Global Health Watch 1 in one file

Health and globalization | A1
Box A3 Debt, corruption and the cost of doing
business
Transfers of resources to developing countries, as debt relief or direct
grants, are increasingly accompanied by requirements that recipient
countries demonstrate ‘good governance’, notably by reducing corruption.
Superficially the logic of such requirements is unassailable. Transparency
International, perhaps the most influential actor in civil society with regard
to anti-corruption efforts (Serafini 2004), estimates that ten of the most
notoriously corrupt leaders of the past 20 years, led by Indonesia’s Suharto,
the Philippines’ Marcos and Zaire’s Mobutu, embezzled US$ 29–58 billion
from some of the poorest countries in the world (Hodess 2004).
The irony of such conditions, however, lies in the routine involvement
of Western businesses in a range of corrupt practices. Western businesses
in 1999 are said to have paid over US$ 80 billion in bribes to officials in
low- and middle-income countries to gain market access (often for weapons
purchases) and regulatory relaxation (often in the mining, logging and oil
sectors). Such bribes inflate the costs of projects, and may increase the
debts of low- and middle-income countries by creating an incentive for
leaders to borrow for financially unsustainable but personally lucrative
projects (Hawley 2000).
Multilateral initiatives to control corruption include an OECD Convention
on Combating Bribery (which came into force in 1999) and the
2003 UN Convention Against Corruption. It potentially represents a major
advance not only because of its provisions requiring domestic criminalization
of various forms of corruption, but also because it specifically addresses
the crucial issue of recovery of illegally obtained assets. However,
although 113 countries had signed the convention by 2004, it had been
ratified by only 13 and 30 ratifications are needed before it comes into force,
even with respect to those countries that have ratified it.
Whatever multilateral agreements may be in place, implementation
depends on legislation and enforcement at national and sometimes
subnational level. Given the asymmetry of power relations in the world
economy, it is especially important that industrialized countries both regulate
the behaviour of firms under their legal jurisdiction, imposing sanctions
that are meaningful when compared with the potential gains from
engaging in corruption, and act aggressively to prevent financial institutions
from handling proceeds from corruption.
26