National and International Integrity Standard

The ACD/CSC work is different from and complementary to anti corruption/good governance programs such as The World Bank’s diagnostic surveys, the OECD’s monitoring groups, Freedom House’s “Nations in Transition” survey, and others. The ACD/CSC focus on the implementation mechanisms of existing legislation regarding anti-terrorism legislation, public integrity, good governance, procurement, liberalization and privatization, and laws governing the financial sector, as referred to in the ACD/CSC Integrity Index. The findings serve to design programs to address the special needs of each country, and provide the appropriate training mechanisms to correct and control those problems detected. The ACD/CSC comprehensive evaluations of anti-terror laws, national and international corruption and adherence to the rule of law, thus could serve as a major policy tool regarding foreign business practices, foreign aid, and terror financing.

The ACD/CSC offers case studies of 3 – 4 months each. The studies would be conducted in countries that have been identified as having a real opportunity for change. At the same time the ACD/CSC plans to conduct a comprehensive evaluation of national and international corruption for the development of an annual Integrity Indicators, and evaluate the implementation of anti-terror financing legislation. This Index could provide a comparative measure on a country – by – country basis of corruption/ anti-corruption/anti-terrorism measures and the effectiveness of their implementation. Following the case studies and the development of models for reform, the ACD/CSC would concentrate on training for government officials, corporate executives, international organization personnel, public interest groups, the media and the like, in ways of fighting corruption and effectively stopping terror financing. The ACD/CSC would continue to monitor and reinforce democratic values and national and international integrity standards, among other things, by updating and publishing its findings and an annual Integrity Index.

Draft Proposal:

Executive Summary (2001)

One of the major hindrances for developing free trade globally is corruption and the inability to measure it. This proposal will outline what attempts have been made to fight international corruption, and will present a outline for an objective benchmark to measure corruption in the form on an International Integrity Standard (IIS). The Standard will aid both the fight against international corruption and the development of fair free trade worldwide.


Corruption is not new, but the US has been at the forefront of fighting it. The Foreign Corrupt Practices Act (FCPA) was enacted in 1977. In the context of the US “War against Drugs,” the Money Laundering Control Act followed in 1986. President George Bush continued to pursue international financial integrity by launching the G-7 initiative that led to the creation of the Financial Action Task Force (FATF), and the subsequent drafting of the 40 FATF Recommendations against money laundering in 1990. Those have effectively become the world standard for countries’ anti money laundering programs.

Recently, at the Summit of the Americas in Quebec, President G. W. Bush called for the reaffirmation of democracy and free trade and spoke of the need to “root out corruption.” The new Bush Administration has already gone on the record when US Treasury Secretary, Paul O’Neill, stated that the need to find a better way to bolster the world economy rather than by bailing out mismanaged, corrupt governments. He stressed the need to find a way to systematically “collect global data and monitor situations before they turn into crises and then formulate policy initiatives to prevent possible catastrophes.”

The Statement of Finance Officials at the G-7 Meeting in Washington DC on April 28, stated: “we believe that implementation of internationally agreed standards and codes offers countries the opportunity to strengthen their basic infrastructure for growth and stability and to provide information to markets in a way that reinforces these goals. Secretary of State Colin Powel followed in his address to the 31st Council of the Americas, by calling to “create conditions that will encourage investment, [because] money is a coward; it will not go where it does not feel safe.”

President Bush’s initiative to fight international corruption would continue the legacy of promoting international financial integrity and fair free trade.

In addition to the U.S. and the international lending organizations, Transparency International (TI) has attempted to fight corruption — It has worked closely with the Clinton Administration, mostly through USAID and with the World Bank. Their Board includes many international figures from the political arena such as Oscar Arias, and their funding comes from organizations such as George Soros’ “Open Society” (about 1/3 of their annual budget.) — TI’s one major success was to help bring media attention to corruption. Unfortunately, its annual “Corruption Perception Index, based mostly on interviews with businessmen, as to how they perceive the “demand” and “supply” of corruption in a given country, is subjective.

Considering corruption’s destabilizing effects on national and international security, the U.S. and most international organizations, including the IMF, World Bank, OECD, UN, OAS and the ADB, have explicitly recognized the need to take more effective action against corruption on a worldwide basis. All these organizations fund programs to combat corruption with little to show for their efforts. (For example, according to the Meltzer Commission report [March 8, 2001], the World Bank’s record showed overall a 70% failure rate of sustainable result of its programs in the poorest countries).

The failure to effectively combat corruption can be attributed to the following major factors:

To begin with, there is no clear definition of what corruption is, nor is there an objective, uniform standard to identify and measure the vulnerability of countries to the various forms and prevalence of corruption. Add to this the fact that most international agreements lack teeth and are impossible to enforce. Furthermore, there is no objective instrument to gauge the success of reform programs. Not surprisingly, all international conventions and programs fail to make even a dent in corruption.

The Need

Since there is no agreement on what constitutes corruption, the surveys, indices and analysis that have been developed to assess it are based on “perception,” not on facts. The US government and the major international organizations have developed and funded many “anti corruption” programs. Yet, the millions of dollars spent on these programs yielded very little.

Clearly, there has to be a better, more pragmatic and effective way to handle this problem.

The International Integrity Standard

The development of an International Integrity Standard (IIS), which would draw together the essential elements of the many international instruments against corruption, would provide another important indicator that will measure the implementation and the effectiveness of the international standards and codes. It would also provide a minimum package of anti corruption measures. The IIS would be an essential policy tool for an objective, practical and measurable systemic anti-corruption reform. It would help to determine whether countries are eligible for loans or any other financial assistance, as well to monitor the implementation and success of reform programs. The IIS would also help to develop safeguards that would make business more reliable, honest and lower the cost of doing business for Americans and others.

The proposed International Integrity Standard (IIS) would form the benchmark against which all countries’ anti corruption programs can be tested. These tests would provide the input for a databank on countries’ anti corruption measures and could help identify the emerging best international practices against corruption. The IIS would provide an objective, result-oriented and measurable approach.

The IIS offers a methodology for assessing the robustness of countries’ economic, legal, and political systems and their existing structures to resist corruption.

The IIS has been developed by the ACD, as an action-oriented standard, which can also become the basis for a “corruption audit.” A corruption audit, based on the IIS would provide, for the first time, an objective assessment based on facts of a country’s seriousness in fighting corruption, that the US and the international organizations could rely on in their pursuit to “root out corruption.” The IIS should become part of the International Financial Institutions conditionallity.

The IIS’s “anti corruption audit” for international organization will focus on:

  • Public disclosure of standards and procedures for allocation and disbursement of funds by international organizations to recipient countries and officials
  • Public disclosure of standards, procedures and contractual arrangements for obtaining private sector funding and bank loans
  • Public disclosure of accounting and auditing arrangements for the use of international and bilateral donor funds
  • Introduction of codes of conduct for officials of international organizations and other donor agencies incorporating the UN definition of bribery.
  • Inclusion of the introduction and implementation of basic anti bribery and anti corruption legislation in recipient countries of top cfa exam prep

To begin with, the proposal will look at the Most Prevalent Forms of Corruption:

  • Nepotism: including impediments against free competition, through favoritism or patronage of family or tribe, as occurs in Asia, Middle East, Africa and Latin America, and parts of Europe, including Eastern and Central Europe
  • Cronyism: including the appointment of friends to political positions as practiced in many areas of the world
  • Kleptocracy: involving the sale at less than market value of state assets to favored customers; this is particularly prevalent in many transitional economies with incomplete or flawed privatization programs
  • Narcocracy: the subversion of political and economic structures with the huge profits from illegal drug traffic
  • Government for hire: bribery of officials to influence government policy, judicial decisions and to obtain favored treatment by government agencies, illegal lobbying and intimidation, as practiced in many industrialized as well as developing countries.

The following are some of the other areas that the IIS focuses on: Elements of Vulnerability to Corruption

  • Overview of the Main International Instruments against Corruption
  • Elements of an International Integrity Standard
  • Cross Border anti Corruption Policies and Practices
  • Methodology for Assessments against the International “Integrity Standard”
  • Development Assistance Projects to Build Resistance Against Corruption
  • Standards to measure implementation of programs

Country evaluation based on the IIS would take six to eight weeks, which will include preparations, site visits, report production and recommendations. Follow up and monitoring of the recommendations should be performed every six months for the following two years, with written reports and site visits.