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Well, what an act to follow!

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I was afraid that, speaking after lunch
I would find you all very sleepy

3
00:00:22,462 --> 00:00:26,847
and very downtrodden,
but I guess he woke us all up.

4
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Wonderful.

5
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Well, when I was invited to speak here,

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I was given the theme micro and macro.

7
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And I thought
I'd speak about small corruption,

8
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and grand corruption.

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Because I always speak about corruption.

10
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But after seeing this audience here,

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after being energized and stimulated

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by so many exciting people in this room,

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I would like to change my subject a bit.

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I am going to speak about corruption,

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but I would like to juxtapose

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two different things.

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One is the large global economy,

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the large globalized economy,

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

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capacity of our traditional governments

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and their international institutions

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to govern, to shape, this economy.

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Because there is this asymmetry,

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which creates, basically,

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failing governance.

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Failing governance in many areas:

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

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in the area of exploitation
of women and children,

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in the area of climate change,

30
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in all the areas in which we really need

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a capacity to reintroduce

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the primacy of politics

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into the economy,

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which is operating in a worldwide arena.

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And I think corruption,

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and the fight against corruption,

37
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and the impact of corruption,

38
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is probably
one of the most interesting ways

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to illustrate what I mean

40
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with this failure of governance.

41
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Because I'm saying
that it is this lack of global reach

42
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of state actors, state institutions
and international organizations.

43
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It is the lack of their
longer term time horizon

44
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in serving short term interest
of their constituencies

45
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and dealing with short electoral periods.

46
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Which makes it so difficult

47
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to expect from our present
paradigm of governance

48
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to help us to create a better world.

49
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Again, corruption is probably the area

50
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which illustrates best what I mean

51
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when I'm talking about this
inherent governance failure

52
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which we are facing
in a globalized economy.

53
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Let me talk about my own experience.

54
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I used to work as the director

55
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of the World Bank office in Nairobi

56
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for East Africa.

57
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At that time, I noticed

58
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that corruption, that grand corruption,

59
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that systematic corruption,

60
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was undermining everything
we were trying to do.

61
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And therefore, I began

62
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to not only try to protect

63
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the work of the World Bank,

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our own projects,
our own programs against corruption,

65
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but in general, I thought,
"We need a system

66
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to protect the people

67
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in this part of the world

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from the ravages of corruption."

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And as soon as I started this work,

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I received a memorandum
from the World Bank,

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from the legal department first,

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

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

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This is forbidden by the charter
of the World Bank,

75
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so I want you to stop your doings."

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In the meantime, I was chairing

77
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donor meetings, for instance,

78
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in which the various donors,

79
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and many of them like to be in Nairobi -

80
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it is true, it is one
of the unsafest cities of the world,

81
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but they like to be there
because the other cities

82
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are even less comfortable.

83
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And in these donor meetings, I noticed

84
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that many of the worst projects -

85
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which were put forward

86
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by our clients, by the governments,

87
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by promoters,

88
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many of them representing

89
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suppliers from the North -

90
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that the worst projects

91
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were realized first.

92
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Let me give you an example:

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a huge power project,

94
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300 million dollars,

95
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to be built smack into
one of the most vulnerable,

96
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and one of the most beautiful,

97
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areas of western Kenya.

98
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And we all noticed immediately

99
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that this project had
no economic benefits:

100
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It had no clients,
nobody would buy the electricity there,

101
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nobody was interested
in irrigation projects.

102
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To the contrary, we knew that this project

103
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would destroy the environment:

104
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It would destroy riparian forests,

105
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which were the basis
for the survival of nomadic groups,

106
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the Samburu and the Turkana in this area.

107
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So everybody knew this is a,
not a useless project,

108
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this is an absolute damaging,
a terrible project -

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not to speak about the future
indebtedness of the country

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for these hundreds of millions of dollars,

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and the siphoning off

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of the scarce resources of the economy

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from much more important activities

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like schools, like hospitals and so on.

115
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And yet, we all rejected this project,

116
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none of the donors was willing

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to have their name connected with it,

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and it was the first
project to be implemented.

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The good projects,
which we as a donor community

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would take under our wings,

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they took years, you know,

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you had too many studies,

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and very often they didn't succeed.

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But these bad projects,

125
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which were absolutely damaging -
for the economy,

126
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for many generations, for the environment,

127
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for thousands of families
who had to be resettled -

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they were suddenly put together

129
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by consortia of banks,

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of supplier agencies,

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of insurance agencies -

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like in Germany, Hermes, and so on -

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and they came back very, very quickly,

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driven by an unholy alliance

135
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between the powerful elites

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in the countries there

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and the suppliers from the North.

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Now, these suppliers

139
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were our big companies.

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They were the actors
of this global market,

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which I mentioned in the beginning.

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They were the Siemenses of this world,

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coming from France,
from the UK, from Japan,

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from Canada, from Germany,

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and they were systematically driven

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by systematic, large-scale corruption.

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We are not talking about

148
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50,000 dollars here,

149
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or 100,000 dollars there,
or one million dollars there.

150
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No, we are talking about
10 million, 20 million dollars

151
00:07:11,845 --> 00:07:13,736
on the Swiss bank accounts,

152
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on the bank accounts of Liechtenstein,

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of the president's ministers,

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the high officials
in the para-statal sectors.

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This was the reality which I saw,

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and not only one project like that:

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I saw, I would say,

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over the years I worked in Africa,

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I saw hundreds of projects like this.

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And so, I became convinced

161
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that it is this systematic corruption

162
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which is perverting economic
policy-making in these countries,

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which is the main reason

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for the misery, for the poverty,

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for the conflicts, for the violence,

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for the desperation

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in many of these countries.

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That we have today

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more than a billion people
below the absolute poverty line,

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that we have more than a billion people

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without proper drinking water
in the world,

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twice that number,

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more than two billion people

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without sanitation and so on,

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and the consequent illnesses

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of mothers and children,

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still, child mortality of more

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than 10 million people every year,

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children dying
before they are five years old.

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The cause of this is, to a large extent,

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grand corruption.

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Now, why did the World Bank

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not let me do this work?

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I found out afterward,

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

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The reason was that the members
of the World Bank

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thought that foreign bribery was okay,

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including Germany.

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In Germany, foreign bribery was allowed.

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It was even tax-deductible.

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No wonder that most of the most important

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international operators in Germany,

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but also in France and the UK

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and Scandinavia, everywhere,
systematically bribed.

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Not all of them, but most of them.

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And this is the phenomenon

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which I call failing governance,

198
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because when I then came to Germany

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and started this little NGO

200
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here in Berlin, at the Villa Borsig,

201
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we were told,

202
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"You cannot stop
our German exporters from bribing,

203
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because we will lose our contracts.

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We will lose to the French,

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

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

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which made it very difficult

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for an individual company,

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an individual exporting country

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to say, "We are not going
to continue this deadly, disastrous

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habit of large companies to bribe."

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So this is what I mean

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with a failing governance structure,

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because even the powerful government,

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which we have in Germany, comparatively,

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was not able to say,

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

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They needed help,

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and the large companies themselves

220
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have this dilemma.

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Many of them didn't want to bribe.

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Many of the German
companies, for instance,

223
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believe that they are really

224
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producing a high-quality product

225
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at a good price,
so they are very competitive.

226
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They are not as good at bribing

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as many of their international
competitors are,

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but they were not allowed

229
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to show their strengths,

230
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because the world was eaten up

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by grand corruption.

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And this is why I'm telling you this:

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Civil society rose to the occasion.

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We had this small NGO,

235
00:10:45,317 --> 00:10:47,088
Transparency International.

236
00:10:47,109 --> 00:10:48,953
They began to think

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of an escape route
from this prisoner's dilemma,

238
00:10:52,500 --> 00:10:55,500
and we developed concepts

239
00:10:55,521 --> 00:10:57,288
of collective action,

240
00:10:57,309 --> 00:11:00,383
basically trying to bring
various competitors

241
00:11:00,404 --> 00:11:01,830
together around the table,

242
00:11:01,851 --> 00:11:03,264
explaining to all of them

243
00:11:03,285 --> 00:11:05,284
how much it would be in their interests

244
00:11:05,305 --> 00:11:07,656
if they simultaneously would stop bribing,

245
00:11:07,900 --> 00:11:10,712
and to make a long story short,

246
00:11:10,733 --> 00:11:12,267
we managed to eventually

247
00:11:12,288 --> 00:11:14,287
get Germany to sign

248
00:11:14,308 --> 00:11:16,750
together with the other OECD countries

249
00:11:16,771 --> 00:11:18,770
and a few other exporters,

250
00:11:18,791 --> 00:11:21,790
in 1997, a convention,

251
00:11:21,811 --> 00:11:23,810
under the auspices of the OECD,

252
00:11:24,500 --> 00:11:26,340
which obliged everybody

253
00:11:26,361 --> 00:11:27,737
to change their laws

254
00:11:27,758 --> 00:11:29,757
and criminalize foreign bribery.

255
00:11:30,031 --> 00:11:34,031
(Applause)

256
00:11:40,100 --> 00:11:42,100
Well, thank you. I mean, it's interesting,

257
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in doing this,

258
00:11:43,804 --> 00:11:46,370
we had to sit together with the companies.

259
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We had here in Berlin,
at the Aspen Institute on the Wannsee,

260
00:11:50,080 --> 00:11:53,423
we had sessions with about
20 captains of industry,

261
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and we discussed with them

262
00:11:55,814 --> 00:11:58,352
what to do about international bribery.

263
00:11:58,500 --> 00:12:00,643
In the first session -
we had three sessions

264
00:12:00,663 --> 00:12:02,499
over the course of two years.

265
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And President Von Weizsicker, by the way,

266
00:12:05,500 --> 00:12:07,548
chaired one of the sessions,
the first one,

267
00:12:07,568 --> 00:12:09,499
to take the fear away

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00:12:09,500 --> 00:12:11,974
from the entrepreneurs,

269
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who were not used to deal
with non-governmental organizations.

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00:12:16,058 --> 00:12:19,267
And in the first session, they all said,

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00:12:19,288 --> 00:12:22,384
"This is not bribery, what we are doing.
This is customary there.

272
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This is what these other cultures demand.

273
00:12:25,352 --> 00:12:26,847
They even applaud it."

274
00:12:26,868 --> 00:12:28,736
In fact, Martin Walzer,

275
00:12:28,757 --> 00:12:30,756
still says this today.

276
00:12:30,777 --> 00:12:32,776
And so there are still a lot of people

277
00:12:32,797 --> 00:12:35,796
who are not convinced
that you have to stop bribing.

278
00:12:36,253 --> 00:12:37,781
But in the second session,

279
00:12:37,802 --> 00:12:40,279
they admitted already
that they would never do this,

280
00:12:40,300 --> 00:12:42,802
what they are doing
in these other countries,

281
00:12:42,823 --> 00:12:45,547
here in Germany,
or in the U.K., and so on.

282
00:12:45,793 --> 00:12:48,007
Cabinet ministers would admit this.

283
00:12:48,028 --> 00:12:51,027
And in the final session,
at the Aspen Institute,

284
00:12:51,048 --> 00:12:53,661
we had them all sign an open letter

285
00:12:53,682 --> 00:12:55,851
to the Kohl government, at the time,

286
00:12:55,976 --> 00:12:59,803
requesting that they participate
in the OECD convention.

287
00:13:00,143 --> 00:13:02,645
And this is, in my opinion,

288
00:13:02,666 --> 00:13:04,665
an example of soft power,

289
00:13:04,686 --> 00:13:07,227
because we were able to convince them

290
00:13:07,248 --> 00:13:09,247
that they had to go with us.

291
00:13:09,268 --> 00:13:11,743
We had a longer-term time perspective.

292
00:13:11,764 --> 00:13:14,536
We had a broader,
geographically much wider,

293
00:13:15,620 --> 00:13:17,863
constituency we were trying to defend.

294
00:13:17,884 --> 00:13:20,124
And that's why the law has changed.

295
00:13:20,145 --> 00:13:23,144
That's why Siemens is now
in the trouble they are in

296
00:13:23,165 --> 00:13:25,686
and that's why MIN
is in the trouble they are in.

297
00:13:25,707 --> 00:13:29,130
In some other countries,
the OECD convention

298
00:13:29,166 --> 00:13:31,165
is not yet properly enforced.

299
00:13:31,500 --> 00:13:33,499
And, again, civil societies

300
00:13:33,500 --> 00:13:35,892
breathing down the neck
of the establishment.

301
00:13:35,913 --> 00:13:37,714
In London, for instance,

302
00:13:37,735 --> 00:13:39,734
where the BAE got away

303
00:13:39,755 --> 00:13:41,468
with a huge corruption case,

304
00:13:41,489 --> 00:13:45,119
which the Serious Fraud Office
tried to prosecute,

305
00:13:46,317 --> 00:13:48,316
100 million British pounds,

306
00:13:48,337 --> 00:13:49,999
every year for ten years,

307
00:13:50,020 --> 00:13:53,019
to one particular official
of one particular friendly country,

308
00:13:53,324 --> 00:13:58,179
who then bought for 44 billion pounds
of military equipment.

309
00:13:58,521 --> 00:14:01,097
This case, they are not
prosecuting in the UK.

310
00:14:01,118 --> 00:14:02,906
Why? Because they consider this

311
00:14:02,927 --> 00:14:05,637
as contrary to the security interest

312
00:14:05,658 --> 00:14:07,454
of the people of Great Britain.

313
00:14:07,475 --> 00:14:10,184
Civil society is pushing, civil society

314
00:14:10,205 --> 00:14:13,204
is trying to get a solution
to this problem,

315
00:14:13,333 --> 00:14:15,011
also in the U.K.,

316
00:14:15,032 --> 00:14:17,461
and also in Japan,
which is not properly enforcing,

317
00:14:17,482 --> 00:14:18,709
and so on.

318
00:14:18,730 --> 00:14:20,241
In Germany, we are pushing

319
00:14:20,262 --> 00:14:22,487
the ratification of the UN convention,

320
00:14:22,508 --> 00:14:24,507
which is a subsequent convention.

321
00:14:24,833 --> 00:14:27,061
We are, Germany, is not ratifying.

322
00:14:27,082 --> 00:14:30,458
Why? Because it would make it necessary

323
00:14:30,500 --> 00:14:34,228
to criminalize the corruption of deputies.

324
00:14:34,770 --> 00:14:36,769
In Germany, we have a system where

325
00:14:36,790 --> 00:14:39,789
you are not allowed
to bribe a civil servant,

326
00:14:40,016 --> 00:14:42,767
but you are allowed to bribe a deputy.

327
00:14:42,788 --> 00:14:45,537
This is, under German law, allowed,

328
00:14:45,558 --> 00:14:48,465
and the members of our parliament
don't want to change this,

329
00:14:48,500 --> 00:14:50,499
and this is why they can't sign

330
00:14:50,500 --> 00:14:52,643
the U.N. convention
against foreign bribery -

331
00:14:52,663 --> 00:14:54,531
one of they very, very few countries

332
00:14:54,552 --> 00:14:58,210
which is preaching honesty and good
governance everywhere in the world,

333
00:14:58,231 --> 00:15:00,845
but not able to ratify the convention,

334
00:15:00,882 --> 00:15:03,021
which we managed to get on the books

335
00:15:03,042 --> 00:15:06,041
with about 160 countries
all over the world.

336
00:15:06,500 --> 00:15:08,499
I see my time is ticking.

337
00:15:08,500 --> 00:15:10,499
Let me just try

338
00:15:10,500 --> 00:15:13,045
to draw some conclusions
from what has happened.

339
00:15:13,066 --> 00:15:17,163
I believe that what we managed to achieve

340
00:15:17,500 --> 00:15:20,059
in fighting corruption,

341
00:15:20,080 --> 00:15:21,710
one can also achieve

342
00:15:21,731 --> 00:15:23,730
in other areas of failing governance.

343
00:15:24,102 --> 00:15:25,952
By now, the United Nations

344
00:15:25,973 --> 00:15:27,698
is totally on our side.

345
00:15:27,719 --> 00:15:30,625
The World Bank has turned
from Saulus to Paulus;

346
00:15:30,625 --> 00:15:33,524
under Wolfensohn, they became,
I would say,

347
00:15:33,524 --> 00:15:36,376
the strongest anti-corruption agency
in the world.

348
00:15:37,135 --> 00:15:39,134
Most of the large companies

349
00:15:39,155 --> 00:15:41,154
are now totally convinced

350
00:15:41,175 --> 00:15:42,820
that they have to put in place

351
00:15:42,841 --> 00:15:44,840
very strong policies

352
00:15:47,000 --> 00:15:48,999
against bribery and so on.

353
00:15:49,900 --> 00:15:52,899
And this is possible because civil society

354
00:15:52,900 --> 00:15:54,899
joined the companies

355
00:15:54,900 --> 00:15:56,899
and joined the government

356
00:15:56,900 --> 00:15:58,899
in the analysis of the problem,

357
00:15:58,900 --> 00:16:00,899
in the development of remedies,

358
00:16:00,900 --> 00:16:03,899
in the implementation of reforms,

359
00:16:03,900 --> 00:16:06,899
and then later,
in the monitoring of reforms.

360
00:16:06,900 --> 00:16:09,899
Of course, if civil society organizations

361
00:16:09,900 --> 00:16:11,204
want to play that role,

362
00:16:11,225 --> 00:16:14,664
they have to grow
into this responsibility.

363
00:16:15,352 --> 00:16:18,725
Not all civil society
organizations are good.

364
00:16:19,352 --> 00:16:21,879
The Ku Klux Klan is an NGO.

365
00:16:21,900 --> 00:16:23,899
So, we must be aware

366
00:16:23,900 --> 00:16:25,899
that civil society

367
00:16:25,900 --> 00:16:27,899
has to shape up itself.

368
00:16:27,900 --> 00:16:29,899
They have to have a much more

369
00:16:29,900 --> 00:16:32,370
transparent financial governance.

370
00:16:32,393 --> 00:16:35,392
They have to have a much more
participatory governance

371
00:16:35,413 --> 00:16:37,711
in many civil society organizations.

372
00:16:37,732 --> 00:16:40,962
We also need much more competence
of civil society leaders.

373
00:16:40,996 --> 00:16:43,995
This is why we have set up
the governance school

374
00:16:44,016 --> 00:16:46,302
and the Center for Civil Society
here in Berlin,

375
00:16:46,323 --> 00:16:49,377
because we believe most of our educational

376
00:16:49,398 --> 00:16:51,579
and research institutions in Germany

377
00:16:51,600 --> 00:16:53,599
and continental Europe in general,

378
00:16:53,600 --> 00:16:55,007
do not focus enough, yet,

379
00:16:55,028 --> 00:16:57,027
on empowering civil society

380
00:16:57,048 --> 00:16:59,491
and training the leadership
of civil society.

381
00:16:59,512 --> 00:17:02,697
But what I'm saying from my very
practical experience:

382
00:17:03,600 --> 00:17:06,598
If civil society does it right

383
00:17:06,599 --> 00:17:09,002
and joins the other actors -

384
00:17:09,022 --> 00:17:11,021
in particular, governance,

385
00:17:11,042 --> 00:17:14,383
governments and their international
institutions,

386
00:17:14,409 --> 00:17:16,948
but also large international actors,

387
00:17:16,969 --> 00:17:19,397
in particular those which have
committed themselves

388
00:17:19,419 --> 00:17:21,417
to corporate social responsibility -

389
00:17:21,439 --> 00:17:24,008
then in this magical triangle

390
00:17:24,075 --> 00:17:25,901
between civil society,

391
00:17:25,922 --> 00:17:27,921
government and private sector,

392
00:17:27,942 --> 00:17:30,363
there is a tremendous chance

393
00:17:30,384 --> 00:17:33,384
for all of us to create a better world.

394
00:17:34,310 --> 00:17:35,460
Thank you.

395
00:17:35,481 --> 00:17:37,481
(Applause)