How did FIFA get into this mess and how can it get out again? Should sponsors have made more of a stand? Were banks and lawyers complicit – and if so, how can they be held to account? Transparency International Chair José Ugaz, one of the world’s most formidable anti-corruption lawyers, addresses these issues and more in the IBA’s third live webcast of 2015, with IBA senior reporter Rebecca Lowe.
RL: Rebecca Lowe, interviewer
JU: José Ugaz
RL I’m Rebecca Lowe from the IBA, and joining me for our third live webcast of the year, at the OECD Centre in Paris, is José Ugaz, Chair of Transparency International and one of the world’s most formidable anti-corruption lawyers. In the 1990s and early 2000s, he acted as the ad-hoc state attorney for Peru in a series of groundbreaking cases, including an anti-corruption prosecution of the former president, Alberto Fujimori, that resulted in the indictment of 1,200 senior government officials. José, thank you very much for joining us.
JU Thank you.
RL Now, as I just mentioned, you are one of the world’s top anti-corruption lawyers, you’ve dedicated your life to fighting for transparency, for accountability, you must have quite strong feelings about the last couple of weeks. Are we seeing a watershed moment here, in the history of corruption in sport? Is this an end to impunity?
JU Well, we at Transparency International knew, some years ago, that terrible things were happening in FIFA, regarding corruption, so that’s the reason why Transparency International released a report on corruption in sport in 2010.
Then, we had some conversations with Mr Blatter and he committed himself to appoint a committee to review the situation of corruption in FIFA and make some suggestions for the future.
In the end, they didn’t review the past and Blatter refused to make public the report, so we were not really happy with that. And what we are seeing now, I think, is just a consequence of decades of passivity in the way that FIFA has been run by the top officials of the organisation, and how they have enriched themselves with illicit practices all around the world.
RL A lot of people might say that this has been a long time coming, as you say - maybe two decades. Why is this only happening now? Why have we not seen this sort of investigation before?
JU Well, I think it has to do with political will. You know, FIFA had the particular issue that since it was a private institution, it was surrounded by impunity. Many countries have huge problems with their national federations that are linked to FIFA, but they were not able to open investigations because they would be immediately debarred from the championships of soccer. So I think that when the American authorities and the Swiss authorities found that these corrupt practices were not only private, involving payments among these officials, but they also crossed some lines and they went into tax evasion and money laundering and racketeering, then that’s why I think it went through the criminal system.
RL And the US were the ones that were able to capitalise on this because of the dollar payments, but should it be the US, really, who has come forward with this prosecution? Where was everyone else? Where were the Europeans, where’s the UK? Why are we depending on the US to do this?
JU Well, to some extent I think it has to do with a lot of wilful blindness, people not willing to take action on things that everybody knows are happening…maybe the United States because soccer is not so popular there and they were not too much concerned about the consequences of that, but I think it has to do more with the ruling in the United States and this possibility of pursuing cases when money goes through the American market. So, anyway, I think the US or Switzerland or whoever gets involved, FIFA was requiring these type of measures many years ago [sic].
RL And why should anyone outside of the sporting world really care about this? Isn’t it just a load of greedy men putting some bungs into their back pockets? I mean, what real consequences does it have for the rest of us?
JU Well, corruption is bad in any case, private or public. Of course, when it goes public, things are worse because it has an impact on the livelihood of millions of people around the world. Now, when we talk about grand corruption, we are talking about the impact of this type of practice on the basic rights of the people.
When corruption is private, it has to do with another set of rules, and this is about fairness and getting into the markets correctly, and in the case of soccer in particular, it has, I think, a big share of public interest.
This is a sport that moves millions of people around the world, and of course when you distort the rules by implementing all these practices under the table, in order to fix matches or to select the countries that are going to be hosting the championships, or when you overpay or you overcharge for the payments of the TV and media rights, then you are distorting the entire business.
RL And also it has very direct impacts on societies and communities around the world as well. We’ve seen Jack Warner accused of diverting funds that should have gone to the Haiti Earthquake Campaign, so in that case we are seeing very real, very tangible impacts on poor communities.
JU Absolutely. Sometimes the linkage between private corruption and the social consequences is not so clear, but in cases like this, we will be seeing, I’m sure, in the following months, what type of impact these practices have generated.
RL And can FIFA really be reformed, do you think? Because sporting bodies do exist in this odd sort of netherworld of governance, don’t they, where they’re not a governmental organisation, they’re not a corporation, they don’t have those levels of oversight, they don’t have shareholders, you can’t have a judicial review against a sporting body, so does it need a fundamental restructuring, or do you think it can actually be reformed as it stands?
JU I’m sure there are big possibilities for changes in the rules and changes in the structures of FIFA. Now I think it’s opening a window of opportunity, because of what we now know about FIFA and its top management, and what will be appearing from the investigations I’m sure, will have also an impact on the national federations. And this is a good thing because then I think every country should go and open their own investigation to see how this business was run within their boundaries.
So as Transparency International requested, at the beginning of the conversations with Blatter, back in 2010, I believe that a new set of rules, a new structure of governance has to be set.
For example, specific terms for being in a specific position. You cannot be running and be chair of a federation for ten, 15, 20 or more years. I think this has been one of the big problems. The leadership of FIFA, all around the world, have been staying in their positions for many years, and transparency in the decision process and transparency and auditing of the movement of the monies is something that should be there, and with the possibility of being in the public domain.
RL And there’s talk about having non-executive directors involved as well, and open ballots and an open register of interest, and also changing the voting rights, so you don’t have tiny pacific islands, which might be more susceptible to corruption, having the same voting rights as the big countries. Do you think those could all have an impact?
JU Of course. Of course. And I think the whole set of rules need to change, because, yes, it was curious that you had these little islands where soccer isn’t even popular… I mean, probably they have these organisations without support of the people, because those are places where this sport is not very well-known or practised. So I think the whole structure of governance of FIFA and the federations needs to be revised, and we would like to see the proposal, visible to the public, of what are they willing to do now with the governance of soccer.
RL And you’ve called for integrity checks, I think that's the right term. What do you mean by that, exactly?
JU Well, as you have, in power, checks and balances - in a state the judiciary is controlling the senate or the congress and the executive - in the same sense, in the private sector, you need to have different bodies in an institution that can make those checks and balances. And this has to be done from an integrity perspective, so transparency has to be the rule, and then you have the possibility of oversight from some bodies to others in order to have these checks and balances from within the institution, and of course opening information to the public.
We still don’t know the results of the Garcia Report, and we were requesting that. And it would be interesting to see what were the findings of this committee at the time.
RL That was going to be my next question, actually. I mean, do you think that FIFA has to publish that report now, if it’s going to have any credibility whatsoever?
JU Absolutely. I mean, why did they hide the findings of this group if it was a group established by FIFA, allegedly, to improve their transparency and accountability in front of the public?
So there is no reason unless they want to hide some terrible findings, why we, the citizens, are not entitled to know what happened inside FIFA.
RL Michael Garcia, who wrote the report, said, when he quit FIFA, that no independent governance, committee, investigator or arbitration panel can change the culture of an organisation. He doesn’t sound very hopeful that FIFA can change. Are you a little bit more hopeful than him?
JU In this particular context, I am. When he said this, remember that Blatter was in the position, a very strong position, at the point that he was re-elected, even though all these issues were already known and people were going to prison. And he was re-elected, and then he had to step down. The situation right now is totally different. I think that the top leadership of FIFA has been discredited, and now there is a window of opportunity, I insist, to go through all the main issues regarding the governance of this institution. So we should take advantage of that.
RL And it’s not all about FIFA, as you mentioned earlier. I mean, a lot of sporting federations are in trouble – cycling, cricket, volleyball, wrestling, a whole host of them – why does sport and corruption go hand in hand like this, and what are you hoping to achieve with your initiative, the Corruption in Sports campaign?
JU There are basically two factors here. One is money. Sport generates huge amounts of money, especially if they are popular sports. Depending on the country, and which sport is more popular, you will find big issues of corruptions there, because the amounts of money involved are quite big. The other thing is that if a sport is popular, it gives you a significant quota of power.
In the case of soccer, you’ve seen this. The impunity that was implemented by the FIFA leaders was because they had the power. They were, all the time, threatening the countries that wanted to make investigations, saying, if you dare to investigate me, I will debar you and you will be out of the official championship.
So power and money, and not only the power that comes from money but also political power, I think, two of the big components that have led sports to this situation.
RL We’ve just had a question in from a viewer, Mat Tromme, from the Bingham Centre for the Rule of Law, and he says the Guardian sports column, today, called for Transparency International to step in and directly investigate FIFA itself. What is your position on that?
JU Well, we are not an investigative agency. We are a civil society organisation. Our role is to work with civil society in order to enhance transparency and integrity. And now, we, that are in an activist role, what we are going to start to do, in the near future, is to point and name and speak loudly when we find corruption issues. And if it’s necessary for us to take cases to law, we will do that, and we will, of course, run campaigns and pursue social sanctioning when justice is not delivered.
What we can do in this case, and we’ve done already in 2010, is to go deep into the issue, expose the facts and call for action to the authorities that have to investigate, that have the powers to investigate. TI has no power to get into a serious investigation here, but of course we will be in, absolutely, the position to help and support the authorities if they want some kind of advice from an institution that has 22 years' experience working on anti-corruption issues.
RL So you can ensure that those doing the investigation are doing their job properly, and provide that level of insight?
JU Well, even though we are not invited, be sure that we will be monitoring and looking at how this process is developing. We are very much interested this. We know that sports, and soccer in particular, reaches millions of people and I think that audience need to have responses. I need to know what really happened here and what we’re going to do, in order to improve these situations and avoid repeating, ten years later, a scenario similar to the one we have today.
RL The International Olympic Committee (IOC) suffered its own big corruption investigation in 2002, with the Winter Olympics in Salt Lake City, and after that it reformed itself quite successfully, some might say. Could FIFA look to that as a model, or does the IOC have other issues of its own that it’s still [overtalking]?
JU I think it’s an interesting example and it, of course, could be something to look into. You were asking, before, why sports and corruption went together, and when you have these massive international events – Olympics, World Championships and things like that; look what happened in Brazil – hundreds of millions of dollars go there, investment in construction and infrastructure, and of course when such massive amounts of money move around, opportunities for corruption appear.
So if the Olympic Committee was able to make radical changes and improve itself, I don’t see why FIFA can’t take an example of that and find their own way out of this terrible situation.
RL And the Swiss are obviously playing their part as well, Switzerland looks set to pass a bill that would allow federal corruption investigations against FIFA and the other 60-odd Swiss-based sporting federations that currently are based in the country. Do you think that’s going to have an impact?
JU Yes. I think that what is happening with the Swiss authorities, regarding corruption, has been very interesting in the past few years. I have witnessed it, as a special state attorney for approving the case. We had to go to the Swiss authorities in order to ask for cooperation in order to recover money that was being stolen by Montesinos and Fujimori, and we found full support from the Swiss authorities. So things have changed considerably in Switzerland, and FIFA is proof of that.
RL We were talking a lot about impunity, and that is one of the big campaigns of Transparency International, the no impunity campaign. I was looking at your 2014 report, Exporting Corruption, and it doesn’t make for very hopeful reading. It says that with 30 of 41 signatories... that OECD anti-bribery convention has no or limited enforcement at the moment. So it seems that there still is a lot of impunity, it doesn’t seem that many countries are really actively prosecuting these sorts of crimes. What needs to change?
JU Well, in the type of anti-corruption work we do, it is not easy to make a final assessment and say, look, we already won, or achieved, a definite victory against corruption, but if we look back, I can assure you that we have achieved… and when I say we, I’m referring to civil society authorities, anti-corruption authorities and the international community in general who have been committed to this work.
We have achieved very significant goals. Now you have a United Nations Anti-Corruption Convention, American, Africa, Asian Conventions against corruption. The OECD has a set of rules in the convention against international bribery, and corruption is at the top of the agenda. You wouldn’t believe that 15 years before, the word corruption was officially avoided from reports in some worldwide institutions, because they say it referred to politics.
RL And it was a tax-deductible expense, wasn’t it, for a lot of countries?
JU Well, just a few years ago, many first-world countries were entitled to deduct bribe payments abroad in order to obtain some additional gain. So things have considerably changed. Of course there’s a lot to do. And regarding the OECD report, I think it’s a very valuable instrument. I was here in December when it was presented, and the OECD found that only 17 out of 42 countries are really complying with the enforcement of the convention.
The good side of it is that at least 17 countries have done it, and we had 446 cases that have been finished regarding corruption investigations. The bad side of the picture is that more than 50 per cent of the countries are not complying, and that group is composed of countries that have the biggest economies.
So Transparency International volunteered to work with the OECD in order to monitor and observe and put some pressure on these countries, in order to obtain a better performance and then forcing another convention.
RL And how’s the UK doing in that? It’s got the UK Bribery Act, which was a little bit delayed but finally came into force, but we haven’t exactly seen a spate of prosecutions yet. I think, maybe, we’ve had one. So does it need to do better? Are there the resources there to do better, the political will?
JU Absolutely. On one side you have the UK accepting the possibility of having a registry in order to know who the ultimate beneficiaries of off-shore companies are, for example, that’s…
RL That’s a huge stride forward.
JU It’s a huge issue, and the OECD reports points it out, because in more than 40 per cent of the cases that were part of this report, that were investigated for international bribery, the money went through corporate vehicles, that’s off-shore companies.
And most of them were linked to the so-called safe havens. There’s a report that has recently been released in the UK, that a huge amount of property is in the name of off-shore companies, and we know because we’ve seen that in many cases, that money’s coming from illicit sources and coming from the third world, where corrupt top officials have been stealing money and buying property in the UK, in France, in the United States, Spain and other first-world countries.
So there’s a lot to be done yet, and I think, of course, the United Kingdom can have a much better performance because it is well known that millions, if not billions, of dollars are running through the London market.
RL Yes, well, exactly. And I wanted to come onto that, actually, because, according the OECD, almost all financial crime involves anonymous shell companies. There was a study by the World Bank not so long ago, that looked at more than 200 cases of grand corruption over the past 20 years, and found that 70 per cent involved these shell companies.
Is this really at the heart of the problem, when we’re looking at grand corruption, when we’re looking at FIFA? Is it better to go after the facilitators who allow for the shell companies to be set up? Is that more effective than going for the people who are actually accepting the bribes? Is that where the heart of the problem really is?
JU Well, intermediaries are always an interesting part of the chain to look at, and following the money through these people sometimes is much easier than going through the people that accepted the money. Now, in this modern world, with a lot of technology and global issues and speedy communications, it’s not easy to trace money.
People, when they use straw men and off-shore companies, can really generate very complex fraud schemes that are very difficult to trace, so all the possibilities, all the means that are available should be used, but it’s a responsibility of the state and of the ruling authorities to set the rules in order to make it possible.
Banking secrecy, off-shore companies, political asylum, immunity for high-level authorities – all of these institutions were created many years ago for other purposes, to protect privacy, yes, but to protect privacy in a specific context, not to build a shield for impunity and not make it possible to trace illicit funds. Political asylum – yes, but not to establish safe havens for the crooks that are looting their states and then run to another state. Immunity for the congressmen – yes, in order to avoid political persecution, but not to permit bad congressmen to do whatever they want without any consequences.
So we should rethink all these institutions and order them in relation to what we expect, now, in combating corruption and impeding impunity to be the general rule in our world.
RL So where tax havens and secrecy jurisdictions are concerned, should we see an end to those, or do you just want greater transparency, greater oversight and accountability? I mean, the British Virgin Islands, the Cayman Islands, whenever there is a corruption scandal, these names keep cropping up, so would it be best just to end them altogether?
JU Well, I think that would be impossible. I mean, they were…
RL Should that be the ideal?
JU They are there because there were, historically, some commercial reasons to put these vehicles in the market. And I think if they are run with transparency and according to legal standards, there shouldn’t be a problem. But if it is used as a means to avoid control, to avoid paying taxes, to bring opacity and to avoid knowing who the ultimate beneficiaries are, then we’d better not have them.
And I think that all the efforts that we are making now, to bring light into safe havens, into off-shore companies, to bring rationale to banking secrecy and other aspects of the right to privacy... The right to privacy, of course, and we should guarantee that fundamental rights are there and are protected, but we cannot be so naïve with the so-called protection of fundamental rights, to open all these avenues for the corrupt in order to further their private gain, affecting millions of people.
Because in the end, when we talk about public corruption, corruption kills, corruption denies education and health and housing, better conditions of life, for millions of people around the world, especially in the poor countries. I’ve been repeating that corruption is a tax that is paid by the poorest, so it is not only a matter of the right to privacy or my right to private financing movements, but it’s also, here, an element of public interest.
RL And do you think the UK should be doing more to ensure there is the oversight and transparency that you’re talking about, over its overseas territories, over its crown dependencies, these tax havens that do keep cropping up? I’ve got a quote here from the Tax Justice Network, and it says, the UK would easily be number one on the financial secrecy index if all of these jurisdictions were taken into account. It’s a spider’s web of interlinked financial services serving the political and economic agenda of the City of London. Should the UK be doing more to try and hold these…?
JU Absolutely. I think the UK has still a very long road to travel. The amazing thing is that I don’t think the UK needs dirty money to be the UK and to sustain their market, so what is the reason for having all this opacity and all these tricky things around, and all these islands making strange movements of money?
The UK doesn’t need that. I mean, this is only to benefit some individuals that are taking advantage of a flexibility that, in my opinion, should be revised, and strongly reduced. Only for necessary elements in a case of protection of fundamental rights.
RL And it may surprise some people to learn that the US is one of the easiest places to set up an anonymous shell company. Should the US be doing more to take the lead here, and try and stamp out that sort of activity?
JU Well, Delaware and Miami are, of course, good examples of how you can launder money very easily, and it is not casual [?] that many dirty funds go through the markets of New York. Of course, the United States is doing very visible things, I think that the State Department and the Department of Justice, in particular, regarding the FCPA - the Foreign Corrupt Practices Act - bringing cases all the time into the light, but there’s a lot of corrupt practices, still.
Recently, as happened in the UK, there was a report of the owners of the richest properties in New York, and most of them were, again, in the name of off-shore companies, and many of those off-shore companies were linked to corrupt top officials in other parts of the world – Russian oligarchs and those from many other parts of the world – so of course there’s a lot to do, a lot of improvement.
Sometimes we find double speech… double standards, showing some results in some sense, but at the same time all this money to go through the territories, or fixing rules in order to not make possible a real control and monitoring of these funds.
RL I’ve got a question here, from Ian Foxley, the chair of Whistleblowers UK, and I believe he’s the whistleblower for a large bribery case involving a European defence contractor that’s currently being investigated by the SFO. He asks, would better whistle-blowing protections in sporting organisations be one way to improve governance and transparency? How can we gain support for these measures in the UK, in the face of opposition from vested commercial interests?
JU Well, it is common knowledge, now, that when you have closed institutions, insiders are a great source of information. It happened with the Mafia and it has been happening in most of the big corruption cases.
Amazingly, in the OECD cases that appear in the report, whistle-blowing was not the main source of why and how corruption was detected. It was audits and some other internal issues or due diligence processes in the companies.
But of course, whistle-blowing and ensuring confidentiality to witnesses and compliance is fundamental if we want to go forward in the investigation of corruption. So all the means we can use in order to ensure whistleblowers avoid retaliation are important. And of course we should implement processes in order to ensure that that information is reliable information, and is not a retaliation or arising from some particular interest of the whistleblower, but I think we should assure and give the people a guarantee that if they know of wrongdoing and corrupt practices, they can safely speak up and they will be protected.
And I think that will change, significantly, the evidence collection for corruption cases. Yesterday, there was a debate, here, in the context of the meetings of the IBA, specifically on whistle-blowing. And the people there who were actors, authorities and people leading with corrupt cases, all of them agreed on the importance and the relevance of protecting and assuring and enforcing whistleblower policies, in order to better combat corruption.
RL And you think you can overcome those vested interests?
RL I’ve got another question, here, from Andrew Feinstein, anti-corruption campaigner, writer and a former South African MP. He says, there are some institutions and companies that are constantly identified as engaging in corruption and fraud – he mentions FIFA as one, HSBC as another – should they be disbanded for their serial offending?
JU Well, first of all we have to make all possible efforts to prevent corruption, but when prevention fails, then investigating and sanctioning needs to be there. It’s the only way to avoid impunity for the future.
To what extent do we sanction? Right now, there’s a debate in the anti-corruption world, saying, well, we are seeing all these big companies or banks that are surprised or caught, involved in money laundering practices or corruption practices, and they receive huge fines - $60 billion, $750 million of fines; big companies and big banks – but nobody goes to prison.
So now the debate is that besides the economical sanction, should we start sending these people to prison, because in many cases, and we’ve seen this in the States, when the corrupt are caught and fined, they just take the money from the institutions that, in the end, is money from other people, and they pay their fines and they continue doing their dirty business.
So in the past, the trend was to sanction these people economically, because this is what really hurt them. Apparently it’s not hurting them enough, so now we should return to consider more effective sanctions of prison or restrictions to liberty of people involved in these big cases of corruption.
RL But if it’s so obvious that this is what should happen, then why are we not seeing more personal culpability? Why has not one senior banker been jailed for the wrongdoing throughout the financial crisis, and all the abuses that we’ve seen since? Is it a lack of political will, is it lack resources, is it governments thinking it’s easier to go after the small fry rather than the powerful vested interests?
JU Well, in the end, basically it’s an issue of power. Banks have power, banks are the leaders of our societies, they are very, very closely linked to politicians and the people that control governments, and of course what, in the literature, we read as state capture… these are powerful economic groups that have the possibility of influencing, and you will find that in some countries, these groups of interest [?] even influence the drafting of the criminal laws in order to avoid being in the position of being caught by a criminal or penal code.
So it is a matter of power, of course, and this needs to be revised again, and I think that strong political will has to be put in place, because if there is no independence in the authorities investigating and prosecuting and sanctioning in these cases, all we will have at the end is big spaces of impunity, and we should not allow that.
RL And we’ve seen more than a dozen banks named in the US indictment from FIFA, and none were accused of any wrongdoing but they are investigating their conduct. What are your thoughts about their conduct, here? Should there not have been serious alarm bells ringing because of the amount of money that was going through the system, that these officials were likely to be politically exposed persons? I would think there should have been red flags there. I mean, is it a bit naïve for us to just believe that the banks had no idea what was happening here?
JU Oh yes, no doubt about it. What happened to banks is exactly what happened with FIFA. There’s a lot of information and there’s a common knowledge that standards of integrity in the financial sector are really lousy, and the banks are playing with the rules and the banks are laundering money.
Many banks, of course, are serious institutions that I am sure are doing the things the way they should be done, but people that know the sector can tell you that financial institutions are really, really affected and impacted and penetrated by corruption.
And nowadays, we’re talking about organised crime too, because millions or billions of dollars are going through these institutions to the terrorist groups, to drug traffickers, organisations, to weapon-traffic organisations, and this, in the end, has an impact on international security and internal security of the countries that are suffering the consequences of the drug cartels.
Look at Mexico or the terrorism groups around the world. So when the corrupt are only thinking about their profits and their illicit gains and the economical growth, they are forgetting about the terrible damage to the world they are fuelling. I insist that corruption is not an economic problem only. Corruption kills, corruptions diminishes fundamental rights and, of course, impedes development. And this is also the responsibility of the institutions in the financial sector that are, kind of, accomplices of the grand corrupt actors of the world.
RL And lawyers? Where do they fit into all of this? I mean, are they, also, partly culpable for facilitating this sort of corruption as well?
JU Absolutely. That’s what I told the audience I spoke to this morning, basically composed of lawyers. We must be part of the solution and not part of the problem. The issue is that behind every corrupt scheme, you will find a lawyer or a bunch of lawyers creating rules and creating strategies of how to circumvent those rules. And who created off-shore companies, and how do you buy an off-shore company?
You go to a law firm in Panama or in the Virgin Islands, or all these dozens of territories around the world. And those businesses are run by lawyers, so we have, as professionals of the law, a great deal of responsibility for this.
I’ve been reading about Peter Eigen, the Transparency International founder, who was a lawyer by training, and he says that it was his legal training that meant that he knew that the argument of the legal department of the World Bank, where he was formerly a director, that fighting corruption was illegal under its charter, was actually fundamentally wrong.
RL It sounds like that’s quite a good example of lawyers putting their training to best practice.
JU Yes, I think Peter decided to leave the bank because of what he was seeing in his work in the field, and how all the efforts that many good officials at the bank were making hit a wall because there were other officials that were taking money from the borrower states.
So he decided to go to civil society and create Transparency International. Twenty-two years later, now we are present in more than 100 countries and, as I mentioned before, I think, TI has made very significant achievements, but when we were in the context of our anniversary, we realised that there’s still a lot to do.
We can give you hundreds, if not thousands, of successful stories of our people working for a better world regarding integrity and anti-corruption, but still we look outside and we see too much corruption around the world.
RL And just another question, while we’re talking about lawyers, how do you hold lawyers to account? Because with corporations, they’re very much on the front line, they have a name, on the High Street often, they have reputations to defend, they have shareholders they need to appease. Lawyers tend to work in the background a little bit more, people don’t tend to know the names of the big law firms in the same way they do of the big companies. How do you name and shame them in the same way that you might do with corporations?
JL Well, it should be done. First of all, lawyers belong to professional bars. I’m a lawyer too. We have ethical obligations that can be controlled and sanctioned if we incur one of those violations.
Secondly, now we have huge law firms of more than 3,000 or 5,000 lawyers, so they are big corporations and they have a reputation to take care of. So the same principles for corporations, I think, can be applied to law firms. In the end, it’s a matter of how are we monitoring the work of the legal profession, regarding all the wrongdoing that is happening these days.
RL And what about members of the public? Should they bear a bit of responsibility as well? Because it’s very easy to wring your hands in despair about the nature of the world and the awful things that banks are getting up to, but then people still go out and they still buy these companies’ services and their products. Do people need to wake up here a little bit here, as well?
JU Well, of course. There’s people and people. If you observe what’s happening in many under-developed countries, for example, corruption has been normalised and people assume they have to pay a bribe to the policeman to obtain something, or to a bureaucrat to obtain a copy of the paper they need or a licence for their daily survival.
So yes, people need to understand that even a small payment and being part of the scheme of corruption has a constant reproduction and a spiral effect, and corruption will grow and grow and grow. So from the guy in the street, or the women in the street, the common citizen, there’s a quota of responsibility.
Also, in the exercise of our electoral rights: who are we voting for? We have countries where people say, well, I know he’s corrupt but he’ll do something and I’ll vote for him. And we constantly see political figures being re-elected and supported by the people, even though they know that they are stealing money.
So there’s a social responsibility here, from public opinion. For the elites, what your question is referring to, people that have access to all these schemes – corporate vehicles, off-shore companies, putting money in safe havens – of course, I mean, that’s a double standard and the double-speech we've seen many times.
People that are at the top of society saying, we should not go through corrupt practices, but at the same time they do not pay their taxes, they take their money out, they are deceiving in order to hide their profit or illicit gains.
RL I’ve got another question here, from Michael O’Kane, a partner at Peters & Peters, who specialised in white-collar crime. He says, what happened to the G8 Gleneagles anti-corruption initiative in 2005, when Geldof, Bono, etc, got Blair to push western governments to take it more seriously?
I think that was when Pink Floyd got together for the first time in 25 years, if I’m right. I’m sure there’s more significance to the event than that, but what did happen to that? Has that been overtaken by events since the financial crisis?
JU Yes, that was a red flag that was raised and an interesting debate, but then there has not been a follow-up. And usually, these things types of things happen. So, it’s also a process of accumulation. Now, as we just did in December, we are talking to the G20, putting the off-shore issues and the public registry on top of the table, and the principles were adopted, but probably it will take many years.
And if there is no oversight of public opinion, of civil society – and that’s one of the roles we at Transparency International have been undertaking all these years and intend to continue – then it’s easy to just leave the debate at that stage with no improvement achieved.
RL Because there is a lot of this hypocrisy that you talk about amongst leaders of developed countries. You see Obama greeting corrupt dictators like old friends, like the president of Equatorial Guinea, you see the Clinton Global Initiative accepting $250,000-donations from the Qataris, just after the bribery allegations came to light. Does that sort of thing need to stop, especially if they want some credibility?
JU Absolutely, yes. The Obama issue you just mentioned, it was amazing. Some weeks before, Obama was saying we will not tolerate corruption, and three weeks after he received Obiang [president of Equatorial Guinea] at the White House and praised him as one of the best friends of the United States. And all of this is because of the oil and the power that Obiang can generate with the resources of his country.
So, these double standards and double speeches are all around the world, I’m not saying only Obama is doing this. But if you look at the big leaders of the world, they are not giving and showing a consistent example to the world…
People need to see ethical leadership, and that is something that we are really lacking.
RL And you mentioned the oil industry, and obviously that can be one of the most shady industries in the world, but we have seen some quite positive drives towards transparency with the EITI [Extractive Industries Transparency Initiative] scheme, this publish-what-you-pay scheme is gaining some traction now. What do you make of this? Are we seeing a bit of a tipping point, now, where oil and gas is concerned?
JU I think those are great initiatives, even though there’s still a long way to go. When I talk to people who are linked to EITI, for example, they say the information that we need to process is so complex and the structures are so technically mingled, that we need real expertise to go through this. So, putting information into access for the public is not only opening the books, it’s also putting it simply so we can understand what they are trying to say. And I think that that’s the second stage we need to pursue in the near future.
RL And do we need companies to be doing more? Going back to FIFA, where we started this conversation, the sponsors, surely, need to take a little bit of responsibility. They came out at the end of all of this, and said, okay, we’re going to, perhaps, reassess our sponsorship, but surely the whole thing was suspect from the beginning.
So why at only that stage, when suddenly the world was going crazy, did they decide that they needed to speak out? I mean, do we need better oversight of sponsorship and the support companies give to these organisations?
JU Yes, right. There’s a big responsibility on the private sector too, and that’s why we think that integrity chains of suppliers need to be controlled. If we have an integrity plan, and it’s a whole process, then suppliers also will have to comply with several standards of integrity.
You were talking about lawyers for example, some minutes ago. If you have companies that have strong integrity standards and they say, we will not retain lawyers that are involved in obscure transactions or practices, that of course will drive a change on the lawyer, supplier side. So I think that the private sector has a lot to do, here. In many of our countries. I think that the private sector is now being conscious of the role that they have to play, because in many of those countries, corruption is generating governance issues, and the private sector is seeing that they cannot run their business in an environment corruption has generated.
RL So maybe it’s a little bit too late in some cases, but I think there’s a new awareness in the private sector, saying, we did wrong, now we want to change, what do we need to do?
But we do still see companies – for example, BP, which is sponsoring the European Games in Azerbaijan – coming out and saying that it’s not our responsibility to look after human rights in the country. They actually gave a statement to the IBA to that effect, saying that unless their operations are directly impacting human rights, that they don’t have a responsibility about the broader issue in Azerbaijan, which effectively has destroyed civil society in the run-up to the European games.
Do we need to see companies like that have, perhaps, a broader definition of what their responsibilities really are?
JU Yes. I think that’s a shame, if BP is saying this, that they don't understand the type of business they are running. I mean, in this modern world, everything has to do with everything else.
In some cases there will be a more direct impact than in others, but of course they have responsibility for that. Why is the private sector now working on social responsibility? Why does the owner of a textile factory also have responsibility if he accepts fabrics coming from a place where children are exploited or people work without a minimum wage?
Everything is related, and coming to corruption, of course there’s a huge responsibility for the private sector, and you cannot say, well, this is not my problem, I will run my limited vision of what I need to do to put money in my pocket.
I think that’s the type of company we don’t want to see anymore in the world.
RL I have a question here from Begüm Nisli. She states that a recent World Bank report suggests that interviewees might not be completely honest when answering corruption-perception surveys, this may imply that Transparency International’s corruption-perception index deviates from the real corruption situation in a given country. What are your thought on that? It’s a question, I’m sure, that you’ve had before.
JU Of course surveys are vulnerable, but the perception index of Transparency International is not based only on one survey, it’s a survey of surveys, so we collect information from different sources that are interviewing in different countries. But of course that index can be imperfect, but what I can assure you is that each country where we go, and we talk to the people, the picture of that index is more or less accurate.
I mean we can differ over one or two points. Yes, we can discuss that, and maybe the survey can capture an exactly scientific situation of these grades or points.
But the bad countries that appear in that picture, when you go to the territories, you’ll find really bad things, and the countries that appear in a good position, probably, they will have also a better environment. Now, if you cross the corruption-perception index with a bribe-payer index, you will see that the situation is reversed, because the bribe-payers, probably, are basically based in the first-world countries.
RL So it’s slightly skewed to that degree then, that its focus is more on the people that receive the bribes, the poorer countries, than perhaps those who pay them, and they’re both equally to blame.
JU We are running surveys and we have an index of bribe payers, and they are there and we are looking through the companies. We just released a report that we called TRAC, and multinational companies presenting the factual situations of the need to report [?]. Companies that are not transparent, that are not doing country-to-country disclosures, and that’s the type of information we want to see.
So of course these are tools to measure, and they cannot be perfect, but I think they give us a very important idea, very close to reality, I would say, of what is happening regarding corruption in the world.
RL Yes, I was looking at that report you just mentioned, actually. It looks at the world’s 124 largest public companies, is that the one?
JU That’s right.
RL And it says the seven out of the ten best were in Europe and eight of the ten worst were in Asia. We’ve talked a lot about the western world, western companies, western governments, but obviously there’s a big issue in Asia regarding transparency. Is enough being done to try and address that?
JU No, not at all. China is a huge problem, we have zero information regarding Chinese companies, and they are some of the biggest in the world. So our report reveals this, and now we have to work and we expect an openness from the Chinese authorities in order to discuss how they can improve in the transparency of their companies’ information.
RL Another question here, from Sacreb Martutt [?], I hope I’ve pronounced that right. How does the head office of Transparency International interact with local accredited chapters of Transparency International, especially in developing countries?
JU Well, we have a process of accreditation for the chapters, so what we do, when someone expresses their interest in being part of the movement, then we go through our process of reviewing their governance structures, the people that are engaged with that chapter, and they are first a national contact and then they submit a formal request to be accredited by that chapter.
And they have to comply with several standards, and this has to be reviewed every three to five years in order for them to be reaccredited and maintain the membership of Transparency International. So we have a special committee that does a great deal of work, devotes significant time to reviewing all these processes, and we have a secretariat in Berlin with more than 100 officials that are travelling all the time, in contact with the chapters, in order to ensure that we have, in the chapters, what we are requesting from the outside world also, and in our own structures.
RL Now, we’re running low on time, so a quick question about the Millennium Development Goals. They’re obviously due to expire this year and we’re going to have the Sustainable Development Goals (SDG) to take their place. We’re currently looking at 17. There is one that is addressing corruption directly.
RL So, what are you thoughts about those?
JU Well, there’s a lot of expectation of the anti-corruption community, regarding the SDGs. We’ve been very close to the process, we were just in New York having meetings, one-to-one, with the ambassadors of different countries, and advocating in order to have a good meeting in Addis Ababa.
We’re having a meeting now in July, where SDGs and particularly anti-corruption, Rule 16, will be reviewed. So there’s a lot excitement of what can come from this, and we expect that it is not a formal declaration for the future, but it will really drive some transformation and real change in most of the countries that are involved in this problem.
RL And do you feel that human rights are adequately addressed in the goals?
JU Well, I think they have space there, but I’m not an expert in human rights… I've not been specifically involved in the assessment of the situation, but I think there’s a tool there that can be used by the human rights community too, so I think that we have to deal with all these rules for the near future.
But it is good that human rights is always expressly mentioned in these SDGs.
RL Final question, about women. I read a very interesting statistic in a Transparency International report that said that 73 per cent of people surveyed in Sierra Leone believe there would be less corruption if there were more women in power.
We don’t see many women in power at FIFA or a lot of these other allegedly corrupt organisations. Could this be one solution? What are your thoughts on that?
JU Well, this, I think is a common feeling in many countries, and particularly third-world countries, where men are in more positions in power, but at this point, I will say that I believe in what [unclear name], who’s a specialist in anti-corruption thinking, says when he mentions that corruption is like AIDS. I mean, it takes no notice of gender, age,
status, if you are rich or you are poor, if you are white or you are black.
Give women power and you will find corruption, because corruption is not about gender, it’s not about the genetics of the people. It has to do with a quota of power.
Where there is power, where there is a lack of control, human beings are greedy and we need to put in checks and balances in order to avoid this. So probably the basic reason why we have fewer women involved in corrupt practices is because they have less quotas of power around the world.
RL So women aren't fundamentally better than men is what you’re saying?!
JU Not regarding corruption, I think. I know terrible stories about corrupt women around the world, too.
RL Well, José, we’re out of time, but thank you very much for an absolutely fascinating discussion.
JU Thank you.