13th Regional Seminar of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific Tackling Corruption in Development Projects

Nov 19, 2015

Welcome Remarks by Ms. Beate Trankmann,

UN Resident Coordinator and UNDP Resident Representative,

19 November 2015

Best Western Tuushin Hotel, Ulaanbaatar, Mongolia

H.E. Mr. Z. Enkhbold, Speaker of the Parliament of Mongolia

Distinguished Vice President of the Asian Development Bank, Mr. Diwakar Gupta,

Members of the ADB-OECD Anti-corruption Initiative,

Representatives from Anti-corruption Authorities,

Development Partners,

Civil society and private sector representatives

Regional and International Experts

Distinguished Participants, Ladies and Gentlemen,

On behalf of the United Nations let me warmly welcome you to this seminar which is being co-organised by the ADB/OECD Anti-corruption initiative in Asia Pacific and UNDP.

I would like to express my gratitude to the Government of Mongolia, in particular the Independent Authority Against Corruption (IAAC), for hosting this important event bringing together policy-makers, experts and practitioners to discuss the issue of tackling corruption in development projects.

The Sustainable Development Goals, recently adopted at the UN General Assembly, are the most ambitious global development agenda ever agreed by Governments. All countries - developed and developing alike – will need to act to eradicate poverty, reduce inequality, address climate change, protect the planet and foster peaceful and inclusive societies. The SDGs under Goal 16 for the first time include specific targets to “significantly reduce corruption and bribery in all its forms” as well as illicit financial flows.

Corruption is a major impediment to sustainable development diverting essential public resources and undermining public services.  And it is most harmful to the world’s poorest who are least capable of paying the extra costs associated with it.

Corruption costs developing countries about 1 trillion dollars every year as estimated by the World Bank. To put this into perspective this is approximately seven and a half times more than total annual ODA. About 40 per cent of investments in electricity, water and sanitation are lost due to corruption. It is also estimated that corruption raises the general price of goods by 20%, and the price of connecting a household to a water network by up to 30% in developing countries.

Illicit financial flows drained roughly US$ 950 billion globally from the developing world in 2011. This is obviously a major loss of domestic revenues that could have been invested into development. The Asia Pacific region accounts for nearly 40 percent of the total illicit outflows from developing countries and holds the largest share among all regions (UNDP/Global Financial Integrity).

Looking at Mongolia, the recent discovery of mineral deposits attracted the attention of foreign investors and triggered a boom in the sector. This brings both development opportunities and governance challenges for the country. International experience shows that natural resource wealth can potentially lead to widening disparities, poverty, conflict and insecurity if governance institutions are not sufficiently robust. In addition, large inflows of money into a country can fuel corruption and money politics. To manage these risks, the establishment of strong legal and institutional frameworks that ensure fair and equitable distribution of resources to all citizens is essential.

UNDP has been a key partner for the Government of Mongolia in its fight against corruption since late 1990s. We assisted the development of the first draft of the Anti-corruption law and the National Programme on Combating Corruption. We also supported the Anti-Corruption Authority upon its establishment with building its investigation and prevention functions. More recently, we have supported a country-led review process of UN Convention on Anti-Corruption (UNCAC) as well as the development of the National Anti-corruption strategy. Jointly with IAAC, UNDP is commissioning an assessment of corruption risks in the extractive industry to support Mongolia with putting in place appropriate safeguard mechanisms. 

Ladies and gentlemen,

Development projects are not immune from the risks of corruption. Today’s Regional Seminar offers an opportunity to discuss and exchange views on challenges and strategies on how to effectively tackle corruption in development projects so that funds reach intended beneficiaries.

Establishing adequate mechanisms to safeguard development projects from corruption risks is a shared responsibility:

  • Programme Country Governments need to set up mechanisms and systems to mitigate corruption risks in the management of funds received.  One good practice is to have strong and transparent aid coordination mechanisms that ensure that information on aid funded programmes is made publicly available. This helps both anti-corruption agencies to oversee programmes and enables civil society to provide scrutiny.
  • Similarly, development partners need to implement zero tolerance policies against corruption. The misuse of development funds not only deprives intended beneficiaries of their rights it also undermines public trust in donor countries in the effectiveness of development aid impacting on international levels of ODA.
  • Corruption in development projects is linked to the general conditions and challenges of transparency and accountability in a given country. Addressing its risks requires strengthening national institutions and mechanisms to fight corruption at large, as well as targeting key sectors for human development such as water, health, education and mining. It also requires joint efforts of national authorities and development partners to increase the robustness of national and project financial management systems and reporting, tracking and monitoring mechanisms

To achieve the ambitious SDG agenda the effectiveness and impact of scarce development resources will need to be even further maximized. Strengthening transparency, accountability and integrity in the implementation of development programmes and setting up adequate risk management systems will be critical here.

Finally, with the majority of countries in the region being Middle Income Countries, reliance on domestic budgets will become even more important to achieve the SDGs. Preventing illicit financial outflows of domestic resources is a key target of SDG16 that we, as development partners and governments alike, should actively pursue.

In closing, let me thank once again the Government of Mongolia for hosting and the ADB/ OECD Anti-Corruption initiative for co-organising this important event.

I wish you all productive discussions. Thank you. 

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