Corruption as a Problem in Nepal: Effects on the Economy-II

Devendra Raj Pandey

How does Corruption work?

Corruption is an old scourge in Nepal as everywhere else. The concern today is its scale and dimensions that have little resemblance with similar experience historically. First, corruption started in Nepal, like in other societies, with some greedy public officials in some offices such as customs, forest departments, land revenue departments and so on taking bribes for the service provided to their "clients". Though legally and socially an unacceptable behaviour, the adverse effect of such exchange on the economy or the society was limited and localalized, even when such individual aberrations gradually engulfed other public offices. And this was probably so even when such corruption was gradually accompanied by high level corruption engineered to enrich members of the ruling families and their hangers on by gifting the commons such as public lands and forests for private ownership and uses.

Second, with the increase in the country’s development budget and the entry of larger projects through foreign aid financing, the character of corruption changed qualitatively since the late 1970s or so. Graft in public works, for example, graduated from what the local contractors paid to engineers and overseers at public cost to the scale and character of what came to be known as "grand corruption", a process linked with sinister alliances built internationally. "Commission agents" flourished whose main responsibility was to find officials and influential persons within and outside the formal decision-making system and help sell the goods and services supplied from abroad by bribing. The cost of the projects (or of goods such as imported fertiliser) escalated on account of competition not so much in bidding as in bribing. Corruption thus became a big economic burden on account of inefficiencies and leakages entailed. From this point on, corruption also became a problem in governance. Extra-systemic agents and interests accountable to none became the real decision-makers. Third, "grand corruption" associated with international business transactions underwent yet another qualitative change when its effect on decision-making took a more pernicious turn. The "commission agents" were no longer limited to paying bribes to have their wares procured for a project that the government had already decided to undertake based on its development priorities and related criteria. They now participated in decisions on the actual choice of projects to be approved and implemented. Different agents of different suppliers of different exporting countries would compete with one another for getting their project selected for donor financing and implementation, making a mockery of the planning and policymaking process. The defining factor in project selection could no longer be the economics of the project or its strategic salience. The choice of project (and, for that matter, technology that goes with it) was influenced by the relative clout and bribe-paying capacity of the commission agents, not the objective reality of the country or the socio-economic attributes of the project. The economic cost of corruption escalated because the bribe to be paid came from the heavily padded price of the goods and services supplied. At the same time, the cost became irrelevant to decision-making as the amount of commission (bribes) to be exacted and paid to the power brokers became more important than the social return to be expected from the project.

Fourth, at present, all of the above dimensions of corruption are prevalent in the country. Curiously, "grand corruption" may be on hold momentarily because the implementation of major development projects, too, is on hold as a result of many other deficiencies in government, in addition to corruption. Furthermore, there is also a room for hoping that, with the donor countries taking a serious view of misgovernance, their policies and measures including the OECD convention will be a deterrent to such corruption. Nonetheless, the general perception is that corruption has now grown to be a monster that is eating into the vitals of the society affecting all aspects of people’s life and their aspirations for development. With the advent of democracy since the 1990s, corruption, paradoxically enough, has become a more intractable problem. Under the authoritarian dispensation, political corruption meant the abuse of authority by the ruling families (and their extended clan) for personal enrichment. Such abuses occurred in plenty before 1990. Towards the later phase of that regime, political corruption also started assuming its modern character when public resources including the public lands and commons were given away for earning and retaining loyalty to the otherwise unpopular regime. Anything from import license (to import goods to be smuggled into India) to bank loans in concessional terms were similarly, and increasingly, channelled to favoured parties. Smuggling in and out of the country of gold, drugs and arts and antiques (including idols of Hindu and Buddhist deities) is also a product of this era.

At present, however, political corruption has gone beyond the quest for personal enrichment by the politicians and other members of the ruling classes. Corruption has become a means for accessing power, retaining it and for making more money for a more permanent hold on power by political parties as well as individuals. Ambitious politicians do this, at the individual level so that they can have adequate following in the parliament. This is also done at the party level in order to access resources necessary to successfully compete against rival parties in elections and other critical moments of test of one’s political power. It is such political corruption, bred as an inevitable part of political competition, that makes the problem intractable at the moment. One difference between political corruption as at present and its counterpart in the earlier, authoritarian regime is that the rulers in the past used corruption for the stability of the regime they were a part of. They were misguided but they did what they did in the interest of the regime they wanted to sustain. Up to a point they succeeded, though ultimately chickens did come home to roost in 1990. At the moment, political corruption has little do with the interest of the democratic regime that all the political parties and leaders nominally subscribe to. If anything, it has damaged the prospects of democracy to a much earlier stage of its evolution than when corruption began to affect the future of the ancien regime. (To be continued)

Northern-Southern NGO Relationship

Devaki Shrestha

The northern NGOs and the multilateral agencies had been busy discovering a phrase to define their relationship with the southern NGOs. They energized NGO professionals, social development consultants, multilateral corporation executives, NGO leaders, journalists and academics to participate in this search process. The exercises to define the relationship encompassed seminars, meetings, research studies, consultations and writings. There were loud talks, popular mobilizations, serious studies, ritualistic conferences and numerous workshops. In the search campaign that took about four decades, several lofty phrases surfaced that included contractual arrangements, alliances, solidarity, partnership, collaboration, cooperation etc. However, most of the people in the NGO world preferred to use the term ‘partnership’. They thought that the popular term ‘partnership’ would impress northern individual as well as corporate donors. In addition, that term would give some relief and a sense of pride to the southern NGOs. By default, that also might contribute to humanize the relationships between northern and southern NGO bureaucracies in general and functional level employees in particular. Therefore, it has been accepted as a useful word to use in all billboards, be it in professional writings, evaluation studies, project documents, appeals asking for donations and speeches. Of course, the term ‘partnership’ mesmerized many development pundits. Therefore, ‘partnership’ topped the list of NGO jargons and vocabularies. It happened not only because of the reasons mentioned above, but also by accepting this lofty word, there was no practical obstacle to continue the northern NGO’s existing relationship behaviours and characters that included domination, distrust and subjugation.

Words do not produce behaviours; rather practices and behaviours create glossaries. The spin-doctors can corrupt the uses and meanings of the words, phrases or sentences. The same happened to ‘partnership’. The most important factor in defining relationships is the power equation. Robert Chambers (Ideas for development: reflecting forwards, Institute of Development Studies, Sussex, England, 2004: 28, website: www.ids.ac.uk/ids/bookshop) says, "Power and relationships are intimately interwoven. ..... Partnership implies collegial equality but aid agencies with funds often call the shots." Of course, aid agencies including northern NGOs dictate terms because they have the control over funds.

The term ‘partnership’ has been widely used in business to define a form of relationship. It has three important factors – investment of capital, management of an enterprise and sharing of risks. All partners share common goals, basic management culture and mutuality of risk-taking attitude. Whilst adopting the same word to define their relationship, the not-for-profit agencies’ guiding-lights did not critically examine its applicability to describe their reality.

Northern NGOs harvest funds. They are the farmers of fund raising. They position themselves strategically as the champions of humanitarian cause or as advocates of human wellbeing, which includes but not limited to elimination of hunger, education and basic health for all, peace, justice, rights and people’s empowerment. Both, humanitarian cause and the human wellbeing are nothing more than the cosmetics for a large number of northern NGOs as they are private non-profits and not voluntary agencies; they are professionally run social marketing enterprises and not the representative people’s organizations. Therefore, they need funds to maintain their own bureaucracies and sustain their own organizations. They need practitioners and implementers to ensure the continuation of their existence by playing an intermediary role and getting a slice of the pie to cover their administrative and operating costs. The need of funds creates compulsions to invent numerous ornamental statements (visions, missions, strategies and so on), to find out implementers (southern NGOs, community-based organizations, consulting firms etc) and, to launch image-building exercises, continuously. These are their basics. This is applicable for a large number of northern NGOs, though there are exceptions.

On the other side, most of the southern NGOs exist by mixing idealism with creation of opportunities for the promoters and functioning as the processing enterprises, which package poverty, marginalization, injustice, deprivation, etc. They process poverty and generate funds. In the same way, they process funds and provide services. They have mastery of processing, packaging and repackaging. Southern NGOs talk loud to their service recipients and wag their tails in front of donors, including northern NGOs.

Northern NGOs insert most of the ideas, strategies and program philosophies in any ‘partnership’ programs according to their donor’s wishes followed by their own organizational mandate. The relationship, though, might be camouflaged by ideals of equality and mutual respect, is no different from the relationship between donors and recipients in a contractual arrangement. Irrespective of some signs and symptoms of mutuality, the relationships have been dominated by the wishes of the donors. In all designs and applications, the southern NGOs play the role of a marginalized junior partner, if at all.

Northern NGOs talk loudly about transparency, accountability and sustainability of the southern NGOs. It sounds that the talk is all about an infant who is at the verge of departure from this world to say "Hello!" to God. Northern NGOs behave in an unjust, disrespectful and unequal manner with their southern cousins when the issue is that of utilization of the funds. Their auditors play the role of an accuser or that of an investigating official. The southern NGOs not only fear the auditors but also most of the time they have to go beyond irritation and unnatural shivering. The second factor to add salt to their injuries are the bureaucrats of northern NGOs, as most of them think that southern NGOs are run by the spin-doctors, manipulators and crooks in disguise. For most of the southern NGOs, the third load is none other than they, themselves – full of contradictions, double-speak and questionable intentions and acts. As the fourth factor, there are program evaluators, mostly the consultants, who often play the role of a villain. Many of them focus on finding faults. Although, they are much better than the humiliating auditors, northern NGO bureaucrats and southern NGO promoters, they also contribute to lower down the morale of southern NGOs. All these actors push the lager southern NGO family in a defensive mode. This phenomenon is not limited to the management of a particular agency but also it has influenced the southern NGOs in formulating standards of relationships with their donors.

Another critical factor that influences relationships between northern NGOs (donors) and southern NGOs is the role of the donor’s donor. Nearly, all northern NGOs play the role of an intermediary and their donors expect certain ways in utilizing their funds. Their approach determines the behaviours of the northern NGOs. Hence, the range of inspections, overseeing, accusing, supervisions, investigations, suspicions, etc gets larger spread. The same is applicable to other bilateral as well as multilateral aid agencies and the transnational corporations. Therefore, the loud talk of partnership in this business of grant funding for a humanitarian or a social cause has become an ornament with some exceptions.

This is high time to examine the relationship objectively and give it a name that reflects the underlying ethos. Partnership among northern NGOs is perfectly possible as more or less, they are in the same core business of raising funds for social or humanitarian cause. Similarly, partnership among southern NGOs could flourish as they also are in the same core business of supplying services for social or humanitarian cause. Both arrangements have sound foundation of commonality of the core business. However, the northern and southern NGOs differ fundamentally in the core business, forget that both of them are called "NGOs". Somebody might argue that both types of NGOs are linked with similar motivation, and that connects them for a larger social or humanitarian cause. Therefore, they are in the same business. Remember, department of roads builds roads by employing the services of road construction contractors. Both of them are in the same larger business of road construction. However, they are not partners.

Broadly, there are three options available to define the relationship between the northern and southern NGOs. First, call it service contract, if in a specific arrangement that reflects the reality and throw away all pretensions. Second, if the particular relationship could be best explained as an alliance, say it alliance, and give it the character and respectability the relationship deserves. Third, if you dare to say the relationship as partnership, then prove it with evidences, facts, logical reasoning and profound conviction. Primarily, bring equality into practice, particularly in the critical area of power sharing. Are the northern NGOs ready to accept "collegial equality" in dealing with their southern cousins?

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