Civil Society, Economy & Trade, Global, Headlines

Opinion

The G20 needs to strengthen regulatory authorities across its membership and expand sanctions for violating Anti-Money Laundering requirements.

WASHINGTON DC, Jul 1 2022 (IPS) – The G20 is meeting again next week in Indonesia for the second time this year- at a moment when the world is facing the most difficult economic, political and social challenges for decades.

At their core, these problems are driven by corruption- from the “weaponization” of graft by Russia in Ukraine to the lack of regulation of the enablers of corruption in G20 countries such as the UK. This malfeasance costs lives and livelihoods- and is directly responsible for everything from energy black-outs to food and fuel shortages.

Critical decisions are being made by the G20 about the ways that governments can collectively manage what is now considered a significant transnational threat to peace and prosperity. But despite the earnest anti-corruption commitments made by G20 countries annually, follow-up and delivery on these commitments is a challenge.

Civil society has to make its voice heard on these issues now, before it is too late. The Civil-20 (C20)– which we Co-Chair- engages the G20 on behalf of civil society. Over the past several months we have collectively gathered ideas from civil society around the world related to five central corruption challenges on which the G20 must take action immediately: Anti-Money Laundering (AML) and asset recovery; beneficial ownership transparency; countering corruption in the energy transition; open contracting; and the transparency and integrity of corporations.

This is what the C20 members are telling the G20 it needs to do now. First, effective anti-money laundering efforts are key to detecting illicit financial flows from corrupt activities in countries like Russia.

The G20 needs to strengthen regulatory authorities across its membership and expand sanctions for violating AML requirements, in particular for large financial institutions and what are called Designated Non-Financial Businesses and Professions (DNFBPs) that facilitate illicit financial flows (such as lawyers or accountants).

Similarly, when assets are returned they need to be aligned to GFAR principles, including through the engagement of civil society and community groups to support the transparency of this process.

Second, the G20 has committed to lead by example on beneficial ownership transparency (the real ownership of companies) and has the opportunity to strengthen this commitment by strengthening G20 High-Level Principles on Beneficial Ownership Transparency in line with improved global standards, including those recommended by the Financial Action Task Force (FATF).

One challenge is integrating data and G20 member countries should also implement the Beneficial Ownership Data Standard to share and analyze data more easily- which would dramatically improve the ability of citizens to understand who owns companies that might be involved in corruption.

Third, there is massive amounts of corruption as the world transitions to clean energy, but corruption risks in the renewables sector are not unique- they follow many of the same patterns we have seen in infrastructure and the extractives industries, for example. As more and more countries transition towards renewable energy, it is important to prioritize resource governance in ways that align with existing agreed-upon high-level principles and best practices.

The G20 must regulate lobbying activities around clean energy- including through lobbying registries; enforce a strong and credible sanctions regime, including public databases of companies banned from tenders; and support independent civil society monitoring of large-scale energy projects through integrity pacts and other similar vehicles that help to ensure transparent procurement.

Fourth, government contracting is rife with collusion, nepotism and graft. The G20 must open up contracting processes and strengthen open data infrastructure by sharing information across the whole cycle of procurement for projects- from planning to contracting to awards and implementation.

Governments must also publish high-quality open data that is readily machine-readable so it can be used across multiple systems. This does not mean starting from scratch- there are standards for this, like the Open Contracting Data Standard (OCDS) and the Open Contracting for Infrastructure Data Standard (OC4IDS). It is a question of commitment.

Finally, not all G20 member countries are party to the OECD Anti-Bribery Convention and private sector bribery is not criminalized in every G20 member country as per the UNCAC provisions. This means companies can legally offer bribes to win contracts, and this has to be outlawed immediately.

The EU Directive for Corporate Responsibility Due Diligence includes requirements that the G20 should adopt immediately- for instance to identify the actual or potential adverse human rights impacts of corruption; to prevent or mitigate the potential impacts of bribery; and improve public communication around due diligence processes.

G20 members should also regulate the “revolving doors” through which government and business people can engage in favoritism; and invest in better partnerships between entities working on these issues such as regulators, law enforcement agencies and civil society.

This might all seem quite technical- but the negative impacts of corruption are not felt in government meeting rooms, but in the everyday lives of citizens. The G20 has for too long made excuses for the lack of action on this topic, and we are now seeing the devastating effects. Unless action is taken now, it will be too late.

These ideas were gathered through a consultative process as part of the C20 Anti-Corruption Working Group (ACWG), and represent the inputs of many civil society organizations.

Blair Glencorse is Executive Director of Accountability Lab and is Co-Chair of the C20 ACWG.

Sanjeeta Pant is the Global Programs and Learning Manager at the Lab. Follow the Lab on Twitter @accountlab.

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Civil Society, Economy & Trade, Global, Headlines

Opinion

With the bloody war in Ukraine dragging on, can the G20 still justify procrastination on the global anti-corruption agenda? Credit: Marianela Jarroud/IPS

WASHINGTON DC, Mar 25 2022 (IPS) – The world has quickly transitioned from a global health crisis to a geopolitical one, as the war in Ukraine rages into its second month. But the Russian invasion of Ukraine is just the latest in a long list of challenges that at their heart are either caused by or exacerbated by corruption.

Just this year, think of the protests in Sudan, the coup in Burkina Faso, the nationwide demonstrations in Kazakhstan, or the Portuguese elections, for example- all driven, one way or another, by graft.

Now- countries including the US and Europe– are coming together to freeze the assets of Russian oligarchs, but this is not just about Putin’s kleptocracy. As world leaders meet at the G20 next week, it is imperative that they step-up further to fight corruption both at home and abroad.

The Civil-20 (C20), which engages the G20 on behalf of civil society, has been calling for increased accountability from world leaders on critical anti-corruption issues for a long time. The war in Ukraine has only reinforced the need for a focus on the priorities identified by the C20 this year.

First, combating money laundering and the recovery of stolen assets. There are numerous studies that indicate that as much as 85% of Russia’s GDP is laundered into countries including the UK and the US.

There are networks of enablers in Western countries that facilitate this process- from accountants, to lawyers to real estate agents (known as Designated Non-Financial Business and Professions (DNFBPs).

But according to the data collected by Accountability Lab for the G20 Anti-Corruption Commitments Tracker, not all G20 member countries are compliant with FATF recommendations on DNFBP due diligence.

Similarly, others do not have effective frameworks to disclose information on recovered assets. Recognizing the increased risks to anti-money laundering and asset recovery efforts from such omissions, the C20 has called for verified beneficial ownership data through public registers; and the assessment of the effectiveness of measures adopted by the G20 member countries including sanctions for non-compliance.

Second, countering corruption in the energy transition. The G20 Indonesian Presidency has included a sustainable energy transition as a priority issue for 2022. More and more countries, especially in Europe, are cutting ties with Russian energy supplies, which will lead to a more rapid shift of resources towards renewables- but the potential in this for corruption is huge.

Certain countries and energy companies have a variety of incentives to maintain the status quo in corrupt ways; while the supply chains for raw materials for renewable energy are also wide-open for illicit activities. G20 countries urgently need to better understand the level and types of corruption in renewables; and commit to providing transparent data around licensing contracts and budgets.

In this, grassroots civil society groups can be valuable allies by filling information gaps and closing feedback loops in communities affected by renewable energy related projects.

Third, the transparency and integrity of corporations. The recent sanctions against Russian oligarchs have renewed focus on corporate governance and how corporate compliance on issues like foreign bribery, corruption and conflict of interests- including in state owned enterprises and public private partnerships (PPP)- are effectively enforced.

For instance, the Foreign Corrupt Practices Act (FCPA) focuses on anti-bribery and internal controls- and is likely to be further enforced, particularly in countries with close ties to Russia.

But beyond this, G20 member countries must also live up to past commitments to strengthen transparency and integrity in business by criminalizing private sector bribery; enacting whistleblower policies in the private sector; and ensuring accounting and auditing standards to prohibit off-the-book accounts.

Fourth, beneficial ownership transparency. The level of secrecy used by Russian oligarchs to hide assets through shell companies, trusts, partnerships and foundations has been headline news. Concerns around beneficial ownership transparency data (the data on who really owns companies) is not new (see this call to action for example).

While G20 countries have made progress within their national borders, there are often lax laws in offshore tax havens that are under their jurisdictions. Equally, beneficial ownership data should not just be open (to regulators and enforcement agencies), it should be public. Citizens and civil society everywhere should be able to monitor conflicts of interest or relationships between policymakers and corporations, free of charge.

It still costs $40 to access beneficial ownership data in Indonesia for instance- making this far too expensive for the average citizen. All G20 countries should lead by example and commit to open, public beneficial ownership registers.

Finally, Open Contracting. The recent focus on how the Russian military may have misused procurement processes has sadly highlighted again the importance of due diligence and open data. Civil society has unequivocally called on G20 member countries to proactively disclose information at every step of public procurement processes, in line with Open Contracting Data Standards as well as the Open Contracting for Infrastructure Data Standard, and to increase audit and citizen oversight in public procurement.

These reforms are past due. At the same time, successful initiatives like Opentender.net in Indonesia show how civil society can partner with governments to ensure citizen led oversight and the transparency of public procurement.

The Russia-Ukraine crisis is a stark reminder of how corruption issues must be central to any discussion about the causes and solutions to geo-political problems. The C20 has already outlined for G20 leaders how to address these issues- they now have the responsibility to implement these reforms.

Even in peace-time, the economic and human costs of corruption are massive. With the bloody war in Ukraine dragging on, can the G20 still justify procrastination on the global anti-corruption agenda?

Blair Glencorse is Executive Director of the Accountability Lab and is the International Co-Chair of the Civil 20 Anti-Corruption Working Group in 2022.

Sanjeeta Pant is a Programs and Learning Manager at Accountability Lab and leads the G20 Anti-Corruption Commitments Tracker. Follow the Lab on Twitter @accountlab and the C20 @C20EG

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