As prepared for delivery by Shelly Han of the U.S. Helsinki Commission
to the OSCE Economic and Environmental Dimension Implementation Meeting
Vienna, Austria 16 October 2012
At the core of economic security and economic cooperation are basic principles that act as the foundation upon which economic security and cooperation can be built. These principles are commonly referred to as good governance.
Good governance entails the management of government in a manner that is essentially free of abuse and corruption, with an emphasis on the rule of law.
According to the OECD, good governance is characterized by participation, transparency, accountability, rule of law, effectiveness, and equity among other things.
We have only to refer to the Istanbul Document signed in 1999, to see that the OSCE participating States have long recognized the need to tackle corruption. The document states: “We recognize that corruption poses a great threat to the OSCE’s shared values. It generates instability and reaches into many aspects of the security, economic and human dimensions. Participating States pledge to strengthen their efforts to combat corruption and the conditions that foster it, and to promote a positive framework for good government practices and public integrity. They will make better use of existing international instruments and assist each other in their fight against corruption. As part of its work to promote the rule of law, the OSCE will work with NGOs that are committed to a strong public and business consensus against corrupt practices.”
In the United States, we have developed mechanisms to minimize the opportunities for corruption and increase the costs of corruption. For example, the bribery scandals in the 1970s led the United States to enact the Foreign Corrupt Practices Act which prohibits bribery of foreign government officials in order to gain or retain business overseas. Over the years the U.S. has also passed laws such as the Ethics in Government Act, which requires disclosure of financial information of public official and established the Office of Government Ethics to regulate the Executive Branch on ethics-related matters. The United States has also created the U.S. Senate Select Committee on Ethics and the Office of Congressional Ethics to review allegations of misconduct of members of Congress. The Department of Justice prosecutes criminal misconduct violations.
In addition, many Departments and government agencies have their own independent Inspector General that acts as a watchdog on misconduct within that agency. For example, the head of the U.S. Customs and Border Protection recently presented testimony to Congress on efforts to fight corruption within the United States’ largest law enforcement agency. He noted that since 2004, 141 employees had been arrested or indicted for acts of corruption. He also detailed efforts to comply with new laws designed to increase the integrity of the workforce.
Increased transparency can help fight corruption as well as provide for better governance overall because of increased public scrutiny and supervision. In the United States we have taken measures to increase transparency in government and in the corporate sector as a way to keep government accountable and increase investor confidence. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act contains a number of provisions aimed at improving the financial structure, including Section 1504, which requires all foreign and domestic companies registered with the U.S. Securities and Exchange Commission (SEC) to report to the SEC annually how much they pay any foreign government for access to oil, gas, and minerals.
The nature of the oil, gas, and mining sector is such that companies and governments deal with huge sums of money, amounts often seen as an invitation to corruption. Investors need to know the full extent of a company’s exposure when they are subject to expropriation, political and social turmoil, and reputational risks. The European Union is currently negotiating a similar standard.
This new reporting standard is a variation on the reporting model established in the Extractive Industries Transparency Initiative (EITI), an initiative that has made tremendous strides in changing the culture of secrecy that surrounds the extractive industries. This standard of transparency has been endorsed by the G8, the IMF, the World Bank, and a number of regional development banks. The financial leaders of the world know that transparency in natural resource development is key to holding government leaders accountable for the needs of their citizens and we urge the OSCE to do the same.
As discuss the role of the OSCE Economic Forum and the activities of the Economic Coordinator’s Office, we should take into account the ongoing need to fight corruption throughout the OSCE space. The OSCE Economic Coordinator’s handbook on Combating Corruption is an excellent tool, but much more can be done by supporting implementation of UNCAC, the OECD Anti-bribery Convention, the Construction Sector Transparency Initiative, and other similar initiatives.
Fighting corruption and instilling good governance principles are fundamental to security, to economic cooperation, and to the promotion of human rights. We will not have stability if citizens believe their government is ripping them off, we will not have economic cooperation when corruption strangles trade at the border, and we will not have human rights when corruption prevents citizens from getting a fair trial. Good governance is fundamental to our multi-dimensional approach to security and we urge other participating States to support further OSCE efforts in this area.