It is an honor to be with you. Bob Zoellick is an old friend, and as he mentioned, I chair the Judiciary Committee as well as the Appropriations subcommittee that provides the United States’ annual contribution to this institution.
What he didn’t say is that having Bob as President of the World Bank gives me and others in Congress a great deal of confidence.
I have supported the World Bank’s mission throughout the 36 years I have been a United States Senator. There have been times when I disagreed with some of the Bank’s decisions, or felt its policies fell short.
But I have always worked to try to obtain the funds to fulfill the United States commitment to this institution, because it can play such a unique and important role in setting the example for how we collectively confront new global development challenges.
One of the issues which I believe governments – including the United States – and the international financial institutions, as well as the United Nations, were too slow to grasp is the corrosive effects of corruption on development – whether economic and social development and the reduction of poverty, or the development of democratic institutions.
But in the past few years, public corruption has become a key concern of donor and developing countries alike, and I applaud the World Bank – and this Alliance – for confronting this difficult but critically important issue. It is an endemic problem that touches every country in the world, which we must face head on, together.
Today we face an unprecedented, global economic crisis that has exposed serious weaknesses in the world’s leading economies and devastated the struggling economies of many developing countries.
As we seek to strengthen our economies and to help the poorest countries, widespread, systemic corruption is among the biggest obstacles.
As each of you knows, public corruption is a blight wherever it occurs. It chips away at the trust that citizens have in public institutions, it undermines democracy and the rule of law, and it deters individuals from engaging in civic life and companies from doing business.
As a former prosecutor, I saw the effects first hand. Prosecuting corrupt public officials and police officers was one of my highest priorities, because of the intolerable message that would be sent if it were ignored.
But these effects are felt particularly deeply in developing countries. There, the result can be civil unrest, even the overthrow of democratically elected governments that have lost the public’s respect and support, making effective international aid difficult if not impossible, and discouraging badly needed foreign investment.
Building the capacity to address corruption worldwide is both a daunting challenge and an absolute imperative, and we must be united and unequivocal in our response. For influential countries like the United States, that means first and foremost leading by example, which we have not always done in recent years.
We have seen the stain of corruption at all levels of our government and across both political parties, including the impeachment of judges and convictions of members of Congress and state and local officials. (In fact, in les than an hour the Senate begins impeachments proceedings on a Federal judge.) This misconduct, and the abuse of public funds, has at times shaken the confidence Americans have in their government.
The United States has taken some key steps to shore up its ability to fight corruption at home, which can help serve as a model for other countries.
In 2007, Congress passed important ethics and lobbying reforms, tightening restrictions on those who hold public office and those who seek to influence public officials on behalf of private companies.
Last year, President Obama instituted similar controls to prevent conflicts of interest and restrict the influence of lobbyists at the White House. We have also seen several successful, high-level prosecutions of senior government officials for serious corruption offenses.
Effectively rooting out public corruption requires giving investigators and prosecutors the tools and resources they need. There are many laws on the books for prosecuting public corruption in the United States, and the FBI and Department of Justice have stepped up their efforts in recent years. But gaps remain, and I and others have been working to try to fill them.
I have twice introduced and worked to pass legislation called the “Public Corruption Prosecution Improvements Act”, which would strengthen key aspects of federal criminal law and enhance the capacity of investigators and prosecutors to attack public corruption nation-wide.
The bill would provide an additional $100 million to support these efforts, because resources were shifted away from fraud and corruption enforcement to counter-terrorism after the September 11th attacks.
The bill would also extend the statute of limitations for the most serious public corruption offenses, and increase sentences for some key offenses.
It would preclude public officials from receiving anything of value because of their official position, other than what is explicitly permitted. This would help prevent corruption and the appearance of corruption, which can be just as insidious. The Judiciary Committee has twice reported this bill, and I will keep pushing to get it passed.
The United States unfortunately took a step backward this year in its efforts to fight fraud and corruption. Earlier this year, the Supreme Court sided with a former executive from Enron, the energy-trading corporation that collapsed with devastating impact on the economy a few years ago.
The Court severely narrowed a law that plays an important role in combating public corruption, corporate fraud, and self-dealing. I have been working to close this gap, and I introduced legislation last month that would restore the government’s ability to prosecute key categories of corruption cases.
Even with these gaps, anti-corruption laws and their enforcement in the United States remain strong. Recent prosecutions of high level officials, while regrettable, are also in some ways a sign that the system is working. But we must strive to make our corruption laws as comprehensive as possible and ensure that they are enforced.
Similarly, those of us who hold public office must meet the highest ethical and legal standards every day.
I have also worked to strengthen our anti-fraud laws and to make sure that we fight fraud aggressively, including working to detect and deter fraud related to government spending. The brazen theft of public funds by private contractors in Iraq and the fraud in our health care system are but two examples.
Congress last year passed the “Fraud Enforcement and Recovery Act,” a bill I introduced which was the most significant anti-fraud legislation passed in more than a decade. We also included key anti-fraud provisions in the health care reform and financial regulatory reform bills that passed into law this year.
As governments engage in stimulus spending, provide increased international aid, and step in to preserve struggling financial institutions, protecting these public investments from fraud will be more and more important.
Leading by example and cracking down on corruption and fraud at home is essential, but it is not the full extent of our obligation. It is vital that American companies not participate in corruption abroad. I have been a supporter since it passed in 1977 of the “Foreign Corrupt Practices Act”, which makes it a crime for American individuals and businesses, and those with close ties to the United States, to engage in bribery abroad.
This law is critical to the integrity of international business and development. Individuals involved in bribery schemes must face jail time for their offenses. Similarly, corporations must face criminal penalties, or a culture of corruption will persist, perpetuating violations over time, as we have seen in many countries.
For a time, the “Foreign Corrupt Practices Act” made a strong statement but was of limited use. The United States stood virtually alone, as few other countries similarly punished their companies for engaging in bribery overseas, and many international corporations ignored the problem. In part for that reason, the law was not used as often as it could have been.
All of that has begun to change. The United States is cracking down aggressively on violations of the “Foreign Corrupt Practices Act”. In the past two years, the Justice Department charged more than 50 individuals and collected nearly $2 billion in criminal fines in cases related to this law. Other leading economic powers have begun enacting and enforcing similar laws, and international businesses have begun to change their ways.
As more countries crack down when their companies engage in corrupt practices abroad, we may start to finally change the culture in countries that have tolerated corruption. When clean government becomes a necessity for international investment, those countries desperately seeking business investment will begin to prioritize curtailing corruption.
We must also work to help countries strengthen the institutions of democracy, particularly independent judiciaries, and to learn how to stop corruption. Supporting those efforts has become a key priority of the World Bank, as it has for the United States.
Several years ago I wrote a law which has the unambiguous title “Anti-Kleptocracy”. It prohibits the issuance of visas for admission to the United States of officials of foreign governments and their immediate family members who have been involved in corruption related to the extraction of natural resources.
There is no shortage of countries whose children are hungry and dying of curable diseases, while corrupt public officials siphon off the profits from oil, gas, timber and mining, drive expensive cars and own extravagant homes in Malibu or the French Riviera. These officials treat their country’s natural resources as their own bank account.
We have also seen how corrupt officials in such countries have successfully intimidated and manipulated judges, prosecutors, the police and the military, to arrest and silence whistleblowers and political opponents and remain in power indefinitely.
No democracy, I believe, can survive or thrive without a justice system that the public has confidence in. Yet reforming corrupt justice systems and strengthening the rule of law, when the officials in power are determined to preserve the status quo, is exceedingly difficult.
We in Congress are trying to prevent our foreign aid from falling into the wrong hands, or from being misused to prop up corrupt governments.
I am encouraged that we are finally enacting laws that require the public disclosure of payments by American companies involved in extractive industries overseas, and of the revenues of foreign governments that receive United States aid. The people of those countries can finally begin to hold their governments accountable for the misuse of public funds.
But it is not easy, and we are not always successful. One need only look at Afghanistan today, where corruption is rampant, there are frequent reports of pilfering of international aid by public officials and their friends and families, and where the United States has compelling national security interests.
We saw unprecedented abuses in Iraq, where corrupt American contractors, the absence of a functioning justice system, and Iraqi officials who had nothing to lose, created a culture of corruption on a massive scale.
I sponsored two pieces of legislation – the “War Profiteering Prevention Act,” which would make intentional over-billing under war contracts a federal crime and strengthen contracting fraud statutes, and the “Wartime Enforcement of Fraud Act”, which was passed a couple of years ago.
These measures seek to bring greater accountability to contractors working overseas and to give the government new, more potent tools to prosecute fraud and abuse by private companies filling government contracts during war time.
I for one do not view protecting national security, fighting terrorism, and combating corruption as competing interests. I see them as complementary.
We should have learned by now that we do no service to ourselves, and neither to the people of other countries, if we turn a blind eye to public corruption.
If we tolerate this type of abuse—
- we fail our own citizens;
- we fail the people of the countries we want to help;
- we undermine the rule of law domestically and internationally;
- we sully the reputation of the United States; and
- we damage our long term national interests.
The same can be said for every country represented here today.
I hope that all of us can commit to work to clean our own houses, so we can be examples to the rest of the world.
I hope we can commit to work together on corruption enforcement, and to continue to use this Alliance to share information and best practices, because international cooperation can be absolutely essential to successful investigations and prosecutions.
I hope we can further commit to do all we can to ensure that our governments, businesses, and citizens do not engage in corrupt practices abroad.
Only if we unite in our commitment to shunning, and punishing, corruption at the highest levels, will we create real incentives for other countries to change cultures where corruption flourishes.
I applaud the World Bank for turning its attention and its influence to addressing this problem. I applaud all of you for joining this effort. I cannot think of a more timely and important issue.
By working together we can make real progress toward fairness, economic prosperity, and global justice.