Dr. Kenneth M.
Jensen, Director, American Council of Foreign Relations; Willmer Parker,
former US Attorney, Atlanta; Howard Safir, Police Commissioner, NYC; Charles
Saphos, former General Counsel for INTERPOL/US; John Shockey, Special
Assistant, Office of the Comptroller of the Currency;  Brian A. Smouha,
Deloitte & Touch LLP; Kenneth Thompson, INL, State Dept.; Walker F. Todd,
former Assistant General Counsel, the Federal Reserve Bank of Cleveland;
Victoria Toensing, Former Deputy Assistant Attorney General, U.S. Department
of Justice
Founding Partner, diGenova & Toensing; William von Raab,
former US Custom Commissioner, and James Woolsey, former Director of the
CIA.

--------------------------------------------

RACHEL EHRENFELD, Ph.D.
BIOGRAPHICAL SKETCH

Rachel Ehrenfeld, Director, Center for the Study of Corruption (CSC) at the
International Law Institute (ILI), Washington DC. She is the author of Evil
Money , published by HarperCollins in 1992 and the paperback edition was
issued August 1994 by SPI. Her previous book, Narco-Terrorism, published in
1990 by Basic Books, was reissued in paperback in 1992. She is now working
on a book, ANYTHING GOES: The New World Disorder.

 Dr. Ehrenfeld, who has been a Research Scholar at New York University
School of Law and a Visiting Scholar at The Institute of War and Peace
Studies, Columbia University, is a commentator and consultant on
international money laundering, corruption, transnational organized crime,
international terrorism, drug trafficking and substance abuse. Dr. Ehrenfeld
have been lecturing on these issues in many countries, to government, law
enforcement, and the banking communities. She is a frequent contributor to
The New York Times, The Wall Street Journal, National Review, The New
Republic, and other  journals, and a frequent guest on public affairs
programs on national and international radio and television such as CNN,
Nightline, Frontline, NBC News, Fox Television and News, and NBC News. She
is also the recipient of research grant awards from the U.S. Institute of
Peace, and the Scaife, Bradley, Randolph, Donner, and DFAF Foundations.

 Dr. Ehrenfeld began studying narco-terrorism, money laundering, and related
issues during a fellowship at Tuft's University's Fletcher School of Law and
Diplomacy. She organized the International Drug Money Laundering and U.S.
Foreign Policy panels at the White House Conference on Drugs in 1988. Dr.
Ehrenfeld is a frequent organizer of and contributor to international
conferences. Her work and research have taken her all over the world. She
uses English, French, German, Spanish, Italian, Hungarian, and Hebrew in her
research.

 Dr. Ehrenfeld's Ph.D. in Criminology is from the Law School at the Hebrew
University of Jerusalem. Her master's in Criminology is from Tel Aviv
University, and her bachelor's degree in Political Science and Criminology
is from Bar-Ilan University.

 330 West 56th Street,#24E, New York, NY 10019 Tel:(212)399-4246 Fax:
(212)399-4244
E mail - ehrenfeld@worldnet.att..net

---------------------------------------------------------------
 The Washington Times, September 29, 1999

           Fighting International Graft,

            Lending Bodies Can Bolster War on Corruption

             By Rachel Ehrenfeld

It was James D. Wolfensohn, the president of the World Bank, who on October
1996 suggested a "war" against corruption, warning that: "the international
community simply must deal with the cancer of corruption, because it is a
major barrier to sustainable and equitable development." His statement led
the international lending agencies to consider better monitoring systems.
But when the Russian money laundering scandal broke a few weeks ago, a World
Bank official remark that "one does not fight corruption by fighting
corruption," reflected the prevailing attitude among many in the Bank and in
international organizations claiming to fight this scourge.

How to fight corruption? For decades the Europeans ridiculed the "naive"
Americans for their quest for an ethical and accountable economic system. In
the Old World, corruption in politics and business were regarded as
inevitable. But American lawmakers understood from the early days of the
Republic that efficient and clean government and business practices were
inseparable from economic growth and development and the proper functioning
of a genuine free market system. Thus, having "human and market - friendly
policies, lowering incentives, and addressing macroeconomic stability,
politics, education and institutional development," as that World Bank
official recommended, will have no effect unless accountability is enforced
at the highest levels of a given political system.

As evident in Russia, years of silence, indifference and willful blindness
have greatly exacerbated the problem. Neglecting to identify corruption as a
basic cause for economic catastrophes in Russia and elsewhere while pouring
in more money to put out an erupting crisis, will do nothing to bring about
reform. "Fighting corruption by encouraging competition in bribery," as
Anders Aslund from the Carnegie Endowment recommended lately, doesn«t seem
to help either. Unchecked, corruption undermines stability -- as one can see
in Indonesia ü or causes the death of thousands of innocent citizens ü as
witnessed in the Turkish earthquake - thus creating tremendous human
suffering, economic hardship, and security concerns for the U.S. and other
democracies. Nonetheless, businessmen and multinational corporations --
often sanctioned by their governments -- are willing to meet corrupt demands
in order to continue the process of globalization, and to get rich.

When globalization replaced communism, it was ushered in by a menacing new
world disorder: an enhanced form of corruption. This New world disorder
twisted the concept of "free markets" to justify the accumulation of wealth
by any means. This "anything goes" attitude is the outcome of unbridled
greed joined with societies that have always had a weak code of public
service.  And as noble as reducing poverty, defending human rights and
advancing free market policies are, they hardly qualify as tools to combat
corruption. The latest Russian scandal demonstrates how those policies have
failed repeatedly. And if the past is any indication, they are unlikely to
succeed because as the Chinese have realized centuries ago, the fish is
rotting from its head. But Russia is not alone and billions of dollars have
been siphoned off by many other governments of developing countries and
countries in transition, while the lenders did very little to stop the
leakage

The international agreements regarding the control of corruption have little
or no effect since all lack teeth.  Neither the UN General Assembly's
"Declaration on Corruption", or the OECD "Anti-Bribery Convention," nor the
Organization of American States« (OAS) Convention, contain effective
monitoring and enforcement mechanism.  This weakness is compounded by the
absence of:  a) solid international political leadership or direction;  b) a
central information gathering body; and c) rational, uniform international
legal and ethical definitions.

To develop policy to effectively curb this international threat,
corruption's most prevailing forms need to be acknowledged. They include
more than Cronyism and Nepotism we read so much about. There is also
Governance for rent (influencing policy and legal decisions by bribing
public officials through illicit campaign contributions); Kleptocracy (the
sale at less than market prices to favored customers of state assets);
Colombianization  (subverting the economic and then the political system
with profits from the illicit drug trade), and Corruption of International
Organizations (subversion and manipulation of legitimate international
organizations by corrupt governments and administrators to purposely
frustrate the unified goals of the organization). And while no list is
complete, this tally provides a base-line and grounds for debate in respect
to the all too common practices which handicap international trade,
investment, exchange, and diplomacy.

The International lending agencies should and could do more. They should
condition the provision of funds on compliance with performance
requirements. While many will argue that this is a violation of sovereignty,
this is a simple and reasonable condition for foreign assistance. Besides,
performance requirements for other matters have been in place all along. End
-user monitoring agreements are a common feature of most assistance
programs. While there is always a temptation to waive control mechanisms for
short term economic or political gains, recent events in Russia and
Indonesia illustrate all too vividly how dangerous such actions can be.

The legislation to "increase the transparency of the international banking
system" in the US, as introduced  by Rep. Jim Leach, R-Iowa, chairman of the
Banking committee this week is a step in the right direction to prevent
abuse and corruption here. But it is expected to raise strong resistance
from the banking industry and others objecting to government controls, and
will have little effect on this global problem.

To bring about real systematic changes, the international lending agencies
should condition funds to particularly corrupt sectors in a given country
requiring specific programs to reform the governance and management
practices of that sector. Their supervision should include a special system
to monitor  implementation and enforcement of laws regarding good governance
and economic accountability such as ethical conduct rules, public integrity
laws, anti-money laundering, and procurement laws, to mention a few.
Corruption is a contagious disease which requires early detection and
constant monitoring. Unlike HIV and Hepatitis C, corruption is a curable
disease.  But it takes political will.

Rachel Ehrenfeld is the  Director of the Center for the Study of Corruption,
at the International Law Institute, Washington, DC.
-------------------------------------------------------------------

The CSC MODEL Project;

THE CENTER FOR THE STUDY OF CORRUPTION and THE RULE OF LAW,
The International Law Institute , Washington DC.

The Rule of Law: Good Governance and Public Integrity.

_______________________________________________

Request for funding for the INDONESIA Project.

 The Center of the Study of Corruption and the Rule of Law is seeking
funding for a major study of anti-corruption laws and their implementation
in Indonesia.  This is particularly timely, since the period between the
general election in June and the presidential election in the fall provides
a rare window of opportunity to identify and analyze the implementation of
existing laws that make self-sustaining democracy possible, and to
recommend, as needed, new laws and pragmatic enforcement mechanisms.  The
purpose of the study is not to find people to blame for the past, but rather
to design a systemic and pragmatic change for the future.

The Center for the Study of Corruption ("CSC") and the Rule of Law is part
of the International Law Institute (ILI)* in Washington, D.C. The CSC/ILI
approach is different but complementary to The World Bank's diagnostic
surveys, the OECD's monitoring groups, Transparency International's
perception polls and other organizations engaged in the fight against
corruption. The CSC specializes in systematic, country-specific analyses of
existing laws  with a special focus on their practicality, monitoring and
implementation.  Based on its findings, CSC then develops a program for
reform and helps to design and conduct training programs necessary to
implement that reform.  The CSC is directed by Dr. Rachel Ehrenfeld, an
acknowledged expert on corruption, money laundering, transnational organized
crime, international terrorism, drug trafficking, and substance abuse.

The recent political changes in Indonesia offer great opportunities to deal
with the systemic weaknesses that have allowed corruption to flourish in
that country for many years.  The outgoing parliament has already passed
some laws to reform the system, including an anti-corruption law requiring
government officials to disclose their assets to a supervisory committee.
The parties that will form the new government are committed to major efforts
to combat corruption.   The political will seems to be present. However,
expert assistance will hasten the process.   The CSC will provide this
assistance.  Our team will undertake the examination of Indonesia's legal
foundation, focusing on the adequacy, implementation and enforcement of laws
regarding good governance and the control of corruption in the context of
governance reform and the development of transparency and accountability.
Based on this work - and the global experience of the project team -- the
CSC will develop recommendations and strategies for reform, and training
programs to implement the necessary changes. The CSC will provide the new
government with an initial blue -print for building a framework for a
meaningful governance reform, including an independent comprehensive legal
system, the control of corruption, and pragmatic and reliable monitoring and
enforcement mechanisms.

We will begin by examining the adequacy, implementation and enforcement of
anti-corruption laws in the public and private sector; Anti bribery laws
(Receiving and Giving); Procurement laws; Anti-money laundering measures;
Privatization; Liberalization; and laws governing the Ombudsman. We will
examine their implementation and related enforcement measure, in particular:
Methods for verification; Monitoring, and Enforcement with special attention
on Compliance with International Organizations requirements.  In addition,
the Team will conduct extensive interviews to determine what works and what
doesn't and why. Based on this comprehensive analysis, the Team will provide
practical recommendations for reform and ways to utilize them. It will also
contain strategies for better monitoring mechanisms, and the methodology and
parameters for appropriate training.

Similar methodology will be used for the examination of laws and their
implementation in the context of Public Integrity (Are public officials
controlled by Rules of Ethical Conduct; Are Federal & State or regional laws
fair, transparent, and predictable; Financial disclosure (pre and/or post,
including immediate relatives); Level of compensation for public officials,
etc.  The Government of Indonesia, and leaders in key political parties,
have indicated their support for this project.    Senior officials at the
U.S. Treasury, Commerce, and the State Departments have also indicated their
strong support for this initiative, and we expect to receive partial funding
from the U.S. government.

The project will be conducted in three phases and will take  eight to nine
weeks to complete:

Phase I : Planning, developing interview list and guidelines (two weeks)
 Phase II : On-the-ground research (four weeks)
 Phase III : Synthesis of findings; development of
recommendations, confirmation of results (two-three weeks)

The Project team will include a project manager (Dr. Ehrenfeld), up to six
experts (possible including Larry Potts former Deputy Director of the FBI;
Sherman Funk former Inspector General at the State and Commerce Departments;
John Shockey  former Chief Fraud Investigator Office of the Comptroller of
the Currency; John Featherly formerly DEA Attache, London; and Roy Clark
Deputy Commissioner Scotland Yard), and two local assistants.

Budget

A rough estimate of the cost of the project is  $400,000 (for the project
manager and six staff members):

 Staff costs             $175,000
 Per diem costs          60,000
  Travel Costs             30,000
 Local Transport        10,000
 Interpretation,
           Translation & Misc.   20,000
  Overhead                 105,000
------------------------
TOTAL                    $400,000

----------------------------------------------------------------------------
----------

>From: Yvonne Engel <yengel@bradleyfdn.org>
>To: "'ehrenfeld@worldnet.att.net'" <ehrenfeld@worldnet.att.net>
>Subject: Inquiry
>Date: Fri, Oct 22, 1999, 2:40 PM
>

>Dear Dr. Ehrenfeld,
>
>I am responding on behalf of Michael Joyce to your October 21st follow
>up to a letter of inquiry dated August 6, 1999.  The Foundation has no
>record of this inquiry.    I am sorry to trouble you, but would you
>please send it again?  Your 10/21/99 correspondence has our current
>address.
>
>Thank you.
>
>Yvonne Engel
>Program and Network Administrator
>Bradley Foundation
>

<HTML>
<HEAD>
<TITLE>Re: Inquiry</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF">
<BR>
Dear Yvonne,<BR>
<BR>
I've been away and could not respond earlier. &nbsp;Instead of mailing it, I'm enclosing our letter herewith. I've also taken the opportunity to add a recent article, and our model project (here, for Indonesia). Please, forward it to Mr. Joyce. The State Dep. is interested in this model &nbsp;and they are now considering a base line analysis by the CSC in Russia and Indonesia. Thus, operational funds for the CSC and for the development of its Integrity Index, are essential. <BR>
<BR>
I look forward to hearing from you.<BR>
<BR>
Best,<BR>
<BR>
Rachel Ehrenfeld<BR>
----------<BR>
The International Law Institute (ILI)<BR>
<BR>
<B>The Center for the Study of Corruption &nbsp;(CSC) and the Rule of Law<BR>
<BR>
</B><H5>The Rule of Law: Good Governance and Public Integrity.<BR>
</H5><BR>
<FONT SIZE="2">&gt;<BR>
&gt;&quot;With the passing of the Cold War, it has become clear that the growth of<BR>
&gt;state corruption will pose one of the most important challenges...in the<BR>
&gt;21st Century.&quot; Ambassador Robert S. Gelbard.<BR>
&gt;<BR>
&gt;<BR>
&gt;<B>Executive Summary<BR>
</B>&gt;<BR>
&gt;<B>Introduction<BR>
</B>&gt;<BR>
&gt;The Center for the Study of Corruption (&quot;CSC&quot;) is part of the International<BR>
&gt;Law Institute (ILI) in Washington, D.C. Its work is fact based analysis of<BR>
&gt;existing laws and their implementation. The findings serve the design of<BR>
&gt;pragmatic strategies for necessary changes, reform and training, taking<BR>
&gt;local conditions into consideration. &nbsp;It is directed by Dr. Rachel<BR>
&gt;Ehrenfeld, an acknowledged expert on corruption, money laundering,<BR>
&gt;transnational organized crime, international terrorism, drug trafficking,<BR>
&gt;and substance abuse. &nbsp;Her resume is attached to this proposal.<BR>
&gt;<BR>
&gt;The CSC/ILI work is different from and complementary to programs such as<BR>
&gt;The World Bank's diagnostic surveys, the OECD's monitoring groups,<BR>
&gt;Transparency International's perception polls, Freedom House_s &quot; Nations in<BR>
&gt;Transition&quot; survey, and others. Unlike other organizations engaged in the fight<BR>
against corruption, CSC specializes in systematic, country-specific analyses<BR>
of existing laws with a special focus on their practicality, monitoring and<BR>
implementation. Based on its findings, CSC then develops a program for reform and helps to<BR>
design and conduct the training programs necessary to implement the changes. In<BR>
addition to examining anti-corruption laws, the CSC/ILI analysis will include:<BR>
evaluation of existing legislation and the implementation of laws regarding good governance, civil<BR>
rights, procurement, liberalization and privatization, and laws governing the financial sector, as referred to in the Integrity Indicators. The CSC_s annual Integrity Index will be based on a comprehensive evaluation of national and international corruption. Of course, the CSC/ILI will rely on and cooperate with other national and international anti-corruption activities.<BR>
&gt;<BR>
&gt;Legal reform programs have been the primary goal of ILI since its founding<BR>
&gt;in 1955 at Georgetown University Law Center. &nbsp;An independent,<BR>
&gt;not-for-profit organization since 1983, the ILI is actively engaged in<BR>
&gt;providing technical assistance to countries, through law reform, new<BR>
&gt;regulations, improved procedures, and developing expanded local training<BR>
&gt;capacity in procurement and many other areas. The ILI works through<BR>
&gt;research , training, and publishing programs to find solutions to the legal<BR>
&gt;and financial problems of the international community. The ILI has received<BR>
&gt;funding from The World Bank, USAID, IMF, and regional banks and individual<BR>
&gt;governments. &nbsp;The Institute has trained over 8,000 professionals from 175<BR>
&gt;countries such as: Indonesia, Saudi-Arabia, Brazil, Colombia, Vietnam,<BR>
&gt;South Korea, Ukraine, Russia, Lebanon, Zimbabwe, and Argentina, to name a<BR>
&gt;few. International Procurement -- a key battleground in the war on<BR>
&gt;corruption -- is a particular area of expertise for ILI's &nbsp;faculty and<BR>
&gt;staff, and the ILI has drafted procurement laws for a number of countries<BR>
&gt;and provided training for their procurement officials. &nbsp;In addition to<BR>
&gt;training, ILI's faculty and staff is dedicated to the promotion of economic<BR>
&gt;and human development, the rule of law, and the development of open<BR>
&gt;markets. &nbsp;All this makes ILI the ideal and partner for the Center for the<BR>
&gt;Study of Corruption.<BR>
&gt;<BR>
&gt;The CSC/ILI will conduct case studies lasting 3 - 4 months each. These will<BR>
&gt;identify and analyze local laws regarding governance and economic<BR>
&gt;accountability (such as ethical conduct rules, public integrity laws,<BR>
&gt;anti-money laundering, and procurement laws, to name a few) and their<BR>
&gt;implementation. These findings will serve to design programs to address the<BR>
&gt;special needs of each country, and provide the appropriate training<BR>
&gt;mechanisms to correct and control those problems detected. The studies will<BR>
&gt;be conducted in countries which have been identified as having a real<BR>
&gt;opportunity for change: Indonesia, Colombia, Georgia, Hungary, Brazil and<BR>
&gt;Egypt, to name a few. At the same time the CSC/ILI will conduct a<BR>
&gt;comprehensive evaluation of national and international corruption for the<BR>
&gt;development of an annual Integrity Indicators. This Index will provide a<BR>
&gt;comparative measure on a country - by - &nbsp;country basis of corruption and<BR>
&gt;anti-corruption measures and the effectiveness of their implementation.<BR>
&gt;Following the case studies and the development of models for reform, the<BR>
&gt;CSC will concentrate on training for government officials, corporate<BR>
&gt;executives, international organization personnel, &nbsp;public interest groups,<BR>
&gt;the media and the like, in ways of fighting corruption. The &nbsp;CSC/ILI will<BR>
&gt;continue to monitor and reinforce national and international integrity by,<BR>
&gt;among other things, updating and publishing the annual Integrity<BR>
&gt;Indicators. &nbsp;The CSC's infrastructure budget for the first two years will<BR>
&gt;be $1,499,000. Case Studies will be budgeted appropriately. Details are attached.<BR>
&gt;<BR>
</FONT><H5>&gt;Background<BR>
</H5><FONT SIZE="2">&gt;Organized crime, drug trafficking, and terrorism are recognized as global<BR>
&gt;threats to civil society. However, until recently the international<BR>
&gt;community often seemed oblivious to an equally insidious and related<BR>
&gt;threat. Corruption subverts democratic institutions and destroys the free<BR>
&gt;market system. For example, it transformed Colombia from Latin America's<BR>
&gt;oldest Democracy into its first Narcocracy. Corruption paves the way for<BR>
&gt;international economic catastrophes such as the Asian and Russian financial<BR>
&gt;crises, and it produces economic turmoil as it has in Japan. &nbsp;Unchecked,<BR>
&gt;corruption undermines stability -- as one can see in Indonesia -- thus<BR>
&gt;creating security concerns for the U.S. and other democracies.<BR>
&gt;<BR>
&gt;International agreements regarding the corruption control have often been<BR>
&gt;written with diplomatic niceties in mind. &nbsp;Most attempt to correct the<BR>
&gt;situation but still lack effective mechanisms for identifying,<BR>
&gt;investigating, and punishing corruption. Hence the need for an independent,<BR>
&gt;specialized institution that will codify, measure, and study the most<BR>
&gt;prevalent forms of corruption in the public and private sectors. For<BR>
&gt;example: Kleptocracy, Narcocracy, and Corruption of<BR>
&gt;International organizations. &nbsp;It will also suggest the appropriate<BR>
&gt;strategies to monitor, reform and control the problem.<BR>
</FONT><H5>&gt;<BR>
&gt;The Project<BR>
</H5><FONT SIZE="2">&gt;The Center for the Study of Corruption (&quot;CSC&quot;) at ILI, will be the first<BR>
&gt;center of excellence specializing in strategic anti-corruption research and<BR>
&gt;analysis. &nbsp;The CSC/ILI will establish programs to broaden public<BR>
&gt;understanding of the types and scale of corruption. CSC/ILI will tap the<BR>
&gt;expertise of our international advisory board. &nbsp;It will develop strategies<BR>
&gt;to address the problems, and will provide training for government<BR>
&gt;officials, executives of &nbsp;corporations, public interest groups, and<BR>
&gt;international organizations committed to combating corruption.<BR>
&gt;<BR>
&gt;The Center will conduct several case studies from which a model for<BR>
&gt;comparative analysis will be generated. This will require visits to foreign<BR>
&gt;capitals to research first-hand the effectiveness of anti-corruption<BR>
&gt;measures. In addition, the Center will develop an annual Integrity Index<BR>
&gt;designed to publicize the problem and address the threat of corruption.<BR>
&gt;Conducting case studies and developing the index will provide the Center<BR>
&gt;with a unique understanding of the requirements for the development of<BR>
&gt;special strategies and training to correct the situation. The CSC will<BR>
&gt;produce various publications that will include the annual Integrity Index<BR>
&gt;as well as interim and annual progress reports and articles in magazines,<BR>
&gt;newspapers, and on the Internet.<BR>
&gt;<BR>
</FONT><H5>&gt;Project Implementation<BR>
</H5><FONT SIZE="2">&gt;The Center will undertake a comprehensive evaluation of national and<BR>
&gt;international corruption, study its various forms and review existing<BR>
&gt;national laws and international conventions. It will begin with national<BR>
&gt;public integrity and anti-corruption laws, their implementation and related<BR>
&gt;enforcement measures. This analytic approach will be used to design<BR>
&gt;pragmatic strategies -- taking &nbsp;different local conditions into<BR>
&gt;consideration -- for better monitoring and reform, and develop the<BR>
&gt;methodology and parameters for appropriate training. This data will be<BR>
&gt;included in the Integrity Index. The Index will list factors such as the<BR>
&gt;political system, location, type, scale, technique, international<BR>
&gt;connections, and compliance and enforcement with national laws and<BR>
&gt;international conventions. The CSC/ILI will provide training for government<BR>
&gt;officials, executives of corporations, public interest groups, and<BR>
&gt;international organizations. The Center will continue to monitor, study,<BR>
&gt;advance, and reinforce national and international integrity by updating the<BR>
&gt;annual Integrity Index -- in effect, providing a highly visible &quot;report<BR>
&gt;card&quot; on how well the international community is doing.<BR>
&gt;<BR>
&gt;<BR>
</FONT><H5>&gt;Long-term Goals<BR>
</H5><FONT SIZE="2">&gt;The CSC/ILI will become the acknowledged international authority and<BR>
&gt;repository of expertise concerning national and international corruption<BR>
&gt;and the pragmatic strategies to change corrupt systems. &nbsp;In addition to<BR>
&gt;studies, training and publication of the annual Integrity Index, the Center<BR>
&gt;will continue to monitor compliance with and enforcement of public<BR>
&gt;integrity and anti-corruption laws. It will issue policy proposals for<BR>
&gt;national and international legislation/sanctions, focusing on countries<BR>
&gt;identified as poor performers. The ultimate objective of the CSC/ILI is to<BR>
&gt;promote standards of national and international integrity. To do so it has<BR>
already begin to<BR>
&gt;develop and maintain a data bank, monitoring corruption and anti-corruption<BR>
&gt;efforts on the national and international levels. This data bank will be a<BR>
&gt;unique resource for governments, multinational corporations, and others<BR>
&gt;interested in this project.<BR>
<BR>
</FONT><B><BR>
The &nbsp;Proposal<BR>
</B><FONT SIZE="2"><BR>
</FONT><H5>The Central Issue: &nbsp;National and International Corruption<BR>
</H5><FONT SIZE="2"><BR>
Efforts to halt the world's economies from sliding into the late 20s-style<BR>
depression dominated the World Bank and the International Monetary Fund 1998<BR>
Annual Meeting in Washington, DC. &nbsp;Unwise and unsustainable economic<BR>
policies were identified as &nbsp;causes for the spreading of global financial<BR>
instability, and accountability, transparency and reform were urged by most<BR>
speakers. &nbsp;Remarkably, the role of corruption as a driving force<BR>
jeopardizing economies worldwide was barely mentioned. &nbsp;James D. Wolfensohn,<BR>
The World Bank's President, launched his &quot;war&quot; against corruption nearly<BR>
three years ago, in October 1996. &nbsp;His statement expressed the growing<BR>
international concern over the spread of corruption, and was followed two<BR>
month later by the &nbsp;UN General Assembly's &quot;Declaration on Corruption&quot;, and<BR>
the OECD's &quot;Convention on Combating Bribery of Foreign Public Officials in<BR>
International Business Transactions&quot;, which entered into force on December<BR>
17, 1997. Following these developments and Wolfensohn's call for &quot;the<BR>
international community...[to] deal with the cancer of corruption, because<BR>
it is a major barrier to sustainable and equitable development,&quot; a whole new<BR>
industry to fight corruption has emerged, but little has been done to change<BR>
the systems.<BR>
<BR>
Most policy makers consider corruption too abstract to translate into a<BR>
concrete foreign policy issue. &nbsp;As a result, they overlook the extent to<BR>
which corruption undermines democratic institutions and destroys the free<BR>
market system. &nbsp;Russia is a case in point. &nbsp;There, according to Venyamin<BR>
Sokolov, director of the Chamber of Accounts, an &quot;alliance between<BR>
government officials and crony capitalists has been raiding the public<BR>
treasury and depriving the Russian people of a secure and democratic<BR>
future.&quot; &nbsp;Closer to home, corruption, fueled with drug money, helped to<BR>
convert Colombia, Latin America's oldest Democracy, into its first<BR>
Narcocracy.<BR>
Despite all this, the international community seems slow to recognize how<BR>
corruption paves the way for international economic catastrophes such as the<BR>
ongoing Asian and Russian financial crises. &nbsp;Unchecked, it produces economic<BR>
turmoil as it has in Japan, and undermines stability as in Indonesia, thus<BR>
creating financial and security concerns for the U.S. and other democracies.<BR>
&nbsp;&nbsp;Nonetheless, Western businessmen and multinational corporations -- often<BR>
sanctioned by their governments -- &nbsp;are willing to meet corrupt demands in<BR>
order to continue the process of globalization. &nbsp;Corruption flourishes with<BR>
impunity.<BR>
<BR>
Corruption is not an abstract concept. &nbsp;Rather, there are today several<BR>
clearly identifiable types of international corruption. &nbsp;For example:<BR>
Cronyism and Nepotism -- impeding free competition via favoritism or<BR>
patronage within a family or tribe or ethnic group, as practiced in Asia,<BR>
the Middle East, some parts of Europe (e.g. Italy under Andreotti), Africa,<BR>
and Latin America.<BR>
Governments for Hire -- influencing policy and legal decisions by bribing<BR>
public officials through illicit campaign contributions, illegal lobbying<BR>
(as in France, Italy, the United States, etc.), or through sanctioned<BR>
bribery and intimidation (as in many Third World countries).<BR>
Kleptocracy -- the sale at less than market prices to favored customers of<BR>
state assets, particularly prevalent in the former Communist countries, new<BR>
democratic states, and developing countries.<BR>
Narcocracy -- subverting the economic and the political system with the huge<BR>
profits from the illicit drug trade, via organized crime and terrorism (as<BR>
in Colombia, Mexico, Burma, etc.).<BR>
Corruption of International Organizations -- subversion and manipulation of<BR>
legitimate international organizations - the UN and its specialized<BR>
organizations such as the International Organization Of Criminal Police<BR>
(INTERPOL), and the International Olympic Committee (IOC) by corrupt<BR>
governments abusing their power to influence the working of the<BR>
organizations, or by illegal groups that, in return for bribes, can use the<BR>
organizations or their instruments to further their corrupt aims.<BR>
<BR>
Corruption in any of the above forms, or in combination, threatens the<BR>
foundations of any civil society: &nbsp;its judicial and/or financial systems,<BR>
its legislative body, and/or its military. Ultimately, international<BR>
corruption, unchecked, endangers the stability of all democratically elected<BR>
governments. Indeed, &quot;given the mounting evidence of the costs of<BR>
corruption,&quot; the World Bank has called for &quot;more coordinated efforts at both<BR>
country and international levels...to address the issue.&quot; Yet, the<BR>
international community's response to the growing hazards of corruption can<BR>
at best be described as inept and inadequate.<BR>
<BR>
Every international agreement regarding the control of corruption lacks<BR>
teeth. &nbsp;Neither the UN General Assembly's &quot;Declaration on Corruption&quot;, nor<BR>
the OECD's &quot;Convention on Combating Bribery of Foreign Public Officials in<BR>
International Business Transactions&quot;, contain effective monitoring and<BR>
enforcement mechanism. &nbsp;This weakness is compounded by the absence of: &nbsp;a)<BR>
solid international political leadership or direction; &nbsp;b) a central<BR>
information gathering body; and c) rational, uniform international legal and<BR>
ethical definitions.<BR>
<BR>
</FONT><H5><BR>
Mission<BR>
</H5><FONT SIZE="2">The Center for the Study of Corruption (CSC) at ILI will undertake strategic<BR>
and comprehensive anti-corruption research, analysis, education and<BR>
training. &nbsp;No such institute currently exists, despite the attention that is<BR>
being focused on the issue. &nbsp;The principal aim of the Center is to review<BR>
existing conventions and national public integrity and anti-corruption laws,<BR>
&nbsp;their implementation and enforcement measures, and to codify, measure,<BR>
evaluate, and analyze the most prevalent forms of corruption. &nbsp;The findings<BR>
will provide the base for devising effective strategies to reform and<BR>
control the problem, and to bring the findings and suggested strategies to<BR>
the attention of policymakers, the international business community,<BR>
international organizations, the media, and the public through training and<BR>
other programs. &nbsp;This would be accomplished through:<BR>
a) Comprehensive research and analysis of corruption, assessing its sources,<BR>
economic cost, extent and impact, starting with national case studies.<BR>
b) Specially commissioned studies and workshops to assess, devise, and<BR>
discuss strategies for countering the problem.<BR>
c) &nbsp;Training for executives of corporations, public interest groups,<BR>
governments, and international organizations, and assisting organizations,<BR>
whether public or private, to fight corruption.<BR>
d) Publication of papers, articles, progress reports, and an annual<BR>
Integrity Index (Report Card), in print and on the Internet.<BR>
e) Development of a data bank that will contain information on corruption<BR>
and anti-corruption measures on a national and international level. This<BR>
data bank will be available to those with interest in the subject, such as<BR>
governments, international organizations and multinational corporations.<BR>
<BR>
<B>The CSC/ILI's agenda<BR>
</B>At first, the CSC/ILI will conduct a series of case studies to assess<BR>
national public integrity and anti-corruption laws and their implementation,<BR>
and the compliance with existing international anti-corruption conventions<BR>
(money laundering, anti-bribery, etc.). &nbsp;The results will be analyzed by<BR>
different expert study groups:<BR>
1. The first group will establish the framework for developing the Center's<BR>
annual Integrity Index. &nbsp;It will address the most prevalent forms of<BR>
corruption based on case studies of countries in different regions, and<BR>
discuss the best methodology to further research, analyze, and reform them.<BR>
2. The second group will study Cronyism and Nepotism, probably the most<BR>
commonly practiced deep-rooted forms of corruption. &nbsp;This type of corruption<BR>
results in inflated costs of goods, low wages, and a dearth of public sector<BR>
services. &nbsp;The key for the successful implementation and enforcement of all<BR>
reform strategies to fight corruption will be the giving of special<BR>
consideration to different cultural customs attached to these forms over<BR>
decades of practice while devising measures to reverse it.<BR>
3. Governments for hire, or bribery of public officials, is one of the more<BR>
traditional forms of corruption. &nbsp;The third group will study public<BR>
integrity laws and their implementation, as well as the escalation of the<BR>
problem since the early nineties, and it will also develop strategies to<BR>
curb this phenomenon.<BR>
4. The fourth group will study Kleptocracy ,&quot; a relatively new form of<BR>
corruption which is also the most widespread method of plundering state<BR>
assets. &nbsp;Special attention will be given to the development of reforms<BR>
needed to change the situation that undermines the development of democracy<BR>
and free markets in the former communist states and developing countries.<BR>
5. The fifth group will consider the corrupting effects of Narcocracy<BR>
worldwide. &nbsp;It will study the interaction between the illicit drug trade,<BR>
organized crime, terrorism, illegal arms trade, and economic and political<BR>
destabilization, and will develop viable strategies for establishing and<BR>
enforcing reform.<BR>
6. The sixth group will study the threat of corrupting international<BR>
organizations. &nbsp;The abuse of international organizations by corrupt states<BR>
and the penetration and subversion of such organizations by criminal<BR>
entities could in effect turn those organizations into tools to further the<BR>
unlawful activities of rogue countries, as well as the illicit activities of<BR>
criminal organizations, while corrupting the organizations and the countries<BR>
affiliated with them. &nbsp;The group will develop strategies to prevent and<BR>
control this menace via legal reform.<BR>
<BR>
The CSC/ILI will conduct studies of countries with special strategic<BR>
importance to the US, and a real opportunity for change such as: Indonesia,<BR>
Brazil, Colombia, Georgia, and Egypt. The Center will also conduct case<BR>
studies in specific regions that share common characteristics, such as<BR>
Indonesia, South Korea (and Singapore), Chile and Argentina, Hungary and the<BR>
Czech Republic, Turkey and Italy, Norway and Switzerland. These comparative<BR>
studies will help to develop models for reform.<BR>
<BR>
A Conference at the end of Center's first year will discuss the findings of<BR>
the various case studies, and will launch the publication of the first<BR>
annual Integrity Index which will include a &quot;Report Card&quot; measuring the<BR>
progress of individual countries and the international community in<BR>
combating corruption. &nbsp;The links between the absence of public integrity<BR>
laws and/or their enforcement, the various types of corruption, the tools<BR>
used to enhance them, their threat to democracy, to national and<BR>
international security, the free market system, and policy initiatives to<BR>
control these problems, will be presented. &nbsp;Emerging trends in corruption<BR>
will be documented and published in the Index.<BR>
<BR>
With the completion of its basic framework, the CSC/ILI will continue its<BR>
studies, training and analysis for updating the annual Integrity Index. The<BR>
CSC/ILI will become the international clearing house for information on<BR>
corruption, and the source for reform policies to control the problem. &nbsp;This<BR>
will facilitate monitoring and cooperation, and broaden CSC's international<BR>
connections in both the public and private sectors. The Center will continue<BR>
to study and analyze the many manifestations of corruption, and will<BR>
recommend policy initiatives that will assist organizations, whether public<BR>
or private, to fight corruption.<BR>
<BR>
The annual unveiling of the CSC's annual Integrity Index, will take place<BR>
every September15, in a well publicized event. &nbsp;An annual conference will<BR>
take place at the same time. &nbsp;This conference will discuss and evaluate<BR>
trends in the Integrity index. &nbsp;Through a series of papers, and surveys of<BR>
trends, the conference will review national and international responses and<BR>
recommend policy initiatives to strengthen control, prevention and<BR>
cooperation in the fight against the spread of corruption.<BR>
<BR>
We believe it will take two years of support to establish the credibility of<BR>
the annual Integrity Index and the other CSC/ILI's programs. &nbsp;Once that<BR>
credibility is established, the Center will seek continuing funding for its<BR>
training from the business community in order to reduce its reliance on<BR>
foundation support. &nbsp;For instance, the Institute could obtain funding of<BR>
special projects by multinational organizations.<BR>
</FONT><H5><BR>
Organization<BR>
</H5><FONT SIZE="2">The Center for the Study of Corruption is based at the International Law<BR>
Institute (ILI), in Washington DC. Legal reform programs have been the<BR>
primary goal of ILI since its founding in 1955 at Georgetown University Law<BR>
Center. &nbsp;An independent, not-for-profit organization since 1983, the ILI is<BR>
actively engaged in providing technical assistance to countries, through law<BR>
reform, new regulations, improved procedures, and developing expanded local<BR>
training capacity in procurement and many other areas. The ILI works through<BR>
research , training, and publishing programs to find solutions to the legal<BR>
and financial problems of the international community. The ILI has received<BR>
funding from The World Bank, USAID, IMF, and regional banks and individual<BR>
governments. &nbsp;The Institute has trained over 8,000 professionals from 175<BR>
countries such as: Indonesia, Saudi-Arabia, Brazil, Colombia, Vietnam, South<BR>
Korea, Ukraine, Russia, Lebanon, Zimbabwe, and Argentina, to name a few.<BR>
International Procurement -- a key battleground in the war on corruption --<BR>
is a particular area of expertise for ILI's &nbsp;faculty and staff, and the ILI<BR>
has drafted procurement laws for a number of countries and provided training<BR>
for their procurement officials. &nbsp;In addition to training, ILI's faculty and<BR>
staff is dedicated to the promotion of economic and human development, the<BR>
rule of law, and the development of open markets. &nbsp;All this makes ILI the<BR>
ideal and partner for the Center for the Study of Corruption.<BR>
<BR>
The CSC consists of a Director; one Fellow -- a young Ph.D., with research<BR>
and writing skills; one Administrative Assistant -- for secretarial work and<BR>
coordination of conferences; one Editor -- to prepare all publications; two<BR>
research assistants, and selected experts.<BR>
<BR>
The Center will identify and invite the participation of key experts in the<BR>
relevant fields, and will draw on the expertise of its international<BR>
Advisory Board, and the faculty of ILI. Guided by the annual Integrity<BR>
Index, and through training, workshops, seminars, and specially commissioned<BR>
&nbsp;research, the Center will continue to devise tools aimed at addressing the<BR>
threat of corruption.<BR>
<BR>
----------------------------------------------------------------------<BR>
</FONT><B>The CSC's Integrity Index: Measuring laws and their implementation<BR>
</B><FONT SIZE="2"><BR>
The following laws (implemented) and their combination are necessary for<BR>
self-sustaining democratic society.<BR>
<BR>
1. &nbsp;&nbsp;Identifying the most prevalent forms of corruption (within the general<BR>
&nbsp;meaning of &quot;abuse of public office for private &nbsp;gains&quot;).<BR>
<BR>
2. State laws: Fair, Transparent, and Predictable<BR>
<BR>
3. Public Officials : &nbsp;a)Rules of Ethical Conduct: conflicts of interest,<BR>
financial disclosure, including immediate family (wife, children);<BR>
verification and monitoring; adequate compensation<BR>
b)Procurement: national and international competitive bidding; advertising;<BR>
&nbsp;pre-qualification; examination; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;evaluation; award<BR>
c)Transparency; Accountability; Anti-Bribery laws: Receiving and Giving<BR>
<BR>
4. Legal System: Independent Judiciary: civil procedure; criminal law;<BR>
Administrative Tribunals; Anti-Drug Laws; Law Enforcement; &nbsp;Security<BR>
Services; Oversight Bodies: inspector general, auditor general,<BR>
anti-corruption committee or commission, independent counsel &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
<BR>
<BR>
5. &nbsp;&nbsp;&nbsp;&nbsp;Civil Rights: Human Rights, Religious Rights, Property Rights, Free<BR>
Media, Freedom of Information<BR>
<BR>
6. &nbsp;&nbsp;&nbsp;&nbsp;Free and Fair Elections: Illegal Campaign Financing.<BR>
<BR>
Economic Governance<BR>
<BR>
7. Privatization and Liberalization: National and International Competitive<BR>
Bidding; Advertising; Pre-Qualification; Examination; Evaluation; Award<BR>
<BR>
8. Market Liberalization: Tariffs, Quotas, Exchange Rate Restrictions, Price<BR>
Controls,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Export/Import Permits<BR>
<BR>
9. Financial Industry: The Banking System and Capital Market:<BR>
accountability, transparency, and anti-money laundering laws<BR>
<BR>
10. The Private Sector: Anti-Corruption Laws; Anti-Money Laundering<BR>
Measures.<BR>
<BR>
11. &nbsp;Ombudsman: Whistle-Blower Legislation; Hot-Lines; Awards; Witness<BR>
Protection Programs<BR>
<BR>
12. &nbsp;Compliance with International Organizations Requirements: Review of<BR>
Multilateral Conventions to Eradicate Corruption: OECD Convention on<BR>
Combating Bribery of Foreign Public Officials in International Business<BR>
Transactions; Inter-American Convention Against Corruption; WTO Agreement on<BR>
Government Procurement; APEC Collective Action Plan: Non-Binding Principles<BR>
on Government Procurement<BR>
<BR>
<BR>
©Ehrenfeld, R. Ph.D. April, 1999<BR>
----------------------------------------------------------------------------<BR>
----------<BR>
</FONT><H5>The Center for the Study of Corruption (CSC) a the International Law Institute<BR>
</H5><FONT SIZE="2"><B>(ILI), Washington DC</B>.<BR>
<BR>
Advisory Board<BR>
Prof. Don Wallace, Jr.; Dr. Norman A. Bailey; John Bolton, Vice President,<BR>
American Enterprise Inst.; Roy Clark, Deputy Commissioner, Metropolitan<BR>
Police, London; Chris Cook, Chief Executive, Off-Exchange Trade Clearing,<BR>
London; John Featherly, DEA, Country Attachü, England; Dr. Kenneth M.<BR>
Jensen, Director, American Council of Foreign Relations; Willmer Parker,<BR>
former US Attorney, Atlanta; Howard Safir, Police Commissioner, NYC; Charles<BR>
Saphos, former General Counsel for INTERPOL/US; John Shockey, Special<BR>
Assistant, Office of the Comptroller of the Currency; &nbsp;Brian A. Smouha,<BR>
Deloitte &amp; Touch LLP; Kenneth Thompson, INL, State Dept.; Walker F. Todd,<BR>
former Assistant General Counsel, the Federal Reserve Bank of Cleveland;<BR>
Victoria Toensing, Former Deputy Assistant Attorney General, U.S. Department of Justice<BR>
Founding Partner, diGenova &amp; Toensing; William von Raab,<BR>
former US Custom Commissioner, and James Woolsey, former Director of the<BR>
CIA.<BR>
<BR>
--------------------------------------------<BR>
</FONT><BR>
<P ALIGN=CENTER>
<B>RACHEL EHRENFELD,</B> Ph.D.<BR>
<BLOCKQUOTE><BLOCKQUOTE><FONT SIZE="2">BIOGRAPHICAL SKETCH<BR>
</FONT><BR>
<BR>
<BR>
<BR>
<P>
<FONT SIZE="2"><BR>
&nbsp;<BR>
Rachel Ehrenfeld, Director, Center for the Study of Corruption (CSC) at the International Law Institute (ILI), Washington DC. She is the author of Evil Money , published by HarperCollins in 1992 and the paperback edition was issued August 1994 by SPI. Her previous book, Narco-Terrorism, published in 1990 by Basic Books, was reissued in paperback in 1992. She is now working on a book, ANYTHING GOES: The New World Disorder. <BR>
&nbsp;&nbsp;<BR>
&nbsp;Dr. Ehrenfeld, who has been a Research Scholar at New York University School of Law and a Visiting Scholar at The Institute of War and Peace Studies, Columbia University, is a commentator and consultant on international money laundering, corruption, transnational organized crime, international terrorism, drug trafficking and substance abuse. Dr. Ehrenfeld have been lecturing on these issues in many countries, to government, law enforcement, and the banking communities. She is a frequent contributor to The New York Times, The Wall Street Journal, National Review, The New Republic, and other &nbsp;journals, and a frequent guest on public affairs programs on national and international radio and television such as CNN, Nightline, Frontline, NBC News, Fox Television and News, and NBC News. She is also the recipient of research grant awards from the U.S. Institute of Peace, and the Scaife, Bradley, Randolph, Donner, and DFAF Foundations.<BR>
&nbsp;<BR>
&nbsp;Dr. Ehrenfeld began studying narco-terrorism, money laundering, and related issues during a fellowship at Tuft's University's Fletcher School of Law and Diplomacy. She organized the International Drug Money Laundering and U.S. Foreign Policy panels at the White House Conference on Drugs in 1988. Dr. Ehrenfeld is a frequent organizer of and contributor to international conferences. Her work and research have taken her all over the world. She uses English, French, German, Spanish, Italian, Hungarian, and Hebrew in her research.<BR>
<BR>
&nbsp;Dr. Ehrenfeld's Ph.D. in Criminology is from the Law School at the Hebrew University of Jerusalem. Her master's in Criminology is from Tel Aviv University, and her bachelor's degree in Political Science and Criminology is from Bar-Ilan University. <BR>
&nbsp;<BR>
&nbsp;<BR>
&nbsp;330 West 56th Street,#24E, New York, NY 10019 Tel:(212)399-4246 Fax: (212)399-4244 <BR>
E mail - <FONT COLOR="#0000FF"><U>ehrenfeld@worldnet.att..net<BR>
</U></FONT></FONT></BLOCKQUOTE></BLOCKQUOTE><FONT SIZE="2"><BR>
</FONT><BLOCKQUOTE><BLOCKQUOTE><BLOCKQUOTE><BR>
<BR>
<BR>
<BR>
</BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE><BR>
---------------------------------------------------------------<BR>
<BLOCKQUOTE><BLOCKQUOTE><B>&nbsp;The Washington Times</B><FONT SIZE="2">, September 29, 1999<BR>
<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Fighting International Graft</B>,<BR>
<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lending Bodies Can Bolster War on Corruption<BR>
<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By<B> Rachel Ehrenfeld</B> <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
<BR>
</FONT><BLOCKQUOTE><FONT SIZE="2">It was James D. Wolfensohn, the president of the World Bank, who on October 1996 suggested a &quot;war&quot; against corruption, warning that: &quot;the international community simply must deal with the cancer of corruption, because it is a major barrier to sustainable and equitable development.&quot; His statement led the international lending agencies to consider better monitoring systems. But when the Russian money laundering scandal broke a few weeks ago, a World Bank official remark that &quot;one does not fight corruption by fighting corruption,&quot; reflected the prevailing attitude among many in the Bank and in international organizations claiming to fight this scourge.<BR>
</FONT><BR>
<FONT SIZE="2">How to fight corruption? For decades the Europeans ridiculed the &quot;naive&quot; Americans for their quest for an ethical and accountable economic system. In the Old World, corruption in politics and business were regarded as inevitable. But American lawmakers understood from the early days of the Republic that efficient and clean government and business practices were inseparable from economic growth and development and the proper functioning of a genuine free market system. Thus, having &quot;human and market - friendly policies, lowering incentives, and addressing macroeconomic stability, politics, education and institutional development,&quot; as that World Bank official recommended, will have no effect unless accountability is enforced at the highest levels of a given political system. <BR>
<BR>
As evident in Russia, years of silence, indifference and willful blindness have greatly exacerbated the problem. Neglecting to identify corruption as a basic cause for economic catastrophes in Russia and elsewhere while pouring in more money to put out an erupting crisis, will do nothing to bring about reform. &quot;Fighting corruption by encouraging competition in bribery,&quot; as Anders Aslund from the Carnegie Endowment recommended lately, doesn«t seem to help either. Unchecked, corruption undermines stability -- as one can see in Indonesia ü or causes the death of thousands of innocent citizens ü as witnessed in the Turkish earthquake - thus creating tremendous human suffering, economic hardship, and security concerns for the U.S. and other democracies. Nonetheless, businessmen and multinational corporations -- often sanctioned by their governments -- are willing to meet corrupt demands in order to continue the process of globalization, and to get rich. <BR>
<BR>
When globalization replaced communism, it was ushered in by a menacing new world disorder: an enhanced form of corruption. This New world disorder twisted the concept of &quot;free markets&quot; to justify the accumulation of wealth by any means. This &quot;anything goes&quot; attitude is the outcome of unbridled greed joined with societies that have always had a weak code of public service. &nbsp;And as noble as reducing poverty, defending human rights and advancing free market policies are, they hardly qualify as tools to combat corruption. The latest Russian scandal demonstrates how those policies have failed repeatedly. And if the past is any indication, they are unlikely to succeed because as the Chinese have realized centuries ago, the fish is rotting from its head. But Russia is not alone and billions of dollars have been siphoned off by many other governments of developing countries and countries in transition, while the lenders did very little to stop the leakage<BR>
<BR>
The international agreements regarding the control of corruption have little or no effect since all lack teeth. &nbsp;Neither the UN General Assembly's &quot;Declaration on Corruption&quot;, or the OECD &quot;Anti-Bribery Convention,&quot; nor the Organization of American States« (OAS) Convention, contain effective monitoring and enforcement mechanism. &nbsp;This weakness is compounded by the absence of: &nbsp;a) solid international political leadership or direction; &nbsp;b) a central information gathering body; and c) rational, uniform international legal and ethical definitions. <BR>
<BR>
To develop policy to effectively curb this international threat, corruption's most prevailing forms need to be acknowledged. They include more than Cronyism and Nepotism we read so much about. There is also Governance for rent (influencing policy and legal decisions by bribing public officials through illicit campaign contributions); Kleptocracy (the sale at less than market prices to favored customers of state assets)<B>; </B>Colombianization &nbsp;(subverting the economic and then the political system with profits from the illicit drug trade), and Corruption of International Organizations (subversion and manipulation of legitimate international organizations by corrupt governments and administrators to purposely frustrate the unified goals of the organization). And while no list is complete, this tally provides a base-line and grounds for debate in respect to the all too common practices which handicap international trade, investment, exchange, and diplomacy.<BR>
<BR>
The International lending agencies should and could do more. They should condition the provision of funds on compliance with performance requirements. While many will argue that this is a violation of sovereignty, this is a simple and reasonable condition for foreign assistance. Besides, performance requirements for other matters have been in place all along. End -user monitoring agreements are a common feature of most assistance programs. While there is always a temptation to waive control mechanisms for short term economic or political gains, recent events in Russia and Indonesia illustrate all too vividly how dangerous such actions can be.<BR>
<BR>
The legislation to &quot;increase the transparency of the international banking system&quot; in the US, as introduced &nbsp;by Rep. Jim Leach, R-Iowa, chairman of the Banking committee this week is a step in the right direction to prevent abuse and corruption here. But it is expected to raise strong resistance from the banking industry and others objecting to government controls, and will have little effect on this global problem. <BR>
<BR>
To bring about real systematic changes, the international lending agencies should condition funds to particularly corrupt sectors in a given country requiring specific programs to reform the governance and management practices of that sector. Their supervision should include a special system to monitor &nbsp;implementation and enforcement of laws regarding good governance and economic accountability such as ethical conduct rules, public integrity laws, anti-money laundering, and procurement laws, to mention a few. Corruption is a contagious disease which requires early detection and constant monitoring. Unlike HIV and Hepatitis C, corruption is a curable disease. &nbsp;But it takes political will.<BR>
<BR>
Rachel Ehrenfeld is the &nbsp;Director of the Center for the Study of Corruption, at the International Law Institute, Washington, DC. <BR>
</FONT></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE><FONT SIZE="2"><FONT COLOR="#0000FF"><U>-------------------------------------------------------------------<BR>
<BR>
The CSC MODEL Project;<BR>
</U></FONT></FONT><BLOCKQUOTE><BLOCKQUOTE><BLOCKQUOTE><BR>
<P ALIGN=CENTER>
<H5>THE CENTER FOR THE STUDY OF CORRUPTION and THE RULE OF LAW, <BR>
The International Law Institute , Washington DC.<BR>
</H5></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE>
<P>
<BR>
<BR>
<H5><BR>
<BR>
The Rule of Law: Good Governance and Public Integrity.<BR>
<BR>
</H5><FONT SIZE="2">_______________________________________________<BR>
<BR>
Request for funding for the INDONESIA Project.<BR>
<BR>
<BR>
&nbsp;The Center of the Study of Corruption and the Rule of Law is seeking funding for a major study of anti-corruption laws and their implementation in Indonesia. &nbsp;This is particularly timely, since the period between the general election in June and the presidential election in the fall provides a rare window of opportunity to identify and analyze the implementation of existing laws that make self-sustaining democracy possible, and to recommend, as needed, new laws and pragmatic enforcement mechanisms. &nbsp;The purpose of the study is not to find people to blame for the past, but rather to design a systemic and pragmatic change for the future.<BR>
<BR>
The Center for the Study of Corruption (&quot;CSC&quot;) and the Rule of Law is part of the International Law Institute (ILI)* in Washington, D.C. The CSC/ILI approach is different but complementary to The World Bank's diagnostic surveys, the OECD's monitoring groups, Transparency</FONT> <FONT SIZE="2">International's perception polls and other organizations engaged in the fight against corruption. The CSC specializes in systematic, country-specific analyses of existing laws &nbsp;with a special focus on their practicality, monitoring and implementation. &nbsp;Based on its findings, CSC then develops a program for reform and helps to design and conduct training programs necessary to implement that reform. &nbsp;The CSC is directed by Dr. Rachel Ehrenfeld, an acknowledged expert on corruption, money laundering, transnational organized crime, international terrorism, drug trafficking, and substance abuse.<BR>
<BR>
The recent political changes in Indonesia offer great opportunities to deal with the systemic weaknesses that have allowed corruption to flourish in that country for many years. &nbsp;The outgoing parliament has already passed some laws to reform the system, including an anti-corruption law requiring government officials to disclose their assets to a supervisory committee. &nbsp;The parties that will form the new government are committed to major efforts to combat corruption. &nbsp;&nbsp;The political will seems to be present. However, expert assistance will hasten the process. &nbsp;&nbsp;The CSC will provide this assistance. &nbsp;Our team will undertake the examination of Indonesia's legal foundation, focusing on the adequacy, implementation and enforcement of laws regarding good governance and the control of corruption in the context of governance reform and the development of transparency and accountability. Based on this work - and the global experience of the project team -- the CSC will develop recommendations and strategies for reform, and training programs to implement the necessary changes. The CSC will provide the new government with an initial blue -print for building a framework for a meaningful governance reform, including an independent comprehensive legal system, the control of corruption, and pragmatic and reliable monitoring and enforcement mechanisms.<BR>
</FONT><BLOCKQUOTE><FONT SIZE="2">&nbsp;<BR>
We will begin by examining the adequacy, implementation and enforcement of anti-corruption laws in the public and private sector; Anti bribery laws (Receiving and Giving)<B>; </B>Procurement laws; Anti-money laundering measures; Privatization; Liberalization; and laws governing the Ombudsman. We will examine their implementation and related enforcement measure, in particular: Methods for verification; Monitoring, and Enforcement with special attention on Compliance with International Organizations requirements. &nbsp;In addition, the Team will conduct extensive interviews to determine what works and what doesn't and why. Based on this comprehensive analysis, the Team will provide practical recommendations for reform and ways to utilize them. It will also contain strategies for better monitoring mechanisms, and the methodology and parameters for appropriate training.<BR>
<BR>
</FONT></BLOCKQUOTE><FONT SIZE="2">Similar methodology will be used for the examination of laws and their implementation in the context of Public Integrity (Are public officials controlled by Rules of Ethical Conduct; Are Federal &amp; State or regional laws<B> </B>fair, transparent, and predictable; Financial disclosure (pre and/or post, including immediate relatives); Level of compensation for public officials, etc. &nbsp;The Government of Indonesia, and leaders in key political parties, have indicated their support for this project. &nbsp;&nbsp;&nbsp;Senior officials at the U.S. Treasury, Commerce, and the State Departments have also indicated their strong support for this initiative, and we expect to receive partial funding from the U.S. government.<BR>
<BR>
The project will be conducted in three phases and will take &nbsp;eight to nine weeks to complete:<BR>
<BR>
Phase I : Planning, developing interview list and guidelines (two weeks)<BR>
&nbsp;Phase II : On-the-ground research (four weeks)<BR>
&nbsp;Phase III : Synthesis of findings; development of<BR>
recommendations, confirmation of results (two-three weeks)<BR>
<BR>
The Project team will include a project manager (Dr. Ehrenfeld), up to six experts (possible including Larry Potts former Deputy Director of the FBI; Sherman Funk former Inspector General at the State and Commerce Departments; John Shockey &nbsp;former Chief Fraud Investigator Office of the Comptroller of the Currency; John Featherly formerly DEA Attache, London; and Roy Clark Deputy Commissioner Scotland Yard), and two local assistants.<BR>
<BR>
Budget<BR>
<BR>
A rough estimate of the cost of the project is &nbsp;$400,000 (for the project manager and six staff members):<BR>
<BR>
</FONT><UL><LI><FONT SIZE="2">&nbsp;Staff costs &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$175,000
<LI>&nbsp;Per diem costs &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;60,000
<LI>&nbsp;&nbsp;Travel Costs &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,000
<LI>&nbsp;Local Transport &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,000
<LI>&nbsp;Interpretation, <BR>
</FONT></UL><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Translation &amp; Misc. &nbsp;&nbsp;20,000<BR>
</FONT><UL><LI><FONT SIZE="2">&nbsp;&nbsp;Overhead &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;105,000<BR>
</FONT></UL><FONT SIZE="2">------------------------<BR>
</FONT><UL><LI><FONT SIZE="2">TOTAL &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$400,000<BR>
</FONT></UL><BR>
<FONT SIZE="5">--------------------------------------------------------------------------------------<BR>
</FONT><FONT COLOR="#0000FF"><FONT SIZE="2"><U><BR>
<BR>
<BR>
</U></FONT></FONT><BR>
&gt;From: Yvonne Engel &lt;yengel@bradleyfdn.org&gt;<BR>
&gt;To: &quot;'ehrenfeld@worldnet.att.net'&quot; &lt;ehrenfeld@worldnet.att.net&gt;<BR>
&gt;Subject: Inquiry<BR>
&gt;Date: Fri, Oct 22, 1999, 2:40 PM<BR>
&gt;<BR>
<BR>
&gt;Dear Dr. Ehrenfeld,<BR>
&gt;<BR>
&gt;I am responding on behalf of Michael Joyce to your October 21st follow<BR>
&gt;up to a letter of inquiry dated August 6, 1999. &nbsp;The Foundation has no<BR>
&gt;record of this inquiry. &nbsp;&nbsp;&nbsp;I am sorry to trouble you, but would you<BR>
&gt;please send it again? &nbsp;Your 10/21/99 correspondence has our current<BR>
&gt;address.<BR>
&gt;<BR>
&gt;Thank you.<BR>
&gt;<BR>
&gt;Yvonne Engel<BR>
&gt;Program and Network Administrator<BR>
&gt;Bradley Foundation<BR>
&gt;<BR>
<BR>
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