Integrity Talking Points 1 - 5 November 2010

5 November 2010

Another survey result! The Human Development Index has been published this week. The index is of the quality of life, reflecting measures regarded highly by the UN.

New Zealand is shown in a substantially more favourable light in this year’s index, moving to 3^rd (behind Norway and Australia) from 20^th place in 2009. There has been an adjustment of the survey content which has contributed to this repositioning. An Inequality-adjusted Human Development Index, a Gender Inequality Index, and a Multidimensional Poverty Index are now calculated into the result.

UNDP has used the release of the 2010 Index as an opportunity to enhance their website, providing 20 years-worth of data for users to generate graphs and images, extract tables of data, and retrieve country profiles with the most current internationally reviewed statistics on income, health and education.

http://www.radionz.co.nz/news/national/61184/nz-third-in-world-for-quality-of-life-un

http://en.wikipedia.org/wiki/Human_Development_Index

4 November 2010

One of the Commissioners at the SEC has posted “An insider’s guide to reform” on a Harvard Law school blog site. The article explores the substantial new workload imposed by statute on the Commission, new processes which it must develop, and takes a swipe at the reluctance of officials in the past to exercise the mandate legislated for them, where as a regulator it “has chosen to sit on the sidelines”.

Many would say that the financial meltdown of the last two years results directly from this sitting on the sidelines.

He observes that the SEC will “address these past failings.... (and) ..return to the muscular approach of the SEC’s storied past.” Comments about the responsibilities of a regulator have universal application. “The SEC must enforce the rules.... rules alone, without proper implementation and enforcement, are meaningless. How many countries around the world have rules on the books that are directly contradicted by the corrupt practices that take place – and where the regulators are nowhere to be found?”

http://blogs.law.harvard.edu/corpgov/2010/11/04/an-sec-insiders-guide-to-reform/#more-13679

3 November 2010

Regulation can sometimes produce perverse incentives. Recent changes to US securities legislation may have an unintended effect. The Securities and Exchange Commission is empowered to make substantial payments to encourage informed whistleblowers. Although the SEC has always received large numbers of tips, these are seldom from people with close knowledge of misconduct. The ability now to pay millions of dollars to informants is likely to change that. But the unintended effect may be that employees will not advise their employers when they see things going wrong at work but will wait, gathering information for which the SEC will provide a substantial reward.

The SEC is exploring a solution. It may be feasible for their incentive payments to be larger where an informant first reports misconduct to the business concerned – provided the matter is referred to the SEC within three months.

Because foreign officials, aware of issues which have not been addressed by their home government, may see opportunities to use the SEC payment structure for personal advantage – with repercussions for US interests - a decision has been made to exclude them from claiming under the programme.

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201011011719dowjonesdjonline000290&title=secs-new-bounties-could-disrupt-corporate-compliance-efforts

http://iworks.factiva.com/du/er.aspxacc=J000000020101101e6b10003c&category=article&ep=NL&v=1.0&napc=RN&erc=LVfLdDTapCDCJmhKyFaLthPYo70f%2bDvkXE1O9hG4VBY%3d%7c2&od=V25Fb3Z8V0G_2BkTyn1PZ54IwTttOLceOUzwrmfCRlqX8UZh4yEGhwPecsmClcRmE0QhuSsVPkO_2B6GI3Q_2FncIpDRTN8zVx2eeELzZC13UPp1Qio_3D%257c2

http://blogs.wsj.com/corruption-currents/2010/11/04/sec-seeks-to-ban-foreign-officials-from-whistleblower-program/

2 November 2010

Experience in the corporate world is often seen as an advantage for senior officials, and people experienced in private sector management can make a valuable contribution to government. The challenge is to avoid conflicts which are inevitable with secondments. Most OECD member states are concerned about the implications of a revolving door where officials leave government and are employed in sectors they may previously have regulated. Concerns are heightened when moves between government and commerce ( and vice versa ) are temporary, “work experience", opportunities.

Canada has a high profile experience of this. An equity funds director, with extensive interests in defence and aerospace industries, is being seconded to the Prime Minister’s office as the Chief of Staff. Careful management of interests is necessary because the appointee will be returning to the private sector, armed with an intimate familiarity of material provided to Ministers.

The Prime Minister has said that an "ethical wall" will be established to ensure that the chief of staff won't be involved in certain issues -- including discussion of the Canadian aerospace manufacturing industry -- to avoid a conflict of interest.

http://www.canada.com/business/Harper+chief+staff+promises+ethical+wall/3759826/story.html

1 November 2010

We are into the survey season. The New Zealand commitment to good government, validated last week by a top rating in the Transparency International Corruption Perceptions Index, has been endorsed now by the 2010 Open Budget Survey. New Zealand has moved to second place (from 3^rd place in 2008).

Some criticism of the CPI is that it is perceptions based. That however is not the case with the Open Budget Survey. It assesses each country’s budget transparency and accountability from independently compiled data - data that is essential to hold governments accountable or to have meaningful input into decisions about how to use public resources. The survey indicates that just seven of 94 countries assessed release extensive budget information. Forty countries release no meaningful budget information.

Perhaps surprisingly, South Africa tops the survey, followed by New Zealand, United Kingdom, France, Norway, Sweden, and the United States.

This practice by the South African administration to promote good government is undermined by comments in that country’s Public Service Commission Annual Report that there has been no response to more than 90% of corruption cases reported to agencies during the last year.

The Mail and Guardian observes that the “African National Congress is more than just mismanaging our economy and running a corrupt political party, but akin to gangsters running an organised crime syndicate. Expecting this mafia organisation to investigate itself is rather like asking criminals to be their own judge and jury in a trial.”

http://www.internationalbudget.org/what-we-do/open-budget-survey/?fa=Rankings

http://www.internationalbudget.org/what-we-do/open-budget-survey/?fa=full-report

http://commons.globalintegrity.org/2010/10/open-budget-survey-2010-released.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+globalintegritycommons+%28Global+Integrity+Commons%29

http://www.mg.co.za/article/2010-10-29-damning-corruption-report