What you'll learn on this podcast episode
Although anti-corruption efforts have stagnated worldwide, human rights and democracy are under assault. Independent nonprofit Transparency International recently published its annual Corruption Perception Index, one of the most widely used indicators of corruption globally. Its 2021 analysis shows that protecting human rights is crucial in the fight against corruption. So, how can organizations help? In this episode of the Principled Podcast, Yoab Bitran, Head of LRN’s Latin America business, talks about key findings from the 2021 report with Delia Ferreira, Chair of Transparency International. Listen in as the two discuss how business leaders around the world can step up to help combat corruption.
Principled Podcast shownotes
- [2:07] - Delia Ferreira explains the work of Transparency International and the corruption perception index (CPI).
- [6:14] - The factors influencing Russia’s score on the CPI and how it may be affected by the war.
- [9:43] - Which countries in Europe saw relevant changes in their CPI score this year, and steps they can take to improve anti-corruption efforts.
- [13:52] - The Latin American fight against corruption.
- [18:25] - How business leaders can help increase anti-corruption efforts around the world.
- [21:41] - How can ESG help fight corruption and give us hope for the future?
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Guest: Delia Ferreira Rubio
Delia Ferreira Rubio is the Chair of Transparency International (elected in October 2017 and re-elected in November 2020). Delia is a lawyer who graduated from Córdoba National University (Argentina) and a Ph.D. degree in Law from Madrid’s Complutense University (Spain). She is a member of the Vanguard Committee of the WEF Partnership Against Corruption Initiative (PACI), a member of the Board of the UN Global Compact, and co-chair of the Global Future Council on Anti-corruption of the World Economic Forum. She served as a member of the Steering Committee of OGP - Open Government Partnership (2018-2021).
She was the chief advisor for several representatives and senators at the Argentine National Congress from 1990 to 2005, advising the constitutional committee of both the House of Representatives and the Senate. She also served as an advisor at the National Accounting Office for two years. She has consulted on political finance, anti-corruption, and transparency-related issues with various international organizations (IFES, UNDP, OAS, IADB, IDEA, NEEDS, ERIS, CAPEL, DEMOCRACY INTERNATIONAL, COUNTERPART, UNWomen among others) and NGOs around the world. She was President of Poder Ciudadano in Argentina (2008-2010). She has authored numerous publications on transparency and anti-corruption, political corruption, public and parliamentary ethics, and comparative politics, among other subjects.
Host: Yoab Bitran
Yoab Bitran leads LRN activities in Latin America. Before joining LRN, Yoab practiced Law both in the private and public sector, in Chile as well as in the US. Yoab studied Law and holds a Masters in American Law from Boston University and a Masters in Corporate Criminal Law. Yoab is the Academic Director of Thomson Reuters LatAm Compliance Diploma and co-author of the book “Compliance: Por Qué y Para Qué. Claves para su Gestión”. Yoab is a frequent speaker at international conferences and events on compliance and anti-corruption.
Principled Podcast transcription
Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Yoab Bitran: Anti-corruption efforts have stagnated worldwide. Human rights and democracy are under the result. Russian president, Vladimir Putin invades Ukraine on baseless claims. Corruption in the Americas continues to undermine civil liberties, despite increased legislation. And even with multiple regional commitments, 131 countries have made no significant progress against corruption in the last decade. None of this is a coincidence to Transparency International. The independent nonprofit recently published its annual corruption perception index, one of the most widely used indicators of corruption globally. It's 2021 analysis shows that protecting human rights is crucial in the fight against corruption, but how can organizations help?
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Yoab Bitran head of Latin America business. Today. I'm joined by Delia Ferreira chair of Transparency International. We're going to be talking about key findings from the 2021 corruption perception index and how business leaders around the world can step up to help combat corruption. Delia is a real expert in this space, having served as the former president of Transparency internationals chapter in Argentina, she has also served as the chief advisor for several representatives and senators at the Argentine National Congress and has advised the constitutional committee of both the house of representatives and the Senate, as well as the national accounting office. Delia many thanks for coming on the Principled Podcast.
Delia Ferreira: Thank you [inaudible 00:02:03] a pleasure to meet you.
Yoab Bitran: For our listeners who aren't as familiar with Transparency International. Can you please tell me a little bit more about your work as an organization and what the corruption perception index is?
Delia Ferreira: Oh yes, of course. Transparency International is almost 30 years old now. We are the leading organization international NGO in the fight against corruption. We have national chapters in more than 100 countries around the world, and we do research and advocacy, and education in many aspects related to the complex issue of transparency and corruption, grand corruption, or petty corruption. One of our most known tools is the corruption perception index that you mentioned in the introduction. But we have other tools also that instead of looking at the perception of experts or academics, looks at the experience of people vis-a-vis corruption in their normal life. And that's our barometer of corruption and we have also one tool, which is the exporting corruption, which analyzes performance of countries. Vis-a-vis the OACD anti rivalry convention of foreign officials.
Yoab Bitran: In this year's corruption perception index. The global average corruption score went unchanged for the 10th year in a row, just 43 out of a possible 100 point. Despite multiple commitments, 131 countries have made no significant progress against corruption in the last decade. Did these numbers surprise you?
Delia Ferreira: Well, in fact, the numbers did not surprise me, they worry me, which is another thing. And just for clarification, for people who are not aware of how the CPI is made of. The CPI, the corruption perception index, which is an annual index, we publish, analyzes the perception of corruption in the public sector of countries, and is the result of 13 sources of research and information from investigative institutes and experts and academic business sector is not a survey on the population of the countries.
Mm. Corruption is becoming more sophisticated each time, more complex, and this requires new approaches. And also the other fact that contribute to this situation is the increase of authoritarian regimes and the populous trends in many countries, where we see leaders competing in elections with the narrative of anti-corruption, but not taking into account the agenda for anti-corruption once they are in office. So we have many factors that contribute to this extermination in the index, concentration of power, lack of accountability, impunity in relation to corrupt acts. And we have to take into account also that we have legislation and commitments and declarations against corruption, but rules which are needed are not enough in terms of fighting corruption effectively, you have to implement those rules, you have to guarantee enforcement of those rules in order to really change the Panorama.
Yoab Bitran: And we will definitely come back to this. It's very aligned with LRN's point of view, the fact that, rules are not enough and you need effectiveness and values to make real progress. But I want to take a minute to talk about Russia, which has been in the news for weeks now. Your report gave the country a score of 29 prior to Putin's invasion of Ukraine. I've also seen you very active in social media about the matter, so I want to highlight that before the invasion again, Transparency International categorize the country as a country to watch because of the corruption taking place. What do you think are some of the major factors that drove the score and how would the current war change the scoring? If at all.
Delia Ferreira: Of course, the problem was very clear in terms of corruption in Russia. It is reflected in the index in several years, and we put that light on the country because of the kleptocracy system that we can find in Russia in terms of capture of state, by corrupt actors that are really exploding the state and the political power in order to enrich themselves and creating an oligarchic elite that is taking money out of the country. Of course, as we have seen, and now the Western countries are reacting in terms of sanctions and even more permanent regulation.
So ill-gotten funds go to tax havens, offshore centers, Shell companies, and complicated and complex corporate structures that allowed these corrupt actors to hide the ill-gotten money and also to enjoy the proceeds of corruption. And for me, that part of enjoying the proceeds without any problem is a great problem because it creates the wrong incentives for a cultural change.
So we have seen real estate, art industry, luxury industry in general, offering these kleptocrats to hide the money and enjoy the proceeds of corrupt tax. And that's the problem that we are seeing very clearly. This is connected with other problems that is in the newspapers in these days, which is the role of gatekeepers in Western countries. Let's talk about bank, lawyers, accountants, real estate [inaudible 00:08:37], the art dealers that should be asking about the origin of money and not performing very efficiently in order to act as gatekeepers of rule of law and transparency and instead of that, becoming enablers of corruption, facilitating corruption. One of the things we were asking for many, many years is the need to have a beneficial ownership transparency. Now we are seeing many countries putting in place these public registers in order to know who is behind the mask, who is behind the Shell company. For instance, in terms of the sanctions that Western countries are trying to apply in order to apply the sanction, you need to identify who the real owner is, not Mickey Mouse, Inc, but the real owner.
Yoab Bitran: Absolutely. Now Russia, isn't the only area within the wider European region that is suffering under corruption. Can you please share which countries in Europe saw relevant changes in their CPI score this year, and what steps do you think they can take to improve their anti-corruption efforts?
Delia Ferreira: This year, we have a decade analysis, although the index is more than 20 years old, but in 2012, we refresh the methodology to really guarantee the comparability year by year, country by country. And so we have now the decade decliners and the decade improvers. And in Europe, the decliners is Western Europe and the EU, the decliners are for instance, Hungary and Poland. In these two cases, it is clear that the authoritarian trend and the concentration of power without respecting checks and balances and the democratic rule has been one of the points that has all the issues that has justified this decline. But we have improvers also in decades terms, let's say like for instance, Austria or Estonia, [inaudible 00:11:02], Italy and Greece in the decade, they are improvers.
Another thing is that we can consider or compare countries and its performance vis-a-vis according to last year. And there for instance, in Europe we have seven countries performing the same, 13 countries that are improvers and 11 that are decliners, but none of this is a statistically significant. So it's one point up, one point down. And when we take the decade, we are considering a statistically significant improves or declines. What to do, of course, it's always the same. You have to guarantee access to information, you have to guarantee the independence of the judiciary, you have to have the proper laws and budgets to guarantee enforcement of the law and the implementation of sanctions against those involved in corruption. Because in fact, corruption is not a victimless crime. The victims of corruption are the citizens, all of us, ordinary citizens. And we suffer the consequences of corruption. But what we need is that those involved in corruption, the actors of corruption acts are the ones suffering the consequences in terms of the legal reaction of state against these criminal activities.
Other thing that we are asking for, and it is something that is concerning us in the last five or six years is to protect and defend civic space and civic liberties. Freedom of speech, freedom of the press, freedom in the use of social media and of course not creating regulations that try to stop civil society organizations from doing what we are doing in terms of holding power to account. This attack on civic space is very clear in many countries around the world. And we have to alert everyone that the defense of freedom of the press and freedom of speech and association and mobilization is defending our own freedoms as citizens. So we need everybody to be alert and to collaborate with civil society organizations and free press in order to guarantee democratic rule.
Yoab Bitran: Right. Now, as head of [inaudible 00:13:55] Latin American business, I need to ask you about our region. I've seen a lot of people talk about an anti-corruption spring years ago when there was maybe a wave of new regulation. Some countries joined the OACD, then you have Operation Car Wash, and we all know where that ended. So despite those regulatory efforts and commitments, it seems like the Americas are paralyzed in the fight against corruption, especially in Latin America. Are you hopeful? Can you tell us a little bit about your view of the region and anti-corruption initiatives?
Delia Ferreira: Of course, I am hopeful and optimistic, if not, I would not be doing this kind of work for years. I think we can change and we can better the situation. I would say that in the Americas as a whole, the problem is not only related to Latin America in particular, you know that Canada and the United States of America are decliners in the decade, both of them, together with Venezuela for instance. So that's an alert that we have to take into account. Of course, one thing is to be a decliner at the top of the CPI and another is to be a decliner, if you are at the bottom. So the situation is different, but we have to take that into consideration. One problem is nice. You talk about the spring of anti-corruption in Latin American particular. It has to do with the OACD in corporation of some countries, but also with the reaction, vis-a-vis case of grant corruption that affect 11 countries in the region.
The other [inaudible 00:15:39] case Lava Jato which started in Brazil, but affected, as I said, 11 countries in Latin America and two African countries also, with the same scheme of corruption and criminal money laundering, et cetera, and illegal political financing of campaigns. And the first reaction in Brazil, and then in some countries in the Americas, was to have cases in courts and the authorities really enforcing legislation against the company and against high level politicians. We were talking about presidents in many countries. That was the source of hope and the idea that, okay, we are at a turning point in Latin America.
Unfortunately, as you already mentioned, we are coming back and some of the decisions and the sanctions applied, has been overruled and removed. By now, in some countries, the procedures are really paralyzed and we are seeing a decline in this energy against these corrupt actors. And this has to do with something that I always repeat, which is, I think clear to see. Some people say that anti-corruption or the fight against corruption is like running a marathon, is a long term endeavor, but I think it is a long [inaudible 00:17:14], but not really a marathon, because in a marathon, everybody goes in the same direction and nobody is throwing stones against the runners.
In fact, when we fight against corruption, we are in a chess board, with some pieces trying to fight against corruption and the [inaudible 00:17:36] and the corrupt actors trying to stop us and making us go a step back. And this is an strategic game let's say. So we have to be aware that we can make progress and that we will be subject to reaction from those who are benefiting from corruption. And we have to be ready to top them and to be firm and keep on working in order to go one step further, but we are not alone in the chess board. There are other actors also that are trying to stop us.
Yoab Bitran: That's a great analogy. I loved it. And you talked about bad and corrupt actors. So this brings me to the larger questions about their role of business in fighting corruption and especially the good actors, the agents of change. Based on your professional experience, how do you envision business leaders, helping sustain and even increase anti-corruption efforts around the world?
Delia Ferreira: I think that, and I have the opportunity to meet many of these business leaders and change makers at the world economic forum in [inaudible 00:18:49] or the global future council on anti-corruption from the world economic forum, which I co-chair with, [inaudible 00:18:56] and good. What we see is that there are many business men and women devoted to go to what I call integrity beyond compliance. Compliance was very important, and it was a new thing, a new issue or topic 10 or 15 years ago, but we have to go and to move one step forward now, because compliance is understood as the compliance with legal issues with the regulation and integrity goes beyond law. It has to do with the culture in organizations.
And I think we cannot really defeat or really effectively prevent corruption without the help of the business sector. And I must say that I am seeing a very positive trend in that field. Of course, there are many things to correct, for instance, the compatibility of the incentive systems in terms of bonds, for instance, or prices for those CEOs performing very well in a company and the ethics code of the company, you can have a wonderful code of ethics, but then if the incentives that the company is offering, that's not much this ethic code, you have a problem. And this is something that has to be taken into account when trying to change the culture, the integrity culture in an organization.
I think the move to stakeholder capitalism, the move to the idea of a public value in a company, the work that is being done in terms of ESGs, is something that is going in the positive way, in order to incorporate business to the fight against corruption, or if you want to put it in the positive, in the fight for integrity in the companies. And we have to keep on working on that because I think many companies have realized that it is in their self-interest to contribute, to have a transparent market and a transparent place where to perform their activities.
Yoab Bitran: And again, that's totally aligned with what LRN believes, exactly, as you said, compliance is an outcome, an outcome of culture and outcome of values and integrity. You mentioned ESG. We see in probably all the West, as, as a big trend, we're seeing new regulation in some countries, new standards, new disclosures, what is your take and how ESG can help fight corruption and help us be more optimistic and hopeful as you said.
Delia Ferreira: I think that DSG is a very useful tool for companies to assess their own performance and also for investors to asses the performance of those companies or projects, where they are putting their money and that the role of investors could be of great help in the fight for integrity. If they really take into account the ESG results of a company. In fact, probably we have to put a lot more attention on the G, the governance structure in a company, where the anti-corruption rules appears and the standards and the organizational places where to issue the controls and to have accountability is place. The E and DS are more visible now probably, or are in the focus are a priority. But I think that without a proper governance structure, including integrity culture, and compliance, and an integral view of these issues, you cannot cut into nudge what the compliance officer do. The climate officer do, and everybody separated. They have to work together in order to really put in place this integrity principles around the whole activity of the company, in the bedrock of this, is the notion of values, of course.
And what we have seen in many societies around the world is that the basic value consensus in society is broken in many countries nowadays. So what is right and what is wrong is not absolutely clear or shared by society. And I remember the Nolan Commission Report in terms of integrity in UK parliament, saying after that, doing surveys and researching these scandals that we have to evaluate, our conclusion is that parliamentarians don't have it clear, what is right and what is wrong. So here are the rules for parliamentary ethics, and that was the origin of the laws and bills on public ethics around the world. You have to be honest, you have to respect the law. You don't have to profit from your position in order to benefit your familiar or your friends or crowns.
So this elementary principles that were part of a consensus many, many years ago, now are in the laws with the force of the law and the power to impose the compliance with this, and to apply sanctions for those who do not comply with these duties, let's say. But in the basic you have values and the need to rebuild agreement on that consensus, which is the only way we can reconstruct trust.
All around the world what we are seeing and Latin America is not an exception, but the North America also, and the rest of the countries in the world, we see a clear lack of trust in institutions, in politicians, in business sector, in banks, even in the press or the NGOs sector. So this lack of trust is one of our problems as a society. We have to reconstruct this trust in order to properly develop a better society for everyone. And I think this should be our common objective, because this is a collective action endeavor. Neither NGOs nor business sector, nor governments can do this alone, the fight for transparency is the fight of every single citizen around the world. I usually say for instance, that if you look at the crisis that we are facing from Afghanistan, to the Lebanon blast, from the Amazon's deforestation to the war in Ukraine, you have two common things. Corruption was there and the victims were simple human beings. So we have to fight together to stop this kind of phenomenon, which is so harmful for society.
Yoab Bitran: Wow. What a great way to end. This is clearly a conversation we could be having all day, but we are out of time for today. Delia, thank you so very much for the joining me on this episode, we appreciate your time and presence here.
Delia Ferreira: Thank you very much. It's been a pleasure and we will keep on talking.
Yoab Bitran: My name is Yoab Bitran and I want to thank you all for listening to the Principled Podcast by LRN.
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