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  • I am going to speak about corruption,

  • but I would like to juxtapose

  • two different things.

  • One is the large global economy,

  • the large globalized economy,

  • and the other one is the small, and very limited,

  • capacity of our traditional governments

  • and their international institutions

  • to govern, to shape, this economy.

  • Because there is this asymmetry,

  • which creates, basically,

  • failing governance.

  • Failing governance in many areas:

  • in the area of corruption and the area of destruction of the environment,

  • in the area of exploitation of women and children,

  • in the area of climate change,

  • in all the areas in which we really need

  • a capacity to reintroduce

  • the primacy of politics

  • into the economy,

  • which is operating in a worldwide arena.

  • And I think corruption,

  • and the fight against corruption,

  • and the impact of corruption,

  • is probably one of the most interesting ways

  • to illustrate what I mean

  • with this failure of governance.

  • Let me talk about my own experience.

  • I used to work as the director

  • of the World Bank office in Nairobi

  • for East Africa.

  • At that time, I noticed

  • that corruption, that grand corruption,

  • that systematic corruption,

  • was undermining everything we were trying to do.

  • And therefore, I began

  • to not only try to protect

  • the work of the World Bank,

  • our own projects, our own programs

  • against corruption,

  • but in general, I thought, "We need a system

  • to protect the people

  • in this part of the world

  • from the ravages of corruption."

  • And as soon as I started this work,

  • I received a memorandum from the World Bank,

  • from the legal department first,

  • in which they said, "You are not allowed to do this.

  • You are meddling in the internal affairs of our partner countries.

  • This is forbidden by the charter of the World Bank,

  • so I want you to stop your doings."

  • In the meantime, I was chairing

  • donor meetings, for instance,

  • in which the various donors,

  • and many of them like to be in Nairobi --

  • it is true, it is one of the

  • unsafest cities of the world,

  • but they like to be there because the other cities

  • are even less comfortable.

  • And in these donor meetings, I noticed

  • that many of the worst projects --

  • which were put forward

  • by our clients, by the governments,

  • by promoters,

  • many of them representing

  • suppliers from the North --

  • that the worst projects

  • were realized first.

  • Let me give you an example:

  • a huge power project,

  • 300 million dollars,

  • to be built smack into

  • one of the most vulnerable, and one of the most beautiful,

  • areas of western Kenya.

  • And we all noticed immediately

  • that this project had no economic benefits:

  • It had no clients, nobody would buy the electricity there,

  • nobody was interested in irrigation projects.

  • To the contrary, we knew that this project

  • would destroy the environment:

  • It would destroy riparian forests,

  • which were the basis for

  • the survival of nomadic groups,

  • the Samburu and the Turkana in this area.

  • So everybody knew this is a, not a useless project,

  • this is an absolute damaging, a terrible project --

  • not to speak about the future indebtedness of the country

  • for these hundreds of millions of dollars,

  • and the siphoning off

  • of the scarce resources of the economy

  • from much more important activities

  • like schools, like hospitals and so on.

  • And yet, we all rejected this project,

  • none of the donors was willing

  • to have their name connected with it,

  • and it was the first project to be implemented.

  • The good projects, which we as a donor community

  • would take under our wings,

  • they took years, you know,

  • you had too many studies,

  • and very often they didn't succeed.

  • But these bad projects,

  • which were absolutely damaging -- for the economy

  • for many generations, for the environment,

  • for thousands of families who had to be resettled --

  • they were suddenly put together

  • by consortia of banks,

  • of supplier agencies,

  • of insurance agencies --

  • like in Germany, Hermes, and so on --

  • and they came back very, very quickly,

  • driven by an unholy alliance

  • between the powerful elites

  • in the countries there

  • and the suppliers from the North.

  • Now, these suppliers

  • were our big companies.

  • They were the actors of this global market,

  • which I mentioned in the beginning.

  • They were the Siemenses of this world,

  • coming from France, from the UK, from Japan,

  • from Canada, from Germany,

  • and they were systematically driven

  • by systematic, large-scale corruption.

  • We are not talking about

  • 50,000 dollars here,

  • or 100,000 dollars there, or one million dollars there.

  • No, we are talking about 10 million, 20 million dollars

  • on the Swiss bank accounts,

  • on the bank accounts of Liechtenstein,

  • of the president's ministers,

  • the high officials in the para-statal sectors.

  • This was the reality which I saw,

  • and not only one project like that:

  • I saw, I would say,

  • over the years I worked in Africa,

  • I saw hundreds of projects like this.

  • And so, I became convinced

  • that it is this systematic corruption

  • which is perverting economic policy-making in these countries,

  • which is the main reason

  • for the misery, for the poverty,

  • for the conflicts, for the violence,

  • for the desperation

  • in many of these countries.

  • That we have today

  • more than a billion people below the absolute poverty line,

  • that we have more than a billion people

  • without proper drinking water in the world,

  • twice that number,

  • more than two billion people

  • without sanitation and so on,

  • and the consequent illnesses

  • of mothers and children,

  • still, child mortality of more than

  • 10 million people every year,

  • children dying before they are five years old:

  • The cause of this is, to a large extent,

  • grand corruption.

  • Now, why did the World Bank

  • not let me do this work?

  • I found out afterwards,

  • after I left, under a big fight, the World Bank.

  • The reason was that the members of the World Bank

  • thought that foreign bribery was okay,

  • including Germany.

  • In Germany, foreign bribery was allowed.

  • It was even tax-deductible.

  • No wonder that most of the most important

  • international operators in Germany,

  • but also in France and the UK

  • and Scandinavia, everywhere, systematically bribed.

  • Not all of them, but most of them.

  • And this is the phenomenon

  • which I call failing governance,

  • because when I then came to Germany

  • and started this little NGO

  • here in Berlin, at the Villa Borsig,

  • we were told, "You cannot stop

  • our German exporters from bribing,

  • because we will lose our contracts.

  • We will lose to the French,

  • we will lose to the Swedes, we'll lose to the Japanese."

  • And therefore, there was a indeed a prisoner's dilemma,

  • which made it very difficult

  • for an individual company,

  • an individual exporting country

  • to say, "We are not going to

  • continue this deadly, disastrous

  • habit of large companies to bribe."

  • So this is what I mean

  • with a failing governance structure,

  • because even the powerful government,

  • which we have in Germany, comparatively,

  • was not able to say,

  • "We will not allow our companies to bribe abroad."

  • They needed help,

  • and the large companies themselves

  • have this dilemma.

  • Many of them didn't want to bribe.

  • Many of the German companies, for instance,

  • believe that they are really

  • producing a high-quality product

  • at a good price, so they are very competitive.

  • They are not as good at bribing

  • as many of their international competitors are,

  • but they were not allowed

  • to show their strengths,

  • because the world was eaten up

  • by grand corruption.

  • And this is why I'm telling you this:

  • Civil society rose to the occasion.

  • We had this small NGO,

  • Transparency International.

  • They began to think of

  • an escape route from this prisoner's dilemma,

  • and we developed concepts

  • of collective action,

  • basically trying to bring various competitors

  • together around the table,

  • explaining to all of them

  • how much it would be in their interests

  • if they simultaneously would stop bribing,

  • and to make a long story short,

  • we managed to eventually

  • get Germany to sign

  • together with the other OECD countries

  • and a few other exporters.

  • In 1997, a convention,

  • under the auspices of the OECD,

  • which obliged everybody

  • to change their laws

  • and criminalize foreign bribery.

  • (Applause)

  • Well, thank you. I mean, it's interesting,

  • in doing this,

  • we had to sit together with the companies.

  • We had here in Berlin, at the Aspen Institute on the Wannsee,

  • we had sessions with about

  • 20 captains of industry,

  • and we discussed with them

  • what to do about international bribery.

  • In the first session -- we had three sessions

  • over the course of two years.

  • And President von Weizsäcker, by the way,

  • chaired one of the sessions, the first one,

  • to take the fear away

  • from the entrepreneurs,

  • who were not used to deal

  • with non-governmental organizations.

  • And in the first session, they all said,

  • "This is not bribery, what we are doing." This is customary there.

  • This is what these other cultures demand.

  • They even applaud it.

  • In fact, [unclear]

  • still says this today.

  • And so there are still a lot of people

  • who are not convinced that you have to stop bribing.

  • But in the second session,

  • they admitted already that they would never do this,

  • what they are doing in these other countries,

  • here in Germany, or in the U.K., and so on.

  • Cabinet ministers would admit this.

  • And in the final session, at the Aspen Institute,

  • we had them all sign an open letter