THE PRICE OF CORRUPTION

The United States plans to give greater visibility to our anti-corruption efforts in this hemisphere by sending the message loud and clear: corruption does not pay.

Look at those around you. According to a World Bank survey of 3600 firms in 69 countries, chances are almost even that you or your neighbors have paid a bribe at some point in your professional lives. 

Have you ever paid an unofficial fee to "expedite" processing of paperwork?  Has a so-called community "leader" informed you that as a business owner, you are expected to make a contribution to a "fund" for security purposes?  Have you had to stop and wonder: what service am I getting for the fee I paid?

Corruption is not always easy to spot.  It takes on many faces. A government official taking a bribe and handing out a contract in return is a fairly clear example.  So too, on a smaller scale, is a policeman taking money in exchange for letting a driver off without a ticket for a traffic violation. But what about the official who sits on a license for months because the right payment -a bribe- wasn't offered? What about slipping the customs inspector "a little extra" for clearing your undeclared goods? Or the official who hires his not-necessarily-qualified nephew for a high-ranking, high paying job? How about the construction company that builds a road and skimps a little - knowing the road will only last four years - even though it contracted for and is perfectly capable of building a road that will last twenty years.  Is this corruption?  Perhaps it is not as obvious as a bribe, but the deleterious effect on society can be felt every time your car hits a pothole. 

Why does corruption occur?  Well, you might say that people the world over are underpaid. But that's too simplistic.  Even if everyone were overpaid, criminals -those who do not follow the laws of society- would still be able to pay far more. There will always be those looking to subvert, and to outmaneuver legitimate entrepreneurial activity. And sadly, there will be those who do not have the backbone to say NO.

Let's look at corruption on a worldwide scale. The statistics are shocking. According to the Asian Development Bank, one East Asian country is estimated to have lost $48 billion over 20 years due to corruption, surpassing its entire foreign debt of $40.6 billion.  It has been calculated that as much as $30 billion in aid for Africa has ended up not in Africa, but in foreign bank accounts. Thirty billion dollars is twice the annual gross domestic product of Ghana, Kenya, and Uganda combined. Corruption, it turns out, costs many governments as much as 50 percent of their tax revenues.

Corruption is a problem in this hemisphere and here in Jamaica as well. Transparency International gave Jamaica a four out of 10 on its Corruption Perception Index, which ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians. A September 2001 Gleaner poll found that nearly 80 percent of Jamaicans feel that there is corruption in the public sector, and 68 percent feel that there is corruption among the police. Folks - If four out of five Jamaicans believe there is a problem, then certainly something must be done to address it.

Think of the economy.  Corruption is strongly tied to negative investment rates. Most of you would agree that one of the biggest problems facing Jamaican businesses today is the lack of investment capital.  IMF data shows that the investment rate in corrupt countries is almost five percent less than in relatively corruption-free countries.  This is an important figure in countries like Jamaica, which seek foreign direct investment.

And corruption, in fact, exacts the highest tolls on developing countries like Jamaica. People in such countries can least afford the burden of corruption, which erodes security and trust in one's government, justice system, and peers.

Once corruption is associated with a certain person, company, government, or country, it is difficult to shed the stigma. Think about this: Standard and Poor's gives investors a 50 to 100 percent chance of losing their entire investment within five years in countries with corruption. Would you invest in a company or a country that is rumored or known to be corrupt? Would you knowingly associate yourself with a person tainted by corruption? I would not and I suspect you would not.  And protecting our investment is too important to risk. 

While corruption exacts the highest toll on developing countries, small businesses are often hardest hit. Cross-country data of 22 transition economies shows that, on average, small businesses pay more than twice as much of their annual revenue in bribes than do large firms. We are not talking the Godfather here. We're not talking about some high level corporate honcho gone wrong. We are talking about women who sell goods on the corner being forced to surrender a large percentage of their income to the neighborhood strongman, the small shop owner who fears for his life if he can't come up with his extra "rent" payment. Such circumstances are not only personally dangerous; they undercut the capacity of small businesses to act as engines of growth, as they do in many countries.

To stop corruption, or at least slow it, we must punish the corrupt.  If I can accept bribes, extort money, and grant favors with impunity, there is little incentive to stop.  Until the cost of being corrupt outweighs the benefit, many people would simply find no reason to stop.  An important key to fighting corruption, therefore, is to identify those who are engaged in corruption and ensure that they are exposed and punished. And government policies can help in this regard.

The importance of information in fighting corruption cannot be overstated. So government policies that are transparent are much less susceptible to corruption, and public access to information can help to ensure that corruption finds no soil in which to take root. 

Jamaica has taken a major step in this regard with the recent passage of the Access to Information Act, which allows citizens to see information on how government decisions are made and will help ensure that those decisions are based on objective criteria.  But the mere passage of such an act is insufficient if the rights it grants are not used to thwart corruption.  And that is the challenge that is laid before Jamaicans - to actively monitor- to be the watchdog against corruption.  So the question is: Now that the tool has been created, will it actually be used? Will people in this room help in the process?

Identifying corruption in government is not very useful if there is no mechanism to punish the corrupt; that is where the recently established Corruption Prevention Commission is essential to the success of anti-corruption efforts here in Jamaica.  I think it is a promising and positive reflection on the Government of Jamaica that while most every sector saw across the board cuts in the recent budget release; the Corruption Prevention Commission's funding was increased more than two-fold.  Now, performance will be the measure.  As always, action speaks louder than words. 

Another key in the fight against corruption -as you know- is the private sector.  Public sector officials - by and large - aren't going around bribing each other, so it is vital that the private sector understand the costs of corruption -the economic costs as well as the personal costs- and refuse to encourage it, accept it, or wink at it.

The United States government has dedicated substantial resources and efforts to require and promote transparency in business and responsible and accountable corporate governance.

The State Department rewards ethical and transparent business practices through action, word, and deed, including an annual Award for Corporate Excellence.  We bring together business, government, and civil society leaders to share ideas for fostering corporate social responsibility. And, appropriate to this audience, the United States encourages businesses to become actively involved in combating corruption by forging partnerships with groups such as yours - American Chambers of Commerce worldwide. That is why I stand here today.

Our efforts are designed to bring the business community together in firmly and resolutely saying NO to corruption, to help make it clear that if a country cannot accommodate the rule of law, then businesses that have options worldwide will take their money and their jobs elsewhere. 

Because corruption often transcends sectoral and national borders, the United States is working with the UN and other regional bodies, such as the Organization of American States, to attack the problem.  The United States has ratified the Inter-American Convention Against Corruption, and participates in encouraging and monitoring its implementation in the hemisphere. 

In addition, we plan to make development funds available through the Millennium Challenge Account - some five billion US dollars - to those countries that are committed to good governance and engaged in the fight against corruption.  Jamaica may qualify for some of these funds over the next few years as it follows through on addressing corruption.

But of course the U.S. can only do so much - at some point, the fight against corruption has to come from within. 

Now you may be sitting there thinking "Well this is all well and good, but why is an American lecturing us on corruption when we only need to turn on our televisions to see scandal after scandal in America?"  That's certainly a reasonable criticism - America has had its fair share of corrupt businesses, government leaders and dirty money. But if you observe how the United States has dealt with such scandals, you can get a sense of what a carefully constructed anticorruption framework can accomplish.

Consider the following American triumphs over corruption. Because we do not have parliamentary immunity, Ohio Congressman James Traficant was tried, convicted, and expelled from Congress. Because we have auditors that scrutinize financial statements piece by piece, Arthur Andersen executives were convicted of obstruction of justice and the officers of WorldCom were indicted for fraud.  And because we have protection for whistleblowers, a former Speaker of the State of Florida Senate is this very day going to jail - because his illegal activities were brought to light by a concerned citizen.  Let me tell you his embarrasssing story.

So while the U.S. certainly does not have a perfect system, we have been successful in making anticorruption mechanisms available.  The result has been a society where corruption may occur, but it is not the norm. The very fact that corruption scandals are figuring so prominently in the news shows just how intolerant an informed society has become toward corrupt officials.

I'll be the first to admit that old habits die hard, but they do die. Maybe it's just impressing on a youngster that it's better to pay the ticket than pay the cop. Or it's being sure that your employees declare everything in your company's container at customs. Maybe it's writing to the newspaper or making a phone call when your company encounters corrupt officials, or lodging a complaint with the Corruption Prevention Commission. Maybe it's calling an associate or a business colleague on the carpet for corrupt dealings, even if it places your job in jeopardy. Or voting against politicians who you believe are unacceptably taking money. Maybe it's refusing to buy from companies that you suspect are engaging in corrupt practices.

It is through the accumulation of these daily decisions not to support corruption that society will be changed and corruption rooted out.  Each day that we fail to act against corruption, we are paying a social and economic price. 

We must work together on this issue that has constrained growth in this hemisphere for decades. We wish to support your efforts in this regard and to support the efforts currently being made by the leaders of the government who recognize that this fight is clearly in the best interest of the future of this country.

We all acknowledge and recognize that corruption is a problem in this hemisphere and here in Jamaica. I am pleased to be here to join with you in the effort to eliminate this insidious and corrosive blight that so erodes this beautiful country's social and economic stability and prosperity.

THANK YOU.