Empowering The Role of Academia in Fighting Fraud and Corruption

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Fighting Corruption in Developing Countries: Illusions and Realities

By: Mike J. Masoud, CPA, CACM, CFE, MBA

Technical Advisory Director, Middle East and Africa

The American Anti-Corruption Institute (AACI)

www.THEAACI.com

Mike@THEAACI.com

Developed and developing countries are presumably on the defensive line in fighting fraud and corruption. Pressures are mounting on every country to do its utmost to deal effectively with the cancer of globalization: corruption. On May 12, 2016, at The Anti-Corruption Summit in London Secretary Kerry stated “We are fighting a battle, all of us, for our states, for our countries, for our nation-state. Corruption writ large is as much of an enemy, because it destroys nation-states, as some of the extremists we’re fighting or some of the other challenges that we have faced.” This is the ever strongest message of the U.S. regarding fighting corruption. Our interpretation of this message is straightforward: a country that does not show serious efforts to fight corruption works against the international efforts of the U.S. to eradicate corruption and, at the minimum, indirectly supports extremists and terrorism.   

However, developing countries face real challenges in dealing with this complex socio-economic phenomenon amid the successive waves of globalization and information technology evolution and revolution. The severity of these challenges stems from the fact that in too many developing countries, the state / government is not accountable to its citizens. The state controls and runs its public resources (wealth) with the lowest levels of transparency to manage corruptly its people and opposition political parties ( if any). Too many developing countries govern by managing the fear of their citizens, engineering and institutionalizing nepotism, creating and maintaining their dynasties, and ruining the social values of their societies. To make it worse, even when such countries introduce certain levels of democratic practices or what they call “reforms”, their citizens are usually skeptical about the underlying motives and planned objectives. There is no “access to information, citizen engagement, and fiscal transparency”.  Corrupt governing practices usually tend to escalate in the natural resources rich countries. “Is it any wonder then that, in time, corruption becomes ingrained in the culture.”  Ed Fuller stated recently in Forbes.

“Yet there has been much less discussion about the key institutional change needed to bring societies to the point where they are capable of controlling corruption and achieving good governance.” Unfortunately, many developing countries, especially Arab countries driven by the ramifications of the “Arab Spring”, reacted primitively in addressing corruption. All of a sudden, most Arab countries asserted the existence of corruption in their home countries and started to assure their public they will not tolerate corruption anymore! Some Arab countries established national anti-corruption commissions while others rushed to ratify the United Nations Conventions Against Corruption. As there are no national independently published surveys measuring the national levels of corruption, there are substantial doubts about the success the national anti-corruption commissions or all kinds of anti-corruption reforms. Developing countries rely on international agencies to opine on their levels of corruption. For example, when Transparency International issues its annual corruption perception index, these countries celebrate any improvement they achieve when they score better than other countries or their earlier score(s). What these countries should celebrate is their achievement in lowering the levels of unemployment, poverty, and income inequality, They should also celebrate the increased level of public engagement and civic society in monitoring the performance of their governments and public officials, These countries are gifted with talented youth generations that must be engaged in fighting corruption.

Corruption in developing countries and its consequences are realities representing threats to the national, regional, and international security. Yet, the ultimate beneficiaries of corruption exist within the national state borders and beyond. Panama Papers support this assertion.  The international community is sometimes passively corrupt when it endorses corrupt developing countries. Undoubtedly, this hypocrisy encourages systemic corruption in developing countries. The international community has legal and ethical obligations to expose corrupt countries and take real effective measures to put these countries on alert. There are recently voices that require having an International Anti-Corruption Court (IACC). Though this is hard to sell, we do not encourage establishing the IACC.

Fighting corruption in developing countries should always be based on and supported by the local national efforts. Unchecked local power is the number one cause of corruption. Developing countries are expected to show more than political will to fight corruption: they should show results.

© All Rights Reserved.2016.  The American Anti-Corruption Institute (AACI)

Further readings: America’s Global Corruption Crusade

Corruption Prevention and Strategic Planning - Part 1

The objective of this series of ideas or short articles is to provoke the readers’ mindset regarding a significant threat that jeopardizes entity’s success and existence: corruption.

Corruption is a complex socioeconomic cultural phenomenon. As tone will always be at the top, management cannot ignore such a significant issue. Executive management and those charged with governance are expected to integrate corruption prevention measures in strategic planning.

In most of the cases, strategic planning fails in the execution stage. Corruption may be a part of the reasons underlying this kind of failure. The challenging question for management is to find out whether corruption participated directly or indirectly in the failure of its strategic planning or even plans. However, management should already have anticipated or expected corruption threats that may occur not only in the execution stage but also in the planning stage as well.

Therefore, one would expect prudent, vigilant, competent, and professional management to scan its internal and external environment searching for corruption risks that may negatively affect or impact any task or activity of its strategic planning.

Can management search for something they do not know? Can management evaluate the serious consequences for corruption risks they do not know their attributes? Simply, they can not. As a result, what executive management and those charged with governance should do? Management should have effective and up-to-date awareness about fraud and corruption to effectively play a proactive role in all strategic planning phases. Awareness is always the best defense.   

Mike J. Masoud, CPA, CACM, CFE, CICA, MBA

Technical Advisory director, Middle East and Africa

The American Anti-Corruption Institute (AACI)

www.theaaci.com

Roya TV Coverage of Launching The AACI in Jordan

On Wednesday, June 18, 2014, The AACI launched its operations in Jordan. Administered by The AACI's exclusive approved vendor in Jordan, Albatross Consulting conducted the launch event at Sheraton hotel in Amman. The president of The AACI, Mr. L.b. Files addressed the audience and discussed with them the opportunities and challenges of fighting corruption. The event was attended by the deputy of the Governor of the Central Bank of Jordan, senior financial institutions officials, civic society representatives, academicians, business leaders and other interested parties. 

The AACI delivers its services outside the US through local partners. Currently,The AACI has exclusive  approved vendors in the Middle East in each of Saudi Arabia, Qatar, and Jordan.

The American Anti-Corruption Institute (AACI) in Qatar

Under the patronage of the Governor of Qatar Central Bank His Highness Sheikh Abdulla Bin Saoud Al-Thani, Birzeit Consulting – Qatar launched “ Corruption Prevention in Financial Institutions” in cooperation with The American Anti-Corruption Institute (AACI), Tempe – Arizona; the first of its kind in the GCC countries and the Middle East.

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The CNBC Arabia Interview with Mike J. Masoud in Doha - Qatar

During the launch mega event The AACI and Birzeit Consulting - Qatar had in Doha - Qatar on Tuesday, October 22, 2013, Mike J. Masoud, The AACI Technical Advisory Director in The Middle East and Africa had an interview with CNBC Arabia where he addressed the mission of The AACI and the role The AACI plays in the Middle East and Africa to prevent corruption. Masoud reiterated that targeting decision makers and those charged with governance is what distinguishes The AACI. "We target them through education, training, and qualifying them to obtain the Certified Anti-Corruption Manager (CACM) credential" Masoud stated.

Masoud urged board of directors and executive management of all entities to have CACMs among them to lower the risk of fraud and corruption.

Masoud stated that fighting corruption is local and countries should have national strategic corruption prevention policies that are designed to be executed effectively and with full accountability.

The AACI in the Middle East and Africa

The AACI participated in an international conference in the Middle East. This is a partial coverage of the event.