Corruption, media and performance based budgeting

Paradoxically, Finance Minister M. Saifur Rahman has railed against both corruption and the media who expose it. PHOTO: STAR

It appears that long before the ACC complete reviewing the 5,050 pending cases, most of the ACC officials will be retiring, and hence the current group of corrupt officials may breathe freely since their name will never be in the books before they themselves retire, die and go who knows where. All these are consistent with people's perception that the ACC is nothing but a government "show and tell" institution to do nothing or do little if necessary but at a snail's pace.

While speaking at Bangladesh Shilpa Bank's "timely loan installments payments award ceremony" recently, the Finance Minister (FM) expressed his exasperation that authorities are not taking strong action against big loan defaulters who borrowed Tk 200-300 crore, on the other hand small entrepreneurs, if they default, are treated heavy handedly. The FM on July 6 admitted that corruption has been engulfing "all the ministries, with the National Board of Revenue being among the top."

Isn't it unheard of that the government's most powerful minister is complaining about corruption not being dealt with in one of the sectors under his direct control (banking sector and the Bangladesh Bank)? When corruption impinges from political, bureaucratic and private sources, there is virtually no one left to be corrupted except those who have no scope for corruption. What can one expect from a government (be it AL or BNP) when there are allegations (or perceptions) of corruption by the family members of the Prime Minister, the Finance Minister, and all other ministers and other big shots?

In a country where the bureaucrats and politicians engage in mutually serving underhand dealings, any notion of fighting malfeasance is simply a deception. Dealing with political corruption by the ACC is a daunting task. On one hand, the ruling party would not like its political functionaries including ministers and MPs to be investigated, and on the other hand, criminalising opposition parties would be regarded as politically directed personal vendetta.

Corruption and civil society
Transparency International's 2004 corruption perception index (CPI) of 1.5 may be debatable, but the pervasiveness of corruption is not. The CPI of 1.5 is estimated from a random survey of 3,000 Bangladesh households. This index when translated into GDP value implies that approximately 2 percent of 2003's GDP was devoured because of corruption in 25 service sectors. The per capita bribe was estimated at Tk 485 which added up to a staggering amount of Tk 68 billion a year. This is unpleasant arithmetic for the politicians of all stripes to digest. In fact, expressing his exasperation, the agricultural minister dismissed them as "imaginary and not based on hard facts."

Collecting hard facts about corruption would require TIB to interview corrupt politicians and public officials and ask them to disclose their day to day "takes" in an ostensible manner? How would TIB select which politicians and civil servants to interview? Maybe the TIB should be accorded permission to interview the 5,050 corrupt officials whose cases are currently pending with the ACC. The carcinogen of corruption in our society will continue to proliferate unabated and all attempts by the ACC will be neutralised as long as the party in power sets its priority in election fund-raising than fighting corruption.

Although the CPI numbers are perceptions, one can, however, interpret them objectively into a body of economic predictions. For example, a country with a CPI score of 7 is 10 times more favourable to attract a dollar of foreign direct investment (FDI) per capita than a country with a CPI score of 6. For example, India with a CPI score of 2.8 is nearly 13 times more likely to succeed in attracting a dollar of FDI per capita than Bangladesh (with a CPI score of 1.5); Malaysia or Tunisia with a CPI score of 5.0 is nearly 36 times more likely than Bangladesh to attract a dollar of FDI per capita.

Corruption and free media
A successful anti-corruption program requires the oversight of government by investigative journalists and their unhindered access to public procurement works related documents. South Africa is one of the countries whose successful anti-corruption program was credited to its use of investigative print journalism. The program was implemented by training journalists who focused on the following topics:
-Rights and responsibilities of journalists, including ethics training;
-Detailed case studies on small and medium-sized news organisations involved in investigative reporting;
-Resources needed to investigate business and government;
-The Promotion of Access to Information Act, including how to write a request for information and how to appeal and challenge denials;
- Finding, cultivating and interviewing sources;
- Anti-corruption laws and institutions, whistle blower hotlines, and businesses and NGOs that support the government's anti-corruption strategy.

Unfortunately, when a country's ruling party officials and politicians brand the media "enemy of the country" and political functionaries harass journalists with physical beating and often death, media's role as anti-corruption hawk is a long way to come. Only a corrupt and autocratic government would expect the media to be conformist. The media is supposed to be on guard against anti-people actions and activities of the ruling party. If a government seriously wants to fight corruption, the media and civil society such as TIB can be the most potent corruption hawks. Public procurement of civil works and infrastructure building (roads, bridges, culverts, etc) is an area where most grand corruption occurs. According to media reports and the TI survey many businesses reluctantly bribe officials out of fear that honesty and playing by the rule would only benefit their dishonest rivals.

On recommendations from TI and its Ecuador national chapter the government implemented a number of measures of which the two most important ones were:
- No bribery pledge by the bid winning contractor; and
-Disclosure by the contractor of all commissions and other payments in any way related to the contract.

Violations of the pledges of integrity would result in forfeiture of the contract, the contractor blacklisted, and the losing bidders would have the legal right to claim damages from the winning bidder for their tender related costs and estimated loss of profit. Although these measures could not be mandated by law, all pre-qualified bidders voluntarily signed the pledges. The integrity pledge saved the government up to $300 million on two large contracts budgeted to cost $1 billion. The media were given access to all information without any censorship.

Performance based budgeting
In order to manage limited budget appropriations whilst minimising inefficiency, corruption and bureaucracy, Performance Based Budgeting (PBB) has recently become an essential tool to creating transparency and accountability in the oversight of government programs in many western fiscal operations. In simple terms, PBB is similar to a bank financing the construction of an office building or a house in which the funds are released in stages commensurate with completion of various phases of the project. Here again, transparency and accountability cannot be achieved without an open ended role of the media.

The strategy of PBB is based on the assumption that presenting performance information alongside budget appropriations will improve budget decision-making by focusing funding choices on program results. A performance based budgeting approach can be tailored to scale with existing operational infrastructure thus lowering costs and enabling organisations to:
- Direct limited resources to the most critical and important outcomes.
- Set automatic appropriation cycles to provide accurate, timely information about financial and program performance.
- Proactively administering programs, while tracking and monitoring progress against projected and published objectives.
- Get clear insights and communicate critical issues and priorities relative to budget requests and the use of resources.
- Proactively identify and resolve burgeoning performance problems before they become critical.
- Focus and start where the needs are of immediate of priority, with multiple points of entry, and realise immediate outcome.

The US congress enacted the Government Performance and Results Act of 1993 (GPRA) to promote a focus on improving program performance and to provide greater accountability for results within federal government agencies. At the state level, 31 out of 50 states (US) have legislated some form of PBB, and 16 additional states have formalized processes for integrating performance measures and data into the budgetary process. Only three states, Arkansas, Massachusetts, and New York do not have either type of mandate to conduct PBB. What constitutes performance varies to some extent from state to state. Only two states, Florida and Texas, provide specific verbiage related to corrective actions for noncompliance. The Texas 1996-1997 General Appropriations guidelines state that "if an agency fails to meet its goals, the Legislative Budget Board and the Governor may adopt a budget execution order, which may result in the reduction, elimination, restriction, or withholding of funding or transferability, in addition to possible reorganisation." Florida prescribes a number of budget execution and management restrictions in the event of poor performance.

Recommendations
In Bangladesh, some of the pro-poor growth infrastructure projects in various sectors which performed very dismally in the May 15, 2005 Poverty Monitoring Survey Report published by the Bangladesh Bureau of Statistics could be administered using the PBB strategies. When performance based budgeting approach in large public procurement works is integrated with media and civil society oversight, corruption is bound to diminish significantly.

The author is Professor of Economics, Eastern Michigan University, USA.