Uphill Battle

Fighting graft will require much  more than stringent new laws

By AKSHAY SHARMA

The new anti-corruption legislation, coming on the heels of the establishment of a high-level judicial commission to probe the property of people who have held positions of power and privilege after the political change of 1990, has renewed the debate over whether Nepal may finally be able to rid itself of a scourge that has emaciated the country.

Some argue that the new law will provide bodies like the Commission for Investigation of Abuse of Authority sweeping unchecked powers in the name of fighting corruption, undermining the core principles of the democratic polity. Others argue that efforts like the setting up of a commission to probe graft are likely to fizzle out once the people start paying attention to something else.

But the discussions have overlooked a critical factor that has fueled corruption in Nepal and other developing countries. For decades, bribery and corruption have been the tools of the trade for many foreign companies who wanted to do business in developing countries. Millions are secretly paid into offshore bank accounts of dictatorial potentates and obscure government officials alike, homes are discreetly paid for and expensive ëgifts' provided to help secure deals.

After the Paris-based Organization for Economic Cooperation and Development (OECD) endorsed the Convention on Combating Bribery, key Western governments have moved to outlaw acts of bribery by nationals and companies abroad. This has prompted concern that companies from countries that don't have such laws gain an edge over those who are constrained by the OECD convention.

After all, there are still many parts of the world where the wheels of commerce are quietly greased with a payment here and a lavish holiday there. It can be anything from a few notes slipped to a minor official ó to ensure the telephone is connected, say, or an official paper stamped ó to bribery on a major scale. Moreover, many governments still allow companies to claim hefty tax deductions for euphemisms like "education money" to promote business abroad.

"The aim of Nepal's new legislation is laudable enough, since corruption is a blight on much of the world and a brake upon advancement in underdeveloped countries," says analyst Arjun Pandey. "But it misunderstands how business is conducted in many areas."

According to Kailash Tripathy, the former chairman and chief executive of the Bank of Sri Lanka, bribes were the norm among the most respectable of companies wanting licences or concessions to develop energy reserves across the world. Few businessmen, understandably, will talk openly about bribery and corruption. Off the record, however, they admit that enormous amounts go into the process.

Another potential problem in Nepal relates to facilitation payments — 'grease' as it is known in the trade ó which are not usually big amounts. Under the new legislation, every businessman who slips a 100-rupee note into the hands of some functionary is breaking the law. "But these sort of issues are often about the way you do business," says Kajun Piya, an entrepreneur.

"The choice with facilitation payments can be the choice between doing business or not doing business. In theory, as we understand it, if you give a tea boy five rupees to bring your tea in the morning that could be a facilitation payment and therefore against the law," he says.

Those who are expected to enforce the anti-corruption rules often do not have the resources to do so. Moreover, Nepalese officialdom is notorious for bending rules, identifying loopholes and making exceptions ó for a fee. This probably explains the prevailing mood among many Nepalis that, after the new laws come into effect, corruption may change its form but certainly not disappear.