Interview excerpts with Peter Eigen

Transparency International (TI) is the only international, non-governmental organization devoted to combating corruption. The group is based in Germany and has more than 85 independent national chapters around the world. American RadioWorks' correspondent Michael Montgomery spoke with TI's founder and chairman, Peter Eigen. Here are excerpts from their conversation.

What is Transparency International's mission? - Listen

Peter Eigen: We started out with the idea that we should fight corruption as it affects developing countries. We had the feeling that in particular, countries in Africa, Latin America, Asia, needed to be protected against their own, often corrupt, leaders. But also a systematic approach by many international companies who bribed them for contracts, for business. Therefore, our idea that we should develop some tools, some instruments which one could put in place in order to control this corruption.

In the meantime, our mandate has become much broader. Many of our national chapters, and by now we have about 90 national chapters, all over the world, they really would like to focus on their own corruption in their own country. And this is true in Germany where our national chapter is fighting political corruption, corruption in procurement, and so on, but also in Argentina, in Zimbabwe, in India. So now, I would say, we are a movement fighting corruption wherever it shows its ugly face.

How big is the problem of corruption globally? How do you measure the damage? - Listen

Eigen: The World Bank has made an estimate that every year, about $1 trillion are being paid for corruption: bribes in order to buy the wrong decisions about economic policies, ranging from grand corruption to petty corruption in the slums of Nairobi or Calcutta. I think this is probably a very impressive number, $1,000 billion dollars being siphoned from the legitimate economy by payment to corrupt decision makers.

But I believe this is only a small part of the damage done, because if you pay, say, a $5 million bribe to a minister in order to promote a project which has no use, which is even harmful to the economy, say a huge power dam or a huge pipeline that costs $500 million, then the damage to the economy is close to $500 million rather than the $5 million.

It's interesting to note that according to Transparency International's surveys, some of the most corrupt governments in recent times had close ties to the United States. Why is that? - Listen

Eigen: Generally, I would say a positive thing about the United States: Jimmy Carter, in 1977, introduced the Foreign Corrupt Practices Act in the United States. This is legislation that makes it illegal for American citizens or American companies to bribe outside of America. At that time, the American administration was hoping that other major exporting countries would follow suit. Not so much because America wanted to protect the world from corruption, but rather in the aftermath of the Watergate affair, they had found that a lot of this corrupt money which had been paid to foreign officials was flowing back into party coffers of the political system in the United States. Therefore, it was clearly seen as a measure of enlightened self-interest that you stop companies from bribing abroad because it was clear that this money would boomerang back into the system in the United States and corrupt it.

But to the great disappointment of the Americans, none of the friends and partners in the world followed suit. Therefore, many of the European countries and other exporting countries for a very long time did allow their exporters to bribe in foreign marketplaces. So when we started our work in Germany for instance, the German establishment, both political and business establishment, was quite shocked that we thought it was possible to reduce corruption in the international marketplace. They thought it was sort of blue-eyed idealistic, unrealistic, and they treated us like naïve trouble makers, because they felt, "If you want to go into international marketplace, you have to be able to take the heat, and to accept what is customary there." In fact, some people went so far as to say if we impose our European values of integrity and honesty on other societies, this is a form of cultural imperialism. And therefore, they felt what they were doing was not very pleasant but was necessary.

Therefore, many of these countries not only allowed their exporters to bribe, but they even subsidized the systematic bribery through generous tax write-offs, by support, by export financing agencies, export guarantee agencies. And what we found: a system in which even the most respectable companies had no compunction to systematically bribe, to pay huge amounts of money, $5-$10-$20 million, to the decision makers in other countries, in Indonesia, in Nigeria, in India, in order to get billions in contracts in these countries.

Now in this connection, the American system really was relatively positive because there were very few cases of prosecution of American companies who had bribed defense officials in Israel or officials in Egypt or officials in Argentina. But the enthusiasm of the Americans to prosecute their own exporters was moderated by the fact that all the competitors from all over the world didn't have this kind of constraint.

What has changed since then? - Listen

Eigen: In February, 1999, a convention came into play which is now the dominant theory and system in the world which had been promoted by the OECD (Organization for Economic Cooperation and Development) under which 35 signatory states, and these are practically all the rich exporting countries, agree to change their laws, to criminalize foreign bribery by their exporters. It will still be a rather important battle to make sure this legal system is translated into reality. And Transparency International not only played a decisive role in the formulation of that convention, but also in the monitoring of it.

But this is the system that was introduced five years ago. Before then, it was a free-for-all. Coming back to your questions, I believe that indeed the Americans were, at least as far as the letter of the law is concerned, much better positioned than their competitors. Surprisingly to all of us, they came out in a bribe-payers index, which we publish every two years, very badly because the reality apparently, or the perception of reality is different. So the Americans figure behind countries like France or Germany, for instance, in our bribe-payers index. The reason is most likely that during the cold war period, the Americans made a difference between the corrupt leaders who were on their side of the fence and those on the other side of the fence. Therefore, there are the Marcoses, there are the Noriegas, there are the Mobutus who were basically the friends of the United States and therefore the application of this American legal system of integrity and honesty was not as rigorous as it should have been.

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