Agreed. Here's an excellent article from yesterday's Sowetan newspaper that amplifies Jim's point, particularly in view of the slimey Wolfensohn's visit this week to lecture us all, conveniently ignoring his institution's ties to the TNCs that make it all happen:
Sowetan 14/10/99
Privatisation often leads to corruption
By David Hall
As the Transparency International (TI) 9th International Anti-Corruption Conference takes place in Durban, it is time to recognise that the mother of much recent corruption is privatisation.
It gives lucrative business to multinationals, and provides great economic incentives to corruption.
Most of the multinationals involved in the recent dam scandal in Lesotho are based in Europe - a continent where corruption has become entrenched.
Politicians in the UK, France, Italy, Spain, and Belgium have been convicted in scandals associated with bribery in the last decade. The entire European Commission had to resign this year over corruption.
Multinationals are so used to using bribes to obtain contracts that they do it to each other. Oil group BP started prosecuting construction multinationals for bribing their officials to obtain contracts.
It is well known that concessions are a major source of corrupt practices by groups intent on winning favourable terms. A report by the French audit commission, the Cour des Comptes, in January 1997, said that the system of privatised concessions had led to widespread corruption - both Suez-Lyonnaise and Vivendi have been convicted of this.
Even the World Bank acknowledges "_the privatization process itself can create corrupt incentives." All around the world there are reports of corruption allegations where multinationals are seeking such contracts.
In Indonesia, the public authorities in electricity and water are insisting that the contracts given to multinationals under the old dictatorship were corrupt, and based on extortionate profits. Yet the multinationals, supported by their OECD governments and the World Bank, insist on the sanctity of these contracts.
One former official of the Lesotho Highlands Water Project has been charged with taking R12m in bribes from a dozen international companies over 10 years. According to the charge sheet, the official "did unlawfully, intentionally and corruptly accept bribe moneys, over the period February 1988 to December 1998, from Lesotho Highlands Water Project contractors".
The charge sheets list the precise amounts of all the bribes supposed to have been received by this official have been published, naming the contractors from which the money came.
None of these multinationals are being prosecuted for paying bribes. The South African minister has said that the companies will keep their contracts. None of their OECD home countries are taking any action against the companies. Most of these multinationals have a previous record of involvement in corrupt contracts. Instead, many of these multinationals are gaining new, profitable business from privatisation. Bouygues subsidiary SAUR, for example, is being given a water concession on the Dolphin Coast.
If this happened in Singapore, these multinationals would be prosecuted - and on conviction they, and all their subsidiaries, would be banned from bidding for any public sector contracts for 5 years.
James Wolfensohn, the World Bank's director, makes fine speeches about the Bank's opposition to corruption. But the practice of the bank is quite different.
It forms partnerships with multinationals which have been convicted of corruption. One example is Aguas Argentinas, where the Bank, through its International Finance Corporation (IFC), is an equity partner alongside Lyonnaise des Eaux (now Suez-Lyonnaise) and Générale des Eaux (now Vivendi), both of which have had executives convicted of bribing French public officials to win contracts (in Grenoble, Réunion, and Angoulême).
The Bank helps companies keep contracts which may have been obtained corruptly. Hubco, Pakistan's largest power company, is accused by the government of obtaining its contract corruptly. The World Bank has insisted that Hubco's contract to sell electricity should not be affected by this, whatever the result of the investigation, and asked the IMF to hold back a loan to Pakistan until the bank was satisfied that Hubco's contract would not be cancelled because of the corruption proceedings.
In 1996 Wolfensohn announced that he had hired an international inspection company, Société Générale de Surveillance (SGS) of Switzerland, to audit bank projects for evidence of corruption in three countries - Poland, Kenya and Pakistan'.
But within months the Financial Times reported that "SGS has admitted that it paid a substantial commission to a Geneva lawyer_ for `assistance' in negotiating a pre-shipment inspection services contract with Pakistan..."
In April 1999, the former prime minister of Pakistan, Benazir Bhutto, was found guilty of accepting bribes worth US$9m from SGS, was sentenced to five years in prison, and banned from holding a seat in parliament for seven years. But SGS have not been tried for any offence in Pakistan or Switzerland, and have not been banned by the World Bank.
The Bank also insists on privatisation as a condition for loans - regardless of corruption allegations. In Uganda, the Bank's IFC is financing 80% of a $500m hydropower scheme involving multinational AES and has also agreed to guarantee the scheme against political and other risks - on condition that the Ugandan government agrees to privatise the Ugandan Electricity Board.
But the Bank has ignored all allegations of corruption over the power purchase agreement on which the scheme depends - in April 1999 the minister for energy resigned because he was accused "of bribe-taking in his brokering of the power purchase agreement between the American/British AES and government"
South Africa can lead the world by using the opportunity of the Transparency International conference to announce that it will:
* prosecute all multinational bribe givers, and follow the example of Singapore in imposing 5-year bans on all convicted groups and their subsidiaries and their partners; * place a moratorium on privatisations, and a complete ban on any `negotiated' concessions; * observe the framework agreement and prioritise the public sector option.
The conference in Durban should:
* urge South Africa and other countries to prosecute multinational bribe-givers and ban offenders from public sector contracts; * urge the World Bank to refuse grants or partnerships to multinationals who have been convicted of bribery - anywhere; * restore its credibility and balance by publishing a list of multinationals involved in bribery; and * call on the World Bank and governments to impose a moratorium on privatisations and concessions.
It is time to end the international scandal of bribery and corruption.
(The writer is Director of the Public Services International Research Unit (PSIRU), which maintains a database and publishes papers on privatisation worldwide.)