Impact of business organizations on anti-corruption policy: Cases of Mongolia and Kazakhstan
Analysis of concepts of corruption and collective action approach in the fight against corruption. Study of international anti-corruption regulations. Analysis of impact of business organizations on anti-corruption policy in Mongolia and Kazakhstan.
| Рубрика | Экономика и экономическая теория |
| Вид | дипломная работа |
| Язык | английский |
| Дата добавления | 30.08.2016 |
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Internal considerations
1. History of the organization
Business associations and chambers of commerce take significant role to become private sector legitimate voice to build positive entrepreneurship ecosystems and to facilitate the capacity of all sized-to grow. According to CIPE's assessment, voluntary and membership-based business associations are essential to this democratic process and strengthen market economy.
2. Autonomous from any political and commercial interest
Autonomous from any political and commercial interest and strongly promotes open market competition and fair rule of law. It considers important to ensure business associations and chambers of commerce organization have any particular criteria in the `membership buy-in processes or selection criteria for board committees are elected for this purpose.
3. Mission-driven
Under this criterion, it ensures the business associations and chambers of commerce have straightforward mission and vision that promote ethical and accountable business.
4. Transparent accounting, operation and certification process
Potential business associations are recognized for its open accounting and operating system and governance mechanisms that are available to public and all members.
5. Policy-oriented
Under this criterion, it is ensured business associations' agenda of public policy issues. CIPE revealed that one of the observable examples of the weak participation of business associations in public policy advocacy is their limited capability to efficient collaboration with government in the policy formulation.
6. Clear mechanisms for encouraging responsibility, accountability to its members
Clear mechanisms for encouraging accountability and responsibility to its members are evaluated. Transparency International defined accountability, responsibility is as obligation and willingness to accept responsibility or to account for one's actions. Here, it is ensured associations have maintained effective code of conduct which commits members to apart from inappropriate action such as corruption as well as having internal auditing committee that is responsible for monitoring their association' members' performance and forming accountable environment for their aimed goal.
7. Broad range of membership
The size and diversity of member companies in business associations/ chambers of commerce is evaluated, as well as proportion of small or medium sized enterprises (SMEs) is essential. Social Weather Station in 2009, it is the most common case that SMEs (small and medium entrepreneurs) are more vulnerable to corruption compared to larger and well-known companies because of their inadequate resources to counter with bureaucratic, corrupted public officials and it is hard to fight corruption alone for them. Therefore, participation of SMEs joint forces in associations are important and become major assessment for assessing potential for effective business and government is needed. The Department of Trade and Industry (DTI) revealed that SMEs account for 99.6% of all total businesses and 63.2% of the total labor force of the economy.
8. Various funding resources
Stable and different funding resource is evaluated under the criteria. CIPE points that stable and diversified-sourced funding is one of the key main pillars for business associations and chambers of commerce whether they sustain their activities and promote pleasant environment for its members to collaborate collectively. Also, that its financial resources should be independent from government or sole source because often corrupted governments or public authorities are in great willingness to have chambers and business associations becoming tool to their own economic and political agenda.
9. Adequate intellectual, professional, technical expertise
In this regard, sufficient intellectual and technical expertise, strong leadership are essential. Broad range of professionalized, sector-specific expertise, associations' involvement with think tanks and other academic institutions, and activities with educating and training members to develop capacity of association's growth are evaluated. In Kosovo, for instance local business associations collaborating with Riinvest Institute, local think tank, on decreasing tax burdens placed on business community and in the result they did influence government to make some changes to the tax on property, wages, and profits.
External considerations
1. Strong standing in the community
Here, association's standing in the community is evaluated through its public statement in the media, and speech in the relevant conferences, as well as involvement in policy research based on the policy options and strategies to decision makers, including participation in the government working groups to develop specific programs or monitoring and evaluation of government decisions.
2. Credibility among other business associations and NGOs
Associations having broad range of networks in national and international level become one of the key pre-conditions for the associations to fulfill their primary role to make public policy advocacy and effectively work with government to build institutional reform that meets real needs of the businesses.
1.4 Policymaking process and stages
Generally, policy cycles can be identified in different ways including Charles O. Jones model (1984); Venus. D's model (2011); Gordon Floyd's model and so on so far. Jones' policy cycle is as follows agenda setting, formulation, implementation, budgeting, and evaluation. Here, agenda setting involves problem identifications that needed to be drawn attention as priorities by either executives or legislative branches of the government; policy formulation defines how problems in the agenda is translated into an authoritative, formal decision; budgeting involves financial resources needed to put the priorities into practice; evaluation stage involves impacts of policy assessment and the output of evaluation ca be no change, small modification, termination, or whatever. Therefore, a feedback came from the evaluation is connected back to the agenda setting stage. As the second view sees the good model for the policy making process can include three parts: agenda-setting, option-formulation, and implementation. Here, agenda setting also refers government officials and agencies also discuss and filter out important problems at hand; possible solutions for the considered problems are defined and final decision made at the option-formulation stage; eventually, the policy considered best is implemented. Then, Gordon identifies policy making as a vacation preparation which include goals and objectives, principles and values, issues, options and assessment, and action steps. Yet, when we have a close look at all these three policy making cycles, we may have one common understanding that these different cycles proposed commonly divide the policy process into following series of important stages: agenda setting; policy formulation; policy adoption; implementation; policy evaluation/ assessment.
Agenda setting
Generally, policymaking starts with problem identification. At this stage, the executive and legislative branch of government filter out and identify priorities and how the making solution of one problem can lead to solution of other problems which may improve the lives of the people in the country. The agenda setting stage includes a problem identification and goal and objectives setting. In most times, social, economic or environmental problems like poverty, corruption or climate change need multiple policy measures that coordinated among governments and many other stakeholders. Therefore, within this stage, business community can help government identify priorities that deserve the most attention of the government and find right solutions from their own experience and practical view. https://paulcairney.wordpress.com/2013/11/11/policy-concepts-in-1000-words-the-policy-cycle-and-its-stages/
2 http://www.policynl.ca/policydevelopment/policycycle.html
3https://www.academia.edu/1207664/Using_the_Policy_Cycle_as_a_Format_Describe_the_Policy_Process_in_your_Country_or_Institution
Policy formulation
Within this stage, several alternative courses of action to deal with the identified public problems can be developed. These alternatives derive from some policy proposals, recommendations, action plans, administrative orders, court decisions and some other legislative acts. Main principles, values of the policy and policy instruments are formulated at this stage, and timely research and data analysis can be the main backbone of the policy choice. There are many factors influencing policy choices such as the cost of implementation, expected period, effectiveness from the outcome etc. Decision makers support policy alternatives based on their sound impacts to the expected outcome, and it is important for them to be provided reliable and practical information and get involved with relevant/ stakeholders impacted by such policy formulation.
Policy adoption
Within this stage, it is ensured that the selected policies get support or not. This stage can involve one or more than two activities including legislative approval, executive approval, making consent through consultation with interest groups, and referendum. At this stage, lots of scrutinies and debates about the alternative courses of action for the pointed problems takes place. In most cases, this stage is involved with the legislative part of government that made final decision on identifying and selecting courses of action to the identified problems after all of these debate and consultation. But in some case, the public, impacted interest groups can get involved within the process of selections of alternative courses through participating consultation and debates. The consultation is a dialogue that gives both the public, private or voluntary sectors practical and timely opportunity to make influence on decisions being undertaken by government. Government takes responsibility to implement policy that meets the real interest of the public and is not contradict their own general position and strategy to dealing with various policy issues, and to decide whether or what public or groups affected by the policy will happen. The consultation helps form transparency, trusts and good working atmosphere within the group which are essential for successful policy implementation. After then, the support for a specific policy proposal or action plan can be developed and legitimized /authorized. The policy proposal or action plan contain full information about the intended policy, how the policy is implemented, what parties are needed to involve in the implementing process of the policy.
Implementation
Within this stage, policy action takes place to address the identified policy problems. It is the stage where the designed policy proposal put into effect and the adopted policy is executed and enforced by the administrative units of the government to make sure if the policy is being carried out as expected. The administrative units of government are provided funding by government and mobilize their human resources and other resources to implement the adopted policy well. (Theodoulou, Stella Z&Chris Kofinis, 2004) developed three main criteria which affects to policy implementation: clarity and specificity of policy goals; information intelligence consists of (constant information feedback and communication among the administrative agencies and population impacted by the policy action about how the policy implementation is progressing, timely pre-assessment); strategic planning that accurately states importance of assessing the potential of agencies to meet the specific implementation of policy tasks and goals.
Evaluation
Evaluation is the final stage of the policymaking process and mainly engaged with efforts by the government to assess whether the policy was successful or not. In other words, the government makes sure the assessment based on feedback and reactions of the people about the adopted policy and its effect in reality. However, the evaluation process is not only about assessing the extent of the policy was successful and put into the desired effect and policy decision was right but also it is about obtaining great significance of the findings and data about why the policy was successful or failed, which will determine future productive and effective program. After the evaluation process completed and a failure of the policy determined, the whole process, policy cycle need to start over again. Even policy is considered as effective and has been supported by the people, it then leads to other problems which are needed to solve and take back to the first stage once again. Accordingly, policymaking process is cyclical where whole process always starts again making the process cyclical no matter if the policy was accepted or not.
2. International level
Corruption is one of the main problems of the contemporary world that threatens sustainable development, economic, political and social development without any territorial jurisdiction, and wide variety of efforts and strong commitments to combat all forms of corruption have been made by governments, businesses, international donors and non-governmental organizations. They develop number of anti-corruption regulations, guidance and assistances aimed to states, businesses and organizations to minimize corruption in both public and private sector. Some of them are adopted, when some are used as a common model that is supposed to facilitate business community to build their own self-assessment tools. In this part, prominent, well-known anti-corruption agreements, framework and tools that can be used by businesses organizations for their own anti-corruption and collective action initiatives will be introduced. Moreover, there are many successful cases where business took leading role on the anti-corruption effort, and government and business together successfully reduced corruption.
2.1 International anti-corruption regulations for public and private sectors
Today, there are many anti-corruption measures including conventions, principles and guidelines to limit ability of both public and private sector to engage corruption with varied levels of success and issues to solve immediately in the international level. Written agreements between several states and countries that identify corruption as both cross-border and worldwide problem, and shares common political commitment to address the issue are called conventions. The conventions are binding legal instruments that require states and countries signed or ratified the agreement to support. While, voluntary anti-corruption principles are initiatives, self-assessment tools, and practices that help businesses, companies and organizations to develop their respective anti-corruption programs. Normally, the principles aim to promote business ethic and integrity as well as is served as common standards for the businesses and organizations in the combating corruption, bribery and other corruption in different forms. Below listed some well-known anti-corruption conventions, principles and standards that can be adopted and hold as frame by businesses and organizations to establish their own anti-corruption programs and collective action initiatives.
United Nations Convention against Corruption (UNCAC)
In 2004, United Nations Convention against Corruption (UNCAC), first global legally binding anti-corruption instrument, agreed and passed by the members of the United Nations (UN) in order to develop and strengthen international anti-corruption measures to prevent corruption, promote international cooperation and technical assistance in the fight against corruption together such as in asset recovery, and promote integrity and accountability in the public property management. The UNCAC has 71 articles divided into 8 chapters, which requires each contracting state to develop and implement anti-corruption measures that promote participation of society and transparency and accountability in their countries. The UNCAC considers a broad range of illegal acts related to corruption, which include national and foreign bribery, trading influence, embezzlement, the money laundering, as well as the framework for criminalizing bribery in the private sectors and support for the measures to build business integrity. In 2005, EU passed particular convention on the fight against corruption for public officials of the European Communities or member states of European Union, purpose of which is to ensure the free movement of goods, capital and services which includes public procurement legislation intended to ensure transparency and the equal access of all candidates for the public contracts and services markets according to UN Convention Against Corruption. United Nations Convention against Corruption. Available at: https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf
United Nations Global Compact 10th principle
UN Global Compact 10th principle states that “Businesses should work against corruption in all its forms, including extortion and bribery.” This principle fighting against corruption passed in 2004 and UN Global Compact participants are committed not only to keep away from bribe, extortion and other forms of corruption, and to voluntarily establish anti-corruption policies and programs within their organizations, supply chains and other interrelations. Companies are required to work in collective manner and work with governments, United Nations, and civil society to make more transparent international economy. It proposes that participants of the UN Global Compact take into account three main elements while combating corruption and implement the 10th principle: introducing anti-corruption policies and programs in the organizations and interrelations in business and sharing best practice and case stories with others working against corruption; joining force with companies in the same industry and with other stakeholders to increase anti-corruption and make better business environment with fair and accountable competition; calling/ demanding government to action to address corruption and to improve governance from representative of the business community to make sure sustainable and inclusive global economy. United Nations Global Compact 10th principle. Available at: https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-10
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transaction was signed in 1997 and came into force on February, 1999 to reduce corruption in developing and developed countries through promoting sanctions against bribery in the international business transactions undertaken by companies in member countries of the convention. The main goal of the Convention is to make better business environment, and stresses that propriety, integrity, and transparency in both public and private sectors are key elements to fight against corruption. The Convention is intended for controlling payments from multi-national corporations to the public officials in developing and developed countries. Therefore, the Convention itself set up open, peer-driven monitoring mechanism to make sure the member countries implementing the convention correctly. Currently, 41 countries, including all 30 member countries of OECD and some of non-OECD members, have ratified and accepted the Convention. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Available at: http://www.oecd.org/corruption/oecdantibriberyconvention.htm
OECD Guidelines for Multinational Enterprises
The OECD Guidelines for Multinational Enterprises are recommendations given by governments aimed to multinational enterprises having operation in and out from the adhering countries, including the 34 OECD member countries and 12 non-OECD countries. It provides voluntary-based principles and standards intended to encourage responsible business conduct compatible with applicable law concerning all areas like employment, human rights, taxation etc. The Guidelines were firstly adopted in 1976 and recently reviewed in 2011 by the collective participation of business, NGOS, international organizations, and adhering countries after five times moderations to make ensure that they take a leading tool for the responsible business conduct in the changing global economy. Despite of many other business codes of conduct, the Guidelines are considered as an only internationally endorsed and comprehensive code with non-binding nature that governments are committed to encourage, they are part of OECD Declaration and Decisions on International Investment and Multinational Enterprise. The Guidelines intends to make sure that the operations of the multi-national enterprises work consistent with government policies, to build shared values of governments of the countries promoting fair operation of multinational enterprises in foreign direct investment, to increase mutual confidence among enterprises and the societies where they are making operation, to facilitate strengthening the foreign investment environment and to increase the contribution of the multi-national corporations for positive economic, environmental and social progress. OECD Guidelines for Multinational Enterprises. Available at: https://mneguidelines.oecd.org/about/
2.2 Anti-corruption measures initiated by private sector
There are variety of principles, guidelines, manuals and practices initiated by private sectors for companies and enterprises to follow, and to provide them step-by-step guidance and practical support on how to develop their own anti-corruption frameworks, programs and tools, and how it can be prevented from corruption. These anti-corruption guidelines and manuals are commonly presented in the forms to easily access and comply. In this subchapter, some publicly endorsed and comprehensive anti-corruption measures initiated by private sector to help companies and enterprises to fight against corruption will be introduced.
The Partnering Against Corruption-Principles for Countering Bribery
The Partnering Against Corruption-Principles for Countering Bribery were rooted on general industry business principle imitative in 2002 by Transparency International and several private sectors and NGOs, and developed in 2004 by member companies operating in multi-industries and multinationals working in the World Economic Forum, Transparency International and Basel Institute on Governance. The PACI Principles are multi-industry principles and practices aimed to provide enterprises a framework for a better business practices and sound risk management strategy to combat corruption. In other words, the PACI Principles are intended to provide companies and enterprises at different sizes practical guide instead of specific prescription on the developing their anti-corruption programs in their companies. They help companies and enterprises to reduce or remove bribery, to show their commitment to countering bribery, and make contribution for good business standards with integrity, transparency and accountability. According to the PACI Principles, signatory companies are committed to do following two main actions: to adopt zero-tolerance policy from bribery, and to develop effective program on implementation of the policy within companies. Partnering Against Corruption- Principles for Countering Bribery. Available at:
http://russland.ahk.de/fileadmin/ahk_russland/Komitees_und_AGs/Initiative_Compliance/PACI_Principles_ENG.pdf
ICC Rules on Combating corruption
The ICC Rules on Combating Corruption were first introduced by International Chamber of Commerce in 1977, then recently revised in 2011. The ICC Rules are served as a method of self-regulation by international business and establish what is regarded as a good commercial practice in fighting corruption.
According to the ICC Rules, it is stated that enterprises voluntarily promote higher business standards in their whole transactions including transactions within the enterprises or between public sectors, other enterprises too. The Rules help enterprises and companies to comply their legal responsibility as well as a variety of anti-corruption initiatives at the international level. They also propose a basis for avoiding extortion or solicitation for bribes. As these Rules stated, all enterprises are advised to work consistent with the applicable laws and regulations the states in which they were founded or where they run operation, to cooperate with each other and with other related initiatives in international, regional and sectorial levels to develop good practices stated in the Rules, as well as are advised to work with national and foreign law enforcement authorities on the investigation of the corruption. ICC Rules on Combating Corruption. Available at: http://www.iccwbo.org/advocacy-codes-and-rules/areas-of-work/corporate-responsibility-and-anti-corruption/ICC-Rules-on-Combatting-Corruption/
Reform Toolkit - Combating Corruption: A Private Sector Approach
The Reform Toolkit on Combating Corruption was developed by the Center for International Private Enterprise (CIPE) and the National Endowment for Democracy (NED) in 2008. The Reform Toolkit gives clear explanation about basic concepts of corruption, costs of corruption, causes of corruption, how to fight corruption at the different stages, as well as it presents several case studies of successful anti-corruption programs. It proposes benefit of collective action approach and suggests successful strategy to combat corruption in explaining in two sides of contribution: important contribution of both public and private sectors. According to this Toolkit, elimination of opportunities for corruption engaged with tough enforcement can be appropriate to restrict public sector corruption, including open procurement codes with reliable third party monitoring, simply reconcile overlapping and duplicative laws and regulations, reducing tax burden, and setting public officials' wage which is competitive with private sector salaries. On the other side, contribution of private sector on the combating corruption is important, and private sector can play important role on making legal and regulatory reforms through promoting transparency, corporate governance, accessible information and voluntary standards in the fight against corruption in public and private sector.
The Extractive Industries Transparency Initiative Standard
The EITI Standard is global standard intended to improve transparency and accountability in governments and extractive producers/companies in countries with rich natural resources, which was developed in 2002. It believes that “corruption is established when massive revenues from extractive industries are not managed on behalf of the common good of a country's citizens”. According to the EITI Standard, effectives of transparency can be measured the way in which companies publish what they paid and government published what they received in an EITI Report that enables public to control how much their government is gaining from their country's natural resources and how they are managing it. In other world, EITI Standard helps government to combat against corruption and improve tax collection process and enforce stability in mining sector, companies to have stable investment climate, and citizens to receive reliable information about extractive industries.
2.3 Good practices for collective action against corruption
As proposed, corruption is a collective action problem and a successful anti-corruption programs in long run need all stakeholders build up alliance and work jointly against corruption, particularly here businesses take important role in institutional reform through providing practical information to the government that meets real needs of the businesses, building coalition and initiating anti-corruption programs, participating in policy formulation and ensuring policies implementation in their operation in the organization, industry, and between public bodies or between other enterprises. There are several successful anti-corruption initiatives in which private sector play leading or supporting role in promoting and endorsing collaboration of public and private sector and civil society. This subchapter will introduce briefly some well-known, international good practices for collective action of public and private sector in the fight against corruption and brought positive results.
Anti-corruption reform in Colombia
In the Colombia, money-laundering, drug trafficking and terrorism are considered often as the most threatening problems to the county's social and economic development. Colombia had long-time conflict of interests within the country due to weak legitimacy where land and capital concentrated in few families and decision makers funded by these landlords and other influential groups. It resulted in the great increase of the drug cartels in 20 years (1970s-ending of the 1990s) and worsened country's security and developed illegal forces, particularly there has been absence of control in the remoted areas. (U4 Anti-Corruption Resource Center, 2013)
In the 1990s', Colombian Confederation of Chambers of Commerce (Confecбmaras) and the Corona Foundation conducted survey among more than 1,500 people in 15 cities in Colombia and the survey show how companies see the local procurement processes. In the result of the survey, they realized that more than 37 percent of respondents saw corruption is widespread and had great willingness to counter corruption despite its cost of committing higher ethical standard against corruption. Not long after, Confecбmaras initiated the project aimed to combating corruption in the public sector and change the culture of business in Colombia and developed “Ethical Code of Conduct” and followed up with “Guidelines for Ethical Management of SMEs” to encourage business ethics and create a transparent business culture. As a result, Confecбmaras made Integrity Pacts with local government of Manizales for the large-scaled public procurement involving broad range of stakeholders like representative of the chamber of commerce and public and private sectors, but the biggest success of the project was that Colombia's new Procurement Law No.80 adopted with private sector's recommendations that enhanced competitiveness and transparency in September of 2002.
Tax reform in Armenia
After the fall of the Soviet Union resulted in failure of Armenian fiscal system in which there was a lot of unclear and duplicative terms of taxation, and public officials abused their public power while private sectors violated this ambiguous laws. This abuse of the taxation law weakened Armenian business and investment environment and democratic process. The Association for Foreign Investment and Cooperation (AFIC) conducted survey among 205 entrepreneurs and business association, and concluded that ambiguous and frequently changing laws, and bureaucracy are major factors for loopholes within taxation system.
In 2006, the Association for Foreign Investment and Cooperation (AFIC) worked with the Center for International Private Enterprise (CIPE) to combating corruption through increasing advocacy and public-private cooperation on the tax reform. The coalition promoted democratic dialogue between legislators, tax officials, business associations, and NGOs to reform tax laws that had increased corruption. In the first year of the cooperation, five public and private roundtables with 106 participants held. In August of 2008, Armenian National Assembly made amendment to the Law on Simplified Tax with assistance of AFIC that restricted large businesses to abuse tax law, and promoted small and medium enterprises through tax breaks. Also, Armenian National Assembly enabled businesses to mail in their tax information, which aimed to diminish face to face interaction between businesses and tax authorities. In the result, tax related business cost was successfully diminished by 12 to 15 percent.
Project SHINE- Integrity Initiative in Philippines
In Philippines, corruption has penetrated in whole society and placing 139th out of 180 countries based on CPI of Transparency International in 2009. This year, Makati Business Club, business association make up senior level executives from leading corporations in Philippines, collaborating with the European chamber of commerce started Project SHINE in 2010 after getting fund from Siemens corporation. This four-years project intends to develop a certification and accreditation system like ISO Standard among businesses, that requires companies to be audited, accredited, and certified to comply good practices for ethical business practices and integrity standards.
To provide the development of this system, following activities have been conducted: Setting and adopting unified code of conduct for business where basic ethical principles concerning business practices in related areas are stated; creating an integrity pledge signed by CEOs or senior level executives; creating integrity assessment tool to ensure their policies are compatible with stated code of conduct; conducting public awareness events like training, seminars, festivals etc. Today, more than 500 companies already joined in the integrity initiative, promoting the ethical business and integrity standards, as well as sharing their good practices of policies and practices during an integrity forum. Moreover, more than 30 professional and industry associations have signed the Integrity Consortium Cooperation.
Anti-corruption reform in Bulgaria
Corruption became widespread and reached every sphere of life after Bulgarian transition to democracy and a market economy in the 1990s due to privatization of state resources. According to a survey conducted by the Center for the Study of Democracy (CSD), majority of Bulgarians (57 percent) believed that politicians misused public power for themselves and their favorite people, and 86 percent of respondents answered that bribing doctor to get medical service was common. Bulgarian public policy institute (CSD) and a number of other Bulgarian NGOs with the support of Center for International Private Enterprise (CIPE) launched Coalition 2000 in April of 1998, which aimed to combat corruption through building a cooperative platform of public and private institutions. Mission of the coalition is to increase the public awareness, adoption and practical implementation of democratic values which includes transparency, trust, and integrity. The Anti-Corruption Action Plan for Bulgaria was one of the first initiatives of the Coalition 2000, and the plan was promoted by broad ranging of stakeholders from the beginning, including government ministers, foreign ambassadors, businesses, intergovernmental and international non-governmental organizations. Since then, each year the Action Plan is assessed and revised to include any changes in the strategy or policies of the coalition. It focuses on reforming public administration, the judicial system, the privatization process, and regulation of the private enterprises. The Coalition 2000 made a great contribution that put anti-corruption into policy agenda, and improved Bulgarian ranking of the Corruption Perception Index (CPI) from 66th to 45th out of 102 countries.
3. Analysis of potential of business organizations to impact on anti-corruption policy
Mongolia and Kazakhstan are examples of the countries suffering from corruption and actively seeking effective ways control and eliminate corruption. According to the Corruption Perception Index (CPI) of Transparency International 2015, Mongolia and Kazakhstan are placed respectively 72nd and 123rd out of 168 countries, which are considered as highly corrupted states. The Transparency International's graph below indicates perceived level of corruption in countries, yellow indicates clean while dark red indicates highly corrupted states. Kazakhstan and Mongolia have many similarities such as geographical, historical, and cultural background. Both are resource-rich countries in Central Asia but both are landlocked and their population density rates are comparably lower than other countries due to their nomadic tradition. Both countries have faced dozens of challenges when shifted from socialism into democracy in 1990s and corruption widespread in whole society.
This chapter consists of two subchapters. First chapter will provide brief information about current situation of corruption and anti-corruption efforts, and business organizations and their current relations with government in addressing corruption in each country. Following chapter will make comparative analysis to define potential of business associations and chambers of commerce for the effective collective action of business and government in the fight against corruption based on the CIPE (Center for International Private Enterprise) internal and external assessment.
3.1 Mongolian Study
3.1.1 Current situation of corruption and anti-corruption measures
Mongolia is a landlocked country in east central Asia and bordered by Russia and China. Mongolia has a nomadic culture and world's 19th largest country (1,564,115 km2) with approximately 3 million people. Mongolia is a democratic country with multi-party system in which president is head of state and of armed force, and executive power is exercised by the government, legislative power is carried out by parliament, and judiciary power is executed by Supreme Court. The prime minister is head of government and exercise most executive power and is elected by parties with most seats in the parliament and approved president. In 1990s, Mongolian political regime and economic system shifted to parliamentary multi-party system and market economy. Agriculture and livestock, and especially extractive industry are primary sectors of economy, representing 63 percent of total domestic industrial product, 17 percent of national gross domestic product and 94 percent of total export. In 2013, GDP growth reached at 17.3 percent and Mongolian annual GDP growth were expected about 18-20 percent. However, corruption, poor governance and unstable government regulations threatened social and economic development of the country, which resulted 28 percent of GDP, 48 percent decrease in foreign direct investment as well as widespread poverty and conflicts within the country. Currently, Mongolian GDP is $13.43 billion, ranked 137th of the world countries and poverty rate is 29.8 percent. Mongolia is placed 83rd out of 165 countries in political instability index 72nd of 168 countries in Transparency International's Corruption Perception Index, considered highly corrupted.
Rating of Mongolia by Transparency International's Corruption Perception Index:
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
|||||||
|
Ranking |
Score* |
Ranking |
Score* |
Ranking |
Score* |
Ranking |
Score* |
Ranking |
Score* |
Ranking |
Score * |
|
|
116 |
2.7 |
120 |
2.7 |
94 |
36 |
83 |
38 |
80 |
39 |
72 |
39 |
*0 = highly corrupt, *10 = very clean
**0 = highly corrupt, *100 = very clean
Although this table above indicates some improvement of rating in Mongolia, corruption still remains one of the main obstacles for my country's development. According to Transparency International's Bribe Payers Index, construction, public works and extractive industries ranked as the most vulnerable sectors to corruption and extractive industry is main bone for country's economy. Survey on Perceptions and Knowledge of Corruption in Mongolia conducted by The Asian Foundation, which asked 1360 households about their perception on corruption and impacts of government anti-corruption efforts in 2015, revealed mass pessimism and majority of respondent agree that one of the most main reason for corruption is the lack of transparency at government and more effective anti-corruption measures are strongly needed. (The Asia Foundation, 2015)
Anti-corruption efforts and measures
Mongolia has introduced anti-corruption initiatives in its public policy and made “Anticorruption Law” in 1996 in fighting corruption. Mongolian Parliament approved National Anti-Corruption Program in 2002 and developed National Anti-Corruption Council to implement and to make sure proper implementation of the program. Then, Mongolia signed and became part to United Nations Convention against Corruption (UNCAC) in on 27 October 2006.
After the implementation UNCAC in 2006, government of Mongolia has made number of changes in legal environment and concerned several anticorruption issues such as the Law on the Regulation of Public and Private Interests and Prevention of Conflict of Interest in Public Service, entered into force in 2012 and following amendments have been made for the legal acts on “The Anti-Corruption Law”, “The Criminal Code and The Criminal Procedure Code”, “The Law on Civil Service”, and on “Information Transparency and Information Access Right Act”. The Government of Mongolia launched developed a Transparency of Budget and Finance and established an online portal. In December, 2006 Mongolia joined the Extractive Industries Transparency Initiative (EITI) to promote open taxation and other payment system from extractive industries to national and local budgets. Currently, it made of national council headed by Prime minister of Mongolia, responsible for coordinating successful EITI implementation, and working group comprising 31 members from government, companies and civil society organizations. In 2006, Mongolia published its initial EITI report and got candidate country status in 2007, and then was admitted as a status of “compliant country in 2010.
In 2007, Independent Authority against Corruption of Mongolia (IAAC) was established by Parliament to conduct specialized investigation on corruption and relevant offences and developed its anti-corruption bodies. IAAC, an independent anti-corruption state body, is charged for following main activities:
· to organize anti-corruption public awareness and education activities;
· to implement corruption prevention activities;
· to carry out inquiry and investigation on corruption and relevant offences;
· to ensure and inspect the assets and income declaration of the public officials;
· to do research on corruption and its extent, types and causes;
IAAC, for instance, implemented number of activities regarding anti-corruption public awareness such as the Prevention and Public Awareness Department (PPAD) conducted reviews regarding student stipend of 20 universities and gave relevant advice to the Ministry of Education and Science of Mongolia and the Ministry made some changes on ongoing money transfer procedures by transferring student as well the Working Group was established under the Office of President of Mongolia, worked on the development of National Strategy to Combat Corruption and IAAC acted as the Secretary of the Working Group. There are several other anti-corruption authorities and agencies in Mongolia including The Supreme Audit Institution, Central Bank of Mongolia and The State General Prosecutor's Office and so on. The Supreme Audit Institution (SAI) was founded after the adoption of the Law on State Auditing by the Parliament in 1995. It carries out following activities:
· to perform financial auditing in the state organizations, state-funded projects, and business entities upon their request;
· to perform annual audits of financial statements of government; to make auditing assessment if necessary; to develop proposal on draft state budget to the State Great Hural;
· to approve standards, guidelines, and profession methodological guidance on issues with auditing;
· to inform to relating organizations about violations revealed during the course of audit;
In Mongolia, President of Mongolia, Government and other public officials at high-ranking regularly express message that fighting corruption is a priority issue for the country; one example is a statement of the President of Mongolia at the general debate of the 68th session of the UN General Assembly, pointing out the importance of transparency in fighting against corruption and the role of whole society. Anti-corruption issues are also stated in the Policy and Action program of the President of Mongolia, key goal and objective settings of political parties in Mongolia, as well as in the “Government Platform for 2012-2016” and more. In 2011, Mongolia partnering with the World Economic Forum established Partnering against Corruption Initiative (PACI) and followed up founded Mongolian Chapter of Transparency International. In 2013, the President of Mongolia signed the decree on Transparent Account System, intended to provide transparency in budget policy that would be followed by state organizations. Government Platform for 2012-2016 National Action Plan of Government of Mongolia on Open Government Partnership, available at: http://www.opengovpartnership.org/sites/default/files/OGP_CAP_Launch.pdf set up to join the Open Government Partnership, implementing and committing the principles of being transparent, responsible, accountable in the public and private sector, and promoting citizen-targeted strategy.
3.1.2 BOs and their potential for effective collective action against corruption
However, the emergence of the civil society development has started in since 1990s' when political regime changed into democratic form in Mongolia. According to CIVICUS Report that studied various types of civil societies in Mongolia including business and professional associations, employers' group, trade unions, charity organizations indicated weak development of civil society in Mongolia. (Center for Citizens' Alliance, 2004) According to Law on Non-Governmental organization (NGOs) of Mongolia in 1997 NGOs in Mongolia divided into two types: a public benefit NGO and a member benefit NGO. First type of NGO is an organization for public benefit or charitable activities like NGOs for art and culture development, environment protection, education, human rights protection and so on. On the other hand, a member benefit NGO is an organization that primarily work to protect or serve legitimate interest of its members, in which business associations and chambers of commerce can be included. (Open Society Forum, 2005) There is no clear research estimated the number of business organizations in Mongolia. The Ministry of Justice and Home Affairs (MOJHA) of Mongolia estimated the number of business associations and chamber of commerce is approximately 40 or 45. According to Tax Office of Mongolia, at least than 20 percent of these NGOs registered are active. Therefore, this paper will study several leading business associations and chambers of commerce based on CIPE's internal and external considerations to identify their potential for effective collective action against corruption. The Internal consideration of CIPE includes establishment of an organization, autonomous from any political interests, mission-driven promoting business ethic standard, having proper accounting and operation system, policy-oriented, clear mechanisms for accountability and responsibility, range of membership, funding, and adequate intellectual, professional, technical expertise. External considerations include standing in the community and credibility among other business associations. In this paper, following leading business associations and chamber of commerce will be assessed, which include Mongolian National Chamber of Commerce and Industry, CEO Club, Mongolian Coal Association, and Mongolian Banker Association. In this paper, some of the considerations can be excluded due to lack of evidence.
The Mongolian National Chamber of Commerce and Industry (MNCCI)
History of the organization and main goals
The Mongolian National Chamber of Commerce and Industry (MNCII) is a non-governmental membership based public organization, which protects the private companies, small-medium enterprises and entrepreneur's rights and interest, in Mongolia. MNCCI was founded on July 2, 1960. Since 1990, after transition to democratic society with a market economy from planned economy, the MNCCI has established itself as Mongolia's leading non-governmental institution. The organization aims to develop and promote international trade and investment in business community in Mongolia. Today, MNCCI is operating with 19 subsidiary branches all around Mongolia and cooperation with more than 40 international chambers of commerce and trade organizations. The main mission of the MNCCI is to become a leading and active contributor to Mongolian private sector development and promote and support activities that makes better business and investment environment in Mongolia
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