Accountability

Background

Tracking the trillions: Emergency funds, corruption and making the Covid-19 recovery work for all

29 September 2020 | Minutes

The IMF and the WBG are playing a leading role in supporting governments’ response to the economic impacts of COVID-19. Both institutions have recognised the risk that unaccountable government decision-making can divert resources from intended beneficiaries and have included anti-corruption measures as part of their financial response. However, questions remain: To what extent have priority vulnerabilities in each country context been addressed? What types of measures and monitoring are there to ensure anti-corruption safeguards are implemented and effective? This session assessed the overall picture of the IMF and WBG’s COVID-19 response to date from an anti-corruption perspective and included forward-looking recommendations.

Panellists:

Moderator: Simon Taylor, Director and Co-Founder, Global Witness

Max Heywood, Head of Policy and Advocacy, Transparency International

Sarah Saadoun, Business and Human Rights Researcher, Human Rights Watch

Rhoda Weeks Brown, General Counsel and Director of the IMF’s Legal Department, IMF

Ed Olowo-Okere, Global Director, Governance Global Practice, World Bank

Sarah Saadoun (HRW):

Equitable economic systems require transparency, accountability and other mechanisms that cannot be present in a corrupt system. The negative consequences of corruption go beyond the withdrawal of resources from essential services such as education and health. It corrupts legislative and judicial systems.

However, the provision of funds to governments that do not have adequate systems can also exacerbate inequalities and have deep societal impacts.

Ed Olowo-Okere (WB):

Lack of trust in government makes responses to crisis such as Covid-19 less effective. Corruption takes away resources from essential services.

World Bank interventions are linked to Bank activities and support through policy advise to non-Bank projects.

  • Bank is using its experiences in previous crises to inform current Covid-19 response. Bank is committed to provision of $160 billion over 15 months. Not diluting fiduciary or other requirements. Have been proactive in addressing challenges. Enhanced implementation support – organise bidding, identify providers. Preparing governance and anti-corruption measures, including participation of CSOs. Bank follows up quickly on allegations and has a VP concerned with the issue.
  • Support governments to identify and address corruption issues – including those outside Bank programmes. Policy notes on governance of Covid response identifies series of risks across different sectors (e.g. health procurement). Highlights need for transparency.

Simon Taylor (GW):

IMF $88 billion dispensed. Covid has highlighted the work that remains to be done.

Rhoda Weeks Brown (IMF):

Covid is a crisis like no other. Emergency financing are one-off disbursements without conditionality. The Fund has asked countries to do more with respect to emergency assistance. Focus on lives and livelihoods. Need to respond quickly but also to focus on governance issues.

“Spend what you need, but keep the receipts”. Governments have committed to use resources for health and income support. Countries outline commitments in letter of intent: e.g. creditable audit, commitment of the audit. Important role for CSOs.

Prices-related to procurement contracts – these contracts must be published with beneficiary owner disclosure. A number of countries have begun to publish contracts. Public and Financial Management – use of specific account, etc.

Safeguard assessments of central bank systems -these are normally used in emergencies. Providing addition assistance on governance issues to states.

One-off support, but long-standing relationships – e.g. through article IV consultations as was the case with report in US, where the report noted a need for a focus on existing systems.

Many countries are now also embarking on programmes – where new systems originating from 2018 governance programme are in force.

Simon Taylor (GW):

Interesting to consider how CSO support would be integrated into relationship with IMF and other institutions (E.g of Nigeria Abacha restitution of stolen asset experience).

Max Heywood (TI):

Recognised progress made in past few months, after initial concerns. IMF and Bank have been able to integrate governance concerns into programmes. 66% of Bank programmes include some governance component.

Population needs to be able to track funds – beyond information. More energy is required in ensuring enabling environment, need to create channels and avoid reprisals for CSO monitoring.

Need to focus on implementation of agreed systems. Need for dedicated funds for systems agreed – consider it an investment rather than cost. Investment in protection of funds provided.

It is no longer an assumption that funds are being lost to corruption – $1.1 billion confirmed lost in past few months – from publicly available resources.

Sarah Saadoun (HRW):

What would an adequate response from Bank and Fund look like?

Referenced recent blog by Transparency International, Human Rights Watch and Global Witness. Need to ensure the systems are ‘people focused’.  Echoed recognition of progress. There is a need to ensure governance actions regardless of visible popular pressure. Fund often mentions that there are limits of what it can do, as grass roots actions is imperative.

That said, it is essential that the Fund and others support the establishment of an enabling environment for CSOs to undertake the role considered so important by the Fund.

On WB side – is publication of contracts required by the Bank? Are the commitments made to the Fund public?

Need to go beyond reliance of data provided by governments.

Simon Taylor (GW):

The Fund has used its power to good effect as with the Extractive Industries Transparency Initiative, where the Fund has required Equatorial Guinea to join.

Rhoda Weeks Brown (IMF):

Was asked: Many states continue to squeeze CSO space. E.g. examples of alleged killings of activists in Honduras.

Answered: For many years no conversations between CSOs and the Fund – 2009 first time CSOs brought into Annual Meetings. Outreach to CSOs is now emphasised to all country teams. This is taking place in most countries – if not all, where the conditions are more difficult.

Fund has several programmes to support CSOs – in some instances ensure that CSOs are present in the discussion. However, the Fund continues to see things ‘through economic lens’. The identification of key issues is very country specific. Fund has a capacity-building programmes for local CSOs. Quite robust regional CSO workshops with IMF staff and in some instances with government officials.

Much of the engagement centres on getting input from CSOs that are then integrated into discussions with governments. In some cases, CSO engagement in deliberative processes has been a requirement of programmes.

Diagnostics on governance are key and dependent on CSO engagement.

Simon Taylor (GW): Noted new WB corruption report.

Asked WB representative, where does Bank see itself in 2030 vis-a-vis corruption?

Ed Olowo-Okere (WB):

While Bank and others have increasingly focused on governance, ‘adversaries’ continue to also innovate and adapt. This requires use of innovation through technology and behaviour sciences, for example.

CSOs remain elemental. As a Bank, WB is trying to mainstream transparency, accountability, etc.

The next frontier – refer to recent paper on Corruption initiative.

Financial centres in developed states continues to facilitate corrupt practices. Mentioned asset recovery of UN and World Bank. Consensus on beneficiary ownership transparency.  Progress in these areas would make corruption more difficult.

Link between political and business practices – use of transparency and better institutional efficiency. In 10 years, it is expected that the conversation will progress.

Technology poses both a challenge and opportunity. It can identify corrupt practices and also support citizen engagement. Also use technology to reduce human interaction – to fight opportunity for corruption.

Bank is working on large data analysis.

Enhancing Governance Effectiveness report – highlights positive experiences. Progress is not linear and is possible in difficult settings.

Simon Taylor (GW):

What actions are needed from the Fund and Bank after the pandemic? Measures are required now to ensure consistence across countries.

WB recent reports are fantastic – There is a need however for a high-level action plan. Need a revitalisation of the message.

Policies developed now for the pandemic should be integrated into all emergency programmes – governance support, potential conditionality.

Need for a civil society policy to ensure consistency across countries. If policy exists, make it more public or develop one with support of civil society.

From the audience via chat:

Are there protocols in place to assist communities to follow the use of funds in programmes?

Rhoda Weeks Brown (IMF):

Answer to Max Heywood: policy reform agenda is very country specific. Conditions are tailored to specific needs. Overall governance policy is due for review next year. While governance reform seems ad hoc, the issue is to a large extent included in many instances.

Dialogues with civil society are more difficult in certain places where compliance with a general policy would be more challenging.

Questions from audience:

WB has been good about disclosing Covid response funding. What about funds that have been reallocated or are part of pre-existing projects?

Ed Olowo-Okere (WB):

Project documents will be made public with the details of lending for different countries. A correction from the chat: “Just to clarify, the Bank has not provided updated project documents for pre-existing projects that have been redeployed to the COVID response, in most cases.”

This site has a list of projects. Partway down is the list that includes redeployments. It is organized by region and then country. If you click on a project name you should get more information.

Mentioned Global Partnership for Social Accountability (GPSA).

Sarah Saadoun (HRW):

Referenced Equatorial Guinea case – after joining the Extractives transparency initiative, government abolished the country’s only accountability body and one of the principal critics was forced to flee.

Noted the situation of Egypt where at least nine doctors are in jail for criticising the government and where doctors do not have the necessary PPE.

There a need to focus on the implementation of agreed frameworks – as is the case of the Extractive Industries Transparency Initiative.

Simon Taylor (GW):

How are impact assessments conducted?

Question of civil society engagement were widely discussed in chat.

Ed Olowo-Okere (WB):

World Bank is developing a anti-corruption action plan and governance guidance note.

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