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[afro-nets] Plain grain or brain drain? (8)


  • From: Peter Burgess <Profitinafrica@aol.com>
  • Date: Sat, 4 Jun 2005 09:10:44 EDT

Plain grain or brain drain? (8)
-------------------------------

Dear Colleagues

I do not want to discount the importance of spirituality in
quality of life, but I think is mistaken to wait on God to end
corruption. Perfectly ordinary people can do a lot to help end
corruption.

Having perfectly ordinary good accounting is a big step in re-
ducing, if not eliminating corruption. The checks and balances
in good accounting make it much more difficult to walk off with
assets (including cash) that belongs to the organization, in-
cluding government organizations. A big problem in government is
that political appointees get to be in charge of accounting, but
know nothing about good accounting and then compromise the sys-
tem because it is the best interest of their mentors. Good ac-
counting gets compromised when big people with bad motives have
signature power. Good clerical staff and accounting clerks can
do nothing about it because of their position in the hierarchy.
Most all junior staff know what to do and how to do it... but
are not at all encouraged to do their work the way it should be
done.

A big reason why the World Bank is a demonstrated failure as a
financier of successful development is that they have avoided
the above issue for as long as I have been interacting with them
(almost 30 years). They have progressed some. They are at the
stage of doing plenty of talking about accounting, but have done
very little that has ensured that good accounting permeates gov-
ernment. Same for the UN system. They talk a lot about good gov-
ernance, and ignore the key management tool for good governance
and that is good accounting that does not make corruption easy.

There is a reason why the "single treasury account" concept in
government accounting exists. It has an ancient history and was
designed so that the government and not the head of state de-
cided on how the state revenues would be disbursed. The parlia-
ment authorizes the budget and therefore the disbursements from
the SINGLE treasury account. This is a central feature of many
if not all government financial regulations... but has been
modified courtesy of the World Bank and the donor community so
that "projects" would not be subject to control by the govern-
ment financial regulations. When one thing is not subject to
control, then essentially everything is not subject to control.
Surprise, surprise, then we have the possibility of grand cor-
ruption, and surprise, surprise, we have a lot of it. The moral
of the story... fix the accounting in government and projects.

But there is more. It is not only the people in government and
leadership who receive cash that need to be held to account.
They get benefit from the cash. There also needs to be account-
ability by the people who make it possible for the cash to be
paid. Who writes the checks? The reason why a corporate organi-
zation writes a check for $1 million is because the corporation
expects to get some benefit that is worth a lot more... say $10
million. At this point among the rich and powerful, every one
wins, and the system is sustainable. Over the past 30 or 40
years this system has grown and grown and is now thoroughly en-
trenched in the way the global economic system works. But where
has the $10 million of benefit come from. It has come from value
that should have helped make poor people a little less poor. It
has come from the process that has helped make poor people even
poorer... it is part of the root cause of why development has
failed almost everywhere.

And in this chain, there also needs to be some accountability by
the big banks. They move corrupt money around. They store cor-
rupt money in safe havens. If they were ordinary people, you
could say that they were laughing all the way to the bank... but
they are the bank. Regulations to stop bad things from happening
in big banks seem to apply more to little people than to big
people with big money... another component of the globally cor-
rupt system.

People who have skills should be free to use them as best they
can. Nurses and Doctors leaving Africa to earn a decent living
in the UK or the USA... or nurses and doctors leaving rural ar-
eas for a better living in richer urban areas should be allowed.
Society needs to figure out a way to attract them back so that
they can economically justify returning and so that returning
gives them a better quality of life. Society's needs are best
satisfied by economic forces. (I avoided the use of the term
market forces, because the market is just a small part of the
whole economic value framework.) One of the reasons bribery and
corruption is so powerful is because when mandates distort the
economy, there are openings for bribery to be very valuable.

How do you improve accounting? Make it visible. Transparency is
the shorthand for this. Allow feedback so that ordinary people
are encouraged to do the right thing, and bad things can be seen
and journalists can do their work! Corruption works best when
the accounting facts are hidden. And when the corruption facts
are available, hold people accountable, both the receivers of
the cash and the check writers and all the facilitators. The
short hand for this is accountability.

Sorry this is so long... but it is a big subject... and at the
center of so many problems that have constrained successful de-
velopment.

As many of you know I am part of a growing network of profes-
sionals and organizations that is concerned about these issues
and are committed to helping to improve socio-economic develop-
ment progress.

Sincerely

Peter Burgess

Tr-Ac-Net in New York
Tel: +1-212-772-6918
mailto:peterbnyc@gmail.com
The Transparency and Accountability Network
With Kris Dev in Chennai India
and others in South Asia, Africa and Latin America
http://tr-ac-net.blogspot.com