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Post-war reconstruction in Iraq must be based on clear lines of accountability and financial transparency, says Transparency International
Berlin, 30 April 2003 --- Transparency and accountability must be the watchwords for post-war reconstruction in Iraq following the endemic corruption of the government of Saddam Hussein, according to Transparency International (TI), the world’s leading non-governmental organisation engaged in the fight against corruption. “It is essential that Iraq be spared the kickbacks habitually paid in post-war situations by some multinational companies,” said TI Chairman Peter Eigen today.
“The future of Iraq’s oil assets should be managed in a way that benefits the Iraqi people as a whole, and neither corrupt Iraqis nor bribe-paying international oil companies,” said Peter Eigen. TI is calling for an open international bidding process for the reconstruction of the Iraqi oil industry. The process must include strict rules on conflicts of interest, which should be binding on both international bidders and Iraqi companies. TI urges multinational oil companies to ‘publish what you pay’ to the Iraqi government or any interim administration in respect of oil contracts, and for fully audited income and expenditure in the Iraqi oil industry.
“It is time for governments to require that their oil companies publish what they pay in taxes, fees, royalties and other payments to host governments. Publication of these payments should be a requirement for stock exchange listing in their own countries,” said Peter Eigen. “Access to this vital information will minimise opportunities for hiding the payment of kickbacks to secure oil tenders, a practice that has blighted the oil industry in transition and post-war economies.” TI has been working with Global Witness and other NGOs on the Publish What You Pay initiative in the context of post-war economies, such as Angola.
“The international community carries a particular responsibility to be fully transparent in its humanitarian aid and in its dealings with the interim administration in Iraq and the emerging Iraqi authorities, including local and regional government structures,” said Peter Eigen, speaking today. According to the TI Bribe Payers Survey (www.transparency.org/surveys/index.html#bpi), conducted last year in key emerging market economies, the public works/construction sector is the most prone to bribe-paying, followed by the arms sector and the oil and gas industry, three sectors of acute importance in a post-conflict situation, particularly in an economy dominated by oil exports, such as Iraq, which has the second largest proven oil reserves in the world.
“Unless open and accountable processes are put in place,” said Peter Eigen, “the Iraqi people will be the losers as the costs will be mortgaged on the promise of future oil revenues, which rightly belong to the Iraqi people as a whole.”
Transparent budgeting and accountable decision-making must also be applied in humanitarian aid, civil administration, democracy-building, and reconstruction and economic development at the local, national and international level, said Peter Eigen.
TI calls on any incoming interim administration in Iraq and subsequent Iraqi authorities to establish and make public clear lines of accountability for the use of all international donor funds received, and to make a public commitment that donor aid and loans will be used solely for reconstruction and humanitarian aid, and will not be diverted into the private pockets of politicians, public officials, regional power-brokers or their associates nor used for the purchase of weapons and military equipment. The disbursement of funds should be subject to regular scrutiny by independent auditors.
Training of public officials, especially the police and the judiciary, will be crucial to good governance – and should be the cornerstone of plans for a new administration. Corruption in post-war economies is most prevalent in government revenues and taxation, in particular customs revenues, cash transfers from donors, and monopoly rents. Such revenues are often kept “off-budget” and squandered on political patronage and embezzlement.
The international community should learn the lessons of the reconstruction efforts in other conflict zones, including Bosnia-Herzegovina, where corruption is one of the biggest problems facing the country today. If reconstruction plans do not address the overriding priority of good governance from the outset, authority in Iraq at the local and national level will rest on tribal influence, bullying and corruption, and the economy will be susceptible to being overrun by extortion, cronyism and organised crime.
Note for editors: The issue of corruption in post-war reconstruction, with a particular focus on Afghanistan and Iraq, will be the subject of a far-reaching debate by experts from around the globe at a workshop at the forthcoming 11th International Anti-Corruption Conference in Seoul, Korea, on 25-28 May 2003. Speakers will address the topic from the experience of post-war reconstruction in Lebanon, Afghanistan, the Balkans and Sierra Leone. For further information, see http://www.11iacc.org/iacc/index.html
Press Release / May 1, 2003