As government officials and finance professionals meet at the global anti-corruption summit orchestrated by UK Prime Minister David Cameron, they should be thinking not just about how to protect charities from exposure to corruption, but about how charities can help to combat it.
Today’s summit has been billed by David Cameron as an opportunity for global leaders to “work together to strengthen all the tools that we have to take on corruption”.
As Mr Cameron rightly points out, corruption – which is estimated to cost the global economy in excess of £380 million a year – undermines sustainable development, has a chilling effect on investment, damages the rule of law, exacerbates inequality and enriches dictators, traffickers and terrorists.
Around the world civil society organisations (CSOs) play a crucial role in exposing corruption, scrutinising business deals, revealing vested interests and holding the powerful to account when the rule of law fails. Voluntary organisations also play a big part in addressing the conditions under which corruption thrives. Whether the focus is on reducing poverty, halting climate change or increasing religious tolerance, they are indirectly helping to make society more resilient to the abuse of the many by the few. It is a process which is not always comfortable for governments, but it is one that is vital nonetheless.
The Prime Minister clearly recognises the important role CSOs play. In a speech in Singapore on the 28th of July 2015 he where he announced today’s summit he offered to give more support to “civil society […] who are working to fight corruption”. As such we hope that the expertise of charities will not be overlooked during this summit. For instance, Transparency International UK (TI-UK) has already identified a number of ideas such as a strengthening of Article 30(3) of UNCAC so that regulators and prosecutors are protected from political pressure to drop anticorruption charges when they threaten economic interests.
However, Mr Cameron’s acknowledgement of the crucial role that CSOs play in tackling corruption fits awkwardly with his government’s new anti-advocacy clause – which would be inserted into its contracts with CSOs to ensure that public funds would not be used to “lobby” government. Preventing charities which deliver public services from being able to present data or recommend policy changes risks undermining their ability to expose corrupt practices.
Tackling corruption is about much more than simply increasing regulatory powers; and in some cases this can actually do more harm than good. We need to ensure that regulation designed to combat corruption doesn’t hamper charities’ efforts to tackle it.
So, cracking down on illicit funding online should not undermine internet freedoms which allow the mass scrutiny of information and sharing of ideas. Similarly, there is a real danger that any attempt to strengthen financial regulation and mainstream banking practices could, however unintentionally, undermine the capacity of legitimate CSOs to operate in many jurisdictions.
We have already seen that increased compliance costs for banks as a result of anti-money laundering (AML) and counter terrorist financing (CTF) directives can make it more difficult for banks to offer a service to charities engaging in controversial cause areas or operating in insecure regions of the world. As such, it is essential that organisations like the Financial Action task Force (FATF) – which sets global standards for such regulation – encourage a proportionate and risk-based approach. Happily, there are signs that FATF are moving in the right direction after a recent revision of their Interpretive Note to Recommendation 8 (which deals with CSOs) and a call for submissions for a review of Recommendation 8 itself.
A vibrant civil society in which CSOs are able to hold big business and politicians to account is a vital weapon in the fight against corruption. Today’s corruption summit must work to ensure that the very regulation designed to combat corruption does not emasculate the very institutions which seek to address it.