Presented by: Sanjay Pradhan Director Public Sector Governance Board The World Bank Improving Governance and Combating Corruption: The Evolving World Bank Approach & The Role of E-Government The World Bank Presented to: InfoDev Day IFC Room L-103 Washington, DC June 7, 2006

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 2 Reputational Risk That large amounts of aid in countries with corrupt leaders will tarnish donors’ reputation Fiduciary Risk That donor resources will be not be used for the purposes intended Development Effectiveness Risk Poor governance and corruption will be impediments to development in general and in donor-supported projects Poor Governance and Corruption Pose Three Risks

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 3 Overarching emphasis Help countries improve governance systems to achieve development goals & mitigate risks

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 4 Governance & Anti-Corruption Not the same thing! State The manner in which the State acquires and exercises its authority to provide public goods & services publicprivate Use of public office for private gain Governance Corruption Corruption is an outcome – a consequence of the failure of accountability relationships in the governance system Poor delivery of services and weak investment climate are other outcomes of bad governance Governance is the door to anticorruption, and the broad overarching framework for donor engagement

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 5 Strengthening Governance Systems: Balancing Supply & Demand Supply-side Strengthen the state’s bureaucratic capability – leadership, skills, human resource & financial management systems – to deliver public goods and services Demand-side Strengthen accountability arrangements – elections, political parties, effective parliaments, independent judiciary, free press, vibrant civil society, accountable local governments – that enable citizens and firms to hold state institutions to account

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 6 Governance System Actors, Capacities & Accountability Political Governance Political Parties Competition, transparency Executive-Central Govt Service Delivery & Regulatory Agencies Subnational Govt & Communities Formal Oversight Institutions Parliament Judiciary Oversight institutions Civil Society & Private Sector Civil Society Watchdogs Media Business Associations Cross-cutting Control Agencies (Finance, HR) Citizens/Firms Outcomes: Services, Regulations, Corruption

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 7 Transparency Initiatives Political Governance Political Parties Competition, transparency Executive-Central Govt Service Delivery & Regulatory Agencies Subnational Govt & Communities Formal Oversight Institutions Parliament Judiciary Oversight institutions Cross-cutting Control Agencies (Finance, HR) Citizens/Firms Private Sector Interface Civil Society & Media Transparency: Parliamentary votes Income & Assets Campaign contributions Transparency: Free press Freedom of information Citizen Report Cards Transparency: Fiscal transparency (central & local budgets) Public Expenditure Tracking Surveys (PETS) Transparency: ‘Blacklisting’ firms bribing in public procurement E*procurement: transparency (web) & competition Financial status of Banks EITI; CoST

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 8 How Can E-Government Help Government Systems & Performance Greater transparency and less corruption: Publishing information, publishing decision outcome, on line tracking of applications, automation to minimize discretion Improved public sector management: Treasury, IFMS, publishing financial data, modernizing/computerizing government infrastructure & processes Convenient and affordable services to citizens: one stop service centers for on-line delivery, Rural tele- centers; land title, on-line municipal services Private Sector Investment Climate: Transparent & competitive procurement, business-registration, licenses, land, customs and tax agencies

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 9  All supplier companies register, indicating areas of business (e.g., IT, construction, furniture)  Public agencies submit tenders through internet  Automatic to all companies in selected area  Online information on name, position of official in- charge  Online information on results: who participated, proposals made, scores received, who won bid, historical record of agency’s purchases and contracts Chile’s Internet-based Public Procurement: Transparency and Competition

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 10 “BIR Officials Amass Unexplained Wealth” By Tess Bacalla, Philippine Center for Investigative Journalism CAR MODEL BENEFICIAL OWNER REGISTERED OWNER Nissan Patrol Edwin Abella BIR Reg'l Director, Quezon City Sulpicio S. Bulanon Jr Jordan Plains Subd., Quezon City (listed address of Abella in his SALs) Suzuki Grand Vitara Ditto Merrick Abella (son of Abella) 24 Xavierville, Loyola Heights, Quezon City Nissan Cefiro Ditto Elizabeth S. Buendia 152 Road 8, Pag-asa, Quezon City BMW Lucien E. Sayuno BIR Reg'l Director, Makati City Limtra Dev. Corp. Zone 4, Dasmari ñ as, Cavite BMW Ditto Marie Rachel D. Meneses c/o Metrocor and Holdings, G&F, Makati City Honda Accord Danilo A. Duncano BIR Reg'l Director, Quezon City Daniel Anthony P. Duncano 2618 JP Rizal, New Capital Estate, Quezon City Mitsubishi L200 Corazon P. Pangcog Asst. Reg'l Director, Valenzuela City Alberto P. Pangcog (husband) B2 L23 Lagro Subd., Quezon City Honda CR-V Ditto Alberto P. Pangcog 9 Ricardo St., Carmel 1 Subd., Quezon City Ditto Owner: Regional Director in the Bureau of Internal Revenue; forced to resign; currently facing corruption charges; other officials suspended, also facing charges The Powerful Role of Media in Transparency

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 11 E-government: Tackling corruption & delivering better services Citizen Service Centers & One-Stop Shops (Bahia, Brazil; e-Seva in AP, India; online Motor Vehicles Departments) E-procurement (Brazil, Bulgaria, Chile, Korea, Mexico, Philippines, Romania, others) Land titling (Karnataka, India: 18m titles issued) New Business Registration (Jamaica, Jordan, China) Online counseling for teacher transfer (Karnataka, India) Online customs (70 countries) Online municipal services (Seoul, Korea) Property registration (AP, Kanartaka, Maharastra, India) Railway reservations (India: 5 billion passengers/year) Tax payment (Mexico, Singapore, India, Chile) Trade facilitation (Tunisia) Treasury and integrated financial management systems (50 countries)

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 12 Country Type of government application Number of days to process before application Number of days to process after application Brazil Registration of 29 documents Several days 2030 minutes per document, one day for business licenses Chile Taxes online 25 days 12 hours China Online application for 32 business services 2-3 months for business license Several visits to multiple offices for filings days for business license Several seconds for routine filing for companies India, Andhra Pradesh Valuation of Property Few days 10 minutes Land Registration 7-15 days 5 minutes India, Karnataka Updating Land Registration 1-2 years 30 days for approval, request completed on demand Obtaining Land Title Certificate 3-30 days 5-30 minutes India, Gujarat Interstate Check Posts for Trucks 30 minutes 2 minutes Jamaica Customs Online 2-3 day for brokers to process entry 3-4 hours Philippines Customs Online 8 days to release cargo 4 hours– 2 days to release cargo Singapore Issue of Tax Assessments months 3-5 months Source: Subash Bhatnagar and Arsala Deane (World Bank, 2003). E-Government, Transparency & Efficiency: Examples of savings

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 13 Lessons learned: e-government vs better government Consider and promote e- government as a government-centered effort Focus the e-government process on users (citizens & businesses) Ways to failWays to go Source: This slide is taken from a presentation by Bruno LANVIN CITPO/GICT, The World Bank, PREM Week, Washington DC – 26 April 2005 Replace every paper-based process by an electronic process Use e-government as a tool to foster changes in attitudes and thinking, and as an instrument for reforms Offer ‘ministry-specific’ e- solutions Rally government-wide efforts around common procedures and standards (back office), and an ‘all-of-government’ approach (front office)

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 14 Media Private Sector Municipal Government Military State (Bureaucracy) Political Parties Civil Society International Legislative Branch Judiciary 1 Formidable Political Obstacles to Reform: Montesinos’ Corruption Network in Peru Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of Government Case Program, Case C , based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000 Vladimiro Montesinos Alberto Fujimori

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 15 Philippines: Procurement Reform Transparency and Accountability Network (20+ member groups) Walang Ku-Corrupt Movement (Youth) (Youth) PAGBA & AGAP (w/in Gov’t) CBCP (Church) Philippine Contractors Association (private sector – main stakeholder) Local chambers of Commerce (Private sector) Procurement Watch: Drew other civil society groups into the advocacy efforts and coordinated the activities Forging Coalitions for Reform

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 16 Summary  E-Government can advance the agenda on governance reform, transparency, anticorruption. But it is not a panacea.  Successful implementation requires changes in incentives, attitudes and government-wide systems – and focus on users.  Situate reforms in a broader framework of governance and anticorruption: focus on supply and demand for reform  Focus on managing the political economy of reforms Source: Based on Subash Bhatnagar and Arsala Deane (World Bank, 2003).

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 17 Discussion

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 18 Why Should We Focus on Governance & Anticorruption? The quality of governance, including anti-corruption, is crucial for economic growth and poverty reduction Improving governance is essential for scaling up development assistance Poor governance and corruption pose major fiduciary and reputational risks to donors

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 19 Help countries that request the Bank’s support to improve governance & reduce corruption Prevent fraud and corruption in World Bank- financed projects Ensure that Country Assistance Strategies address developmental, reputational, fiduciary risks Governance & Anticorruption Key Elements of World Bank Strategy Support international efforts to improve governance & reduce corruption

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 20 Political Governance Political competition, broad-based political parties Transparency & regulation of party financing Formal Oversight Institutions Independent judiciary Legislative oversight Independent oversight (SAI) Global initiatives: UN, OECD Convention, anti-money laundering Citizens/Firms Decentralization and Local Participation Decentralization with downward accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Civil Society & Media Free press, FOI Civil society watchdogs Private Sector Interface Streamlined regulation Extractive Industry Transparency Initiative Collective business associations Public Sector Management Public finance management & procurement Civil service meritocracy & adequate pay Service delivery and regulatory agencies in sectors Good Governance has many dimensions … Outcomes: Services, Regulations, Corruption

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 21 Political Governance Political competition, broad-based political parties Transparency & regulation of party financing Formal Oversight Institutions Independent, effective judiciary Legislative oversight (PACs, PECs) Independent oversight (SAI) Global initiatives: UN, OECD Convention, anti- money laundering Citizens/Firms Local Participation & Community Empowerment Decentralization with accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Civil Society & Media Freedom of press Freedom of information Civil society watchdogs Report cards, client surveys Participatory country diagnostic surveys Private Sector Interface Streamlined regulation Public-private dialogue Break-up of monopolies Extractive Industry Transparency Corporate governance Collective business associations Effective Public Sector Management Public finance management & procurement Civil service meritocracy & adequate pay Service delivery and regulatory agencies in sectors … The Bank operations focus only on some Primary focus of WB operations in governance Outcomes: Services, Regulations, Corruption