RENATA: Welcome to the Financial Crime Conversation podcast from Refinitiv an LSEG business, where we explore the human cost of financial crime. We take a look at the impact the financial crime has on individuals and society through the lens of our guests who have experienced it, have insider knowledge of it and are willing to share their story with us.
RENATA: I am Renata Galvao, manager of content specialist at Refinitiv as a victim of identity theft in my childhood. I can personally say the financial crime is not a victimless crime. In this episode, we'll be covering a global pandemic.
Corruption is a crime that affects millions of people every year according to Transparency International. Ordinary citizens face demands for bribes to see a doctor, to file a police complaint and even to get medical assistance during the COVID 19 pandemic.
Corruption is a serial killer. I am talking with Alison Matthews. Her and her team listen to victims affected by this crime on a daily basis. She's a programme lead for the advocacy and legal advice centres from Transparency International.
Just last year,(2020) more than 1,800 people contacted their hotlines in 62 countries to report corruption and seek support for issues related to COVID 19, which even included cases of bribery in vaccination programs. Alison, can you share some of the personal stories your team has been hearing during this pandemic?
ALISON: Yes, sure. Thanks for having me, Renata. Based on the reports we've received throughout the pandemic, what we are seeing time and time again is that ordinary citizens are victims of corruption. We knew this before the pandemic hit, but the pandemic has magnified this problem.
Ordinary people are being faced with demands for bribes to take a COVID test to be released from quarantine after they have finished the mandatory period or to receive economic aid that the government has promised them. And it is typically those who are least able to pay who suffer the most.
For example, in Kenya, we received reports early last year alerting us to a hospital whose staff was making patients buy masks at the entrance before they could receive care. Those who could not afford to pay for the masks were denied access to the hospital, even if they had brought their own masks with them.
The mask sale was a corrupt, money generating activity which resulted in patients being denied access to public health care. Once they heard about this, our local team in Kenya was able to stop this from continuing. They contacted the hospital administration, which ultimately shut down the irregular sales.
Similarly, in Italy, we received reports last year that a hospital was distributing uncertified masks. This was happening at the height of the pandemic, when substandard PPE personal protective equipment was more dangerous than ever. Following up on these reports, our team in Italy contacted the administration of the hospital and successfully halted the distribution of the uncertified masks.
Also, moving to Russia, for example, we investigated one case that showed how faulty medical equipment purchased from a company which had questionable connections to decision makers had led to a fire in the St Petersburg Hospital that killed five patients.
Our joint investigation found that the government had favoured this company over other domestic manufacturers in awarding millions of dollars to produce ventilators. Additionally, the the company had overcharged for ventilators, and they had used a government decree to force hospitals to buy the ventilators over ventilators from foreign suppliers.
This story shows clearly how corruption is far from a victimless crime, and in some cases, it can kill. We have also been working on cases where people have missed out on vital government aid support, which they are entitled to receive due to corruption.
One such case happened in Sri Lanka, where early into the pandemic, the government of Sri Lanka announced a single payment of 5,000 rupees for low-income families, senior citizens and people with disabilities. People suffering a major hit to their income, such as small retailers, craftspeople and taxi drivers, were also entitled to the payments, although only enough to buy an average family's groceries for around ten days.
The payments were a vital buffer against extreme hunger. The government put local consuls in charge of distribution. However, the distribution processes was set up without clear tracing mechanisms or checks and balances to ensure accountability, and reports of malpractice soon began to arise.
Around one month after the government aid program had started, staff at our local office in Sri Lanka heard from 40 people who had not yet received the aid to which they were legally entitled. 28 of the reports came from Tamil people in a single rural province in northern Sri Lanka.
These people weren't even given the forms to apply for the essential allowance. Among them was a 68-year-old grandmother who was already living close to the poverty line before the pandemic hit. Surviving through odd jobs and what her children could provide her, she told our team in Sri Lanka that she had asked for relief funds from her local village council, but he said that her name could not be included in the list and he was not obliged to explain why. This was part of a wider pattern that our teams had seen in Sri Lanka.
Some consuls claimed never to have received the money from the government to pay vulnerable families. One councillor was alleged to have stolen the funds she was supposed to distribute. Others were negligent or inefficient, never directing the money to families so urgently in need. There were also allegations of political manipulation, with some councils altering recipient lists to help win support for certain politicians.
And also, we saw parliamentary candidates highlighting their alleged influence over who would receive payments using this as a campaign tool and without the promised assistance. Many people victims of corruption were unable to abide by protective lockdown measures. They were forced to leave their homes to earn money and find food, putting them and their families and their communities at greater risk of catching the virus. So what we can see is that it's clear that this pandemic is not only a health and economic crisis, it's also a crisis of corruption, injustice and inequality.
RENATA: But through the stories that you've been sharing, have you and your team observed an increase in corrupt and corruption cases in the health system during the COVID 19 pandemic? Or has it always been there in your professional perspective?
ALISON: Yes. What we've seen is that corruption has definitely always been there. But what we have seen is that the pandemic has brought more awareness to people's experience of corruption and also created more opportunities for corruption. So COVID has brought to life these issues and made them front of mind more than ever before, such as how public procurement scandals are leading to substandard PPE and diversion of public resources, and also how corruption within health care systems directly impacts on people's lives in harmful ways, particularly in access to health care and the quality of health care services that they receive.
So during the pandemic, what we have seen is an increase in corruption reports relating to the health care sector. These corruption reports present a snapshot of people's experiences with corruption and point to many weaknesses in health systems across all countries where we work that are being experienced first-hand by victims of corruption.
These reports show how corruption is increasing the burden on health care systems and also impeding people's access to health care in many areas such as COVID tests, treatment vaccines and PPE personal protective equipment. Also, corruption in procurement practices, particularly, is leading to substandard equipment and diversion of public resources.
Health care workers are being forced to work in unsafe hospitals, while corrupt networks are profiting from government contracts and the unlawful and questionable sale of medical supplies
We have received a lot of reports highlighting deficiencies in the quality and availability of PPE. Looking further into these cases, we see that corruption in procurement processes and the distribution of PPE is a contributing factor in many of these cases that are reported to us.
We have also done further research. And so these findings have been backed up by a recent study from Transparency International's health initiatives, where we, are seeing more and more evidence of corruption at the point of service delivery, highlighting how corruption has led to lower accessibility and quality of healthcare services during the pandemic.
Not only is this disproportionately affecting health workers and patients across the health sector, but this has been particularly harmful for women and girls and marginalised groups, both as patients and providers. Also, we receive in cases of gendered forms of corruption, such as extortion, where the currency of corruption is not money, but rather sexual favours, which disproportionately affects women and girls and vulnerable groups, including LGBTI persons.
Research we released earlier this year alongside our annual Corruption Perceptions Index shows that even when accounting for a country's level of economic development where corruption is systematic governments tend to spend less on health care. And what we are seeing now is that many governments have been unable to provide the necessary care to COVID patients due to the long-term underfunding of the health systems in their countries.
We're seeing how corruption risks in the health sector have been exacerbated throughout the pandemic by increasing pressure on already fragile health care systems and exposing the cracks in all health care systems and the effect of corruption is clear.
Individuals don't get the right care and resources are wasted both in the national and the global responses to the pandemic.
RENATA: And Alison, I mean, you been mentioning some of the stories you mentioned the story of a sixty-year-old lady mentioned the fact that you have a gendered corruption, which does affect women and girls even more. You also mentioned a story where people lost their lives in the hospital. So your team has done an analysis of the stories that you've been hearing and everything that has been reported so far. So, what are some of the trends or common areas where people seem to be suffering the most when it comes to corruption?
ALISON: Through the work of our advocacy and legal advice centres, we have been hearing first-hand how corruption has affected people during the pandemic. As you mentioned in your introduction, more than 18 hundred people contacted our centres across the globe last year (2020) to seek support. And this number has grown throughout 2021 as well. Although the cases vary by country, our analysis of citizens reports show several common areas where people are suffering the most.
And these are in health care. Government aid and police corruption. In addition, our research shows that women are particularly vulnerable to the corruption risks associated with COVID 19, as they're much more likely to be frontline workers and seek access to public services such as health care and government aid for themselves and their families.
Since towards the end of last year (2020), another corruption trend that we're seeing is on access to COVID vaccines, we had expected to see a spike in these types of complaints. Given the high demand for the vaccine and limited supply, we've received many reports on favouritism, nepotism and other forms of corruption in the distribution of vaccines across countries where we're working.
For example, many reports relate to people jumping the queue and getting vaccinated before their time, which is different to what the government distribution plans state. We've also seen reports of black-market sales of the vaccine so much higher than market prices, and we've seen a lot of opaque deals between governments and vaccine manufacturers and distributors. In the past year, as the vaccine race has played out, we've repeatedly called for transparency of procurement contracts and distribution matrices in these areas to help increase accountability and ensure that vaccines are distributed according to need rather than power. This area is of great concern to us.
RENATA: And I think that the work that you and your team are doing is absolutely incredible, because when it comes to corruption, usually this is coming from people in positions of power, from government, from doctors, from hospitals, as you have been mentioning.
And then citizens have that feeling of where do I run to now? Because it looks like the system is corrupt. So how is the system going to assist you, right? So when people pick up the phone and call the legal advice centre to report cases of corruption, they call your team, what can they expect from that phone call? What is usually their expectations in terms of results? And I think it also be important to highlight how important it is to make that phone call.
ALISON: Yeah, sure. I mean, when people contact our in-country teams, they can expect to speak directly with our anti-corruption experts and receive free, confidential advice and legal assistance.
Our teams are present in more than 60 countries, and we support victims and witnesses of corruption and anyone that wants to challenge it to make their voices heard, while minimizing the risk of retaliation. Our clients include whistle-blowers, businesspeople, journalists, public servants and ordinary people from all across society.
The stories range from petty corruption like bribery to reporting, wasteful resource management, shady business deals and undue influence in decision making. Despite their best efforts, people often arrive feeling helpless and that the system allows impunity for wrongdoing. We provide a safe space for them to report their concerns and for their concerns to be heard and acted upon
People can also send anonymous complaints to our local teams including through online channels. Once a complaint is received by our teams, the assistance ranges from country to country and depending on the case itself. This can include legal advice to supporting people to articulate the complaints or navigate complex reporting channels through government or other channels right up to referral to government channels, legal representation and at times strategic litigation in cases where there is a large public interest issue at stake. We also help clients to access public information and gain media support.
Where statutory whistle-blower protections exist, which can also be known as protected disclosures, a local teams can also provide advice on how to blow the whistle in a way that falls within the legal. protections available. They can also provide support if a whistle-blower is suffering retaliation for exposing wrongdoing.
So one thing to flag here is that for anyone in the position of being a potential whistle-blower. one thing I would encourage you to do is pick up the phone before you formally report the case, where the whistle-blower protections exist they often only apply in certain circumstances, and once someone has blown the whistle, depending on how it is done, it can set off a rollercoaster of repercussions for the person reporting and the case they have reported. So by calling us before you blow the whistle, we can help mitigate any risks and potential reprisal.
We can also move cases forward on your behalf if you wish to remain anonymous. Complementing our local network of experts, our local teams can also tap into Transparency International's global network to seek additional expertise and support on individual cases to raise awareness on issues of public interest or to increase publicity on certain cases.
If that can help it move towards a positive outcome, and of course, with approval of the client, we often join forces with other NGOs to bring coalition approaches to such cases.
One thing to mention is that, as you would be aware, corruption cases can be complex and difficult to resolve, and we cannot promise miracles. We provide what support we can and use our expertise and networks to try and achieve a positive outcome. But this does not mean that all cases are resolved. Also, we prioritize the safety of our clients, our staff and our partners, which can also lead to slow progress in investigating and resolving some complex cases.
Our local teams often also have high workloads and need to prioritize which cases they can focus on with the limited resources available. We have set up ways to deal with this high demand, such as through having awareness raising campaigns and trainings to empower clients and local communities to have the information skills they need to take forward cases themselves.
We also have extensive networks for referring cases that aren't directly related to corruption, which fall outside our mandate, and we also have established networks with trusted partners for helping us to investigate and resolve complex cases.
It's so important for people to pick up the phone and report corruption, and our teams are equipped to help people navigate how to do it safely and effectively in a way that minimizes risk of retaliation.
And as global society seeks to ride out and then recover from this devastating pandemic, addressing the climate crisis and improving prosperity among the disadvantaged. Corruption reporting will be more essential than ever.
RENATA: Oh, that's amazing. Thank you, Alison. You did mention the word impunity. The fact that it's complex is difficult to resolve. So of course, you can't promise any miracles. And I think that's one of the things about corruption, especially against citizens. It is a financial crime like any other but is one that some try sometimes is treated as a victimless crime.
And, you know, better than anyone that that's far, very far from the truth. And in fact, it is a crime that probably has more victims like than any other financial crime. So, with the current system and I mean, we are talking in the global level, I know each country have their own legal system and justice system, but what can victims of corrupt corruption expect? Usually when it comes to victims’ compensation or any type of justice? Really?
ALISON: Yeah, sure. I mean, just pausing on the first part of your question there. I mean, we definitely see it as being a large part of the problem that corruption is treated as a victimless financial crime.
I mean, when bribery and corruption are solely viewed through a compliance and risk management lens, the intersection with other issues such as harm to the victims of corruption can be completely obscured. At Transparency International. we have been working for decades with victims of corruption and are acutely aware of the ways that corruption directly impacts on people’s lives and communities.
Furthermore, some of the types of corruption are not only financial crimes in the transaction itself. I mean, as I mentioned before, sextortion is a type of corruption where the currency traded is sexual favours rather than a financial transaction.
And this type of corruption is far from victimless, and it affects women and other vulnerable groups the most.
But when it comes to seeking justice and compensation for victims of corruption, we still have a very long way to go, both in terms of recognizing victims as a core element of the corruption equation and also in having adequate remedies available for victims to access at the international level, the United Nations Convention Against Corruption, the first universal anti-corruption instrument, emphasises the importance of remedies for those who have suffered damages for corruption.
The convention obligates state parties to ensure that victims of corruption have the right to initiate legal proceedings against those responsible for that damage in order to obtain compensation. But the convention does not define victims of corruption or provide detailed guidelines for their compensation.
Domestic legislation in each country typically determines who qualifies as a victim of corruption and how they can pursue remedies. But most countries have not passed legislation to conform with the convention based on our research. Instead, simply asserting that such mechanisms already exist under domestic or criminal law and also the general trend that we're seeing is that domestic legal systems are not set up adequately. They focus primarily on identifying and punishing the perpetrators of corruption, and they have very limited focus on victims themselves. Corruption cases pursued by enforcement authorities rarely try to identify the victims, determine what type of harm has been caused to victims, or compensate the harm caused to victims.
The victims seeking justice within state borders. It really varies from country to country as to what types of corrupt acts can lead to redress and compensation claims. This is where our local network of advocacy and legal advice centres are making headway in helping victims of corruption achieve redress and justice in many cases.
In our experience, we are able to help many victims receive some form of redress for their case, such as gaining access to the public service that was initially blocked due to corruption or receiving a substitute service. For example, coming back to the Sri Lanka story that I said at the very start of our discussion, this was the case where a group of villagers contacted us after they did not receive the COVID relief aid promised by government. To follow up on these cases. our team in Sri Lanka contacted the local consul, but were told it was too late for anyone to receive aid.
Our team then helped the 28 people from the Tamil community draft an official letter to the Divisional Secretariat, the next level of government above the local council to report the undelivered aid. And the Divisional Secretariat quickly overruled the consul and all 28 people received the assistance they needed to weather the economic fallout from the COVID 19 pandemic
However, this is not the outcome for many cases reported to us. Also, it is unfortunately rare that there exist avenues for victims to seek any additional compensation beyond that level of initial redress. And recognizing this, we have been advocating for stronger laws to recognise and compensate victims of corruption.
Also, this approach reflects our broader approach to our work with victims of corruption and corruption reporting in general, which is that in addition to helping victims of corruption to pursue their complaints, we work through these cases to seek broader systemic change. Through the corruption reports we receive we gain valuable insights and knowledge into how corruption works in practice. This helps us focus our advocacy on relevant solutions to fight corruption and address its root causes, and also to advocate for policy recommendations that are grounded in real experience.
The situation is even more challenging for victims of corruption in international corruption cases. Our research shows that countries, groups and individuals harmed by foreign bribery rarely receive compensation and most confiscated proceeds of foreign bribery wind up in the state treasuries of the countries exporting corruption.
This definitely needs to change, although there are international and national laws in place in some jurisdictions providing for victims’ compensation. In practice, there are very few examples of victims restitution or compensation in foreign bribery enforcement proceedings. More often than not, disgorge profits from corrupt deals secured by foreign bribery land in the national treasuries of supply side countries. While the people affected by the corruption in the demand side countries of what we're calling left out of the bargain. In the United States, for instance, only a handful of estimated 500 cases involving foreign bribery under the Foreign Corrupt Practices Act resulted in restitution with small awards made to the origin state.
RENATA: So, if you could transform the system to better support victims of corruption, what would you change?
ALISON: I mean, in order to transform the system to better support victims of corruption, I think I would look to four main areas. The first one would be that we need full recognition that corruption is not a victimless crime.
And when we speak of victims, we should also completely normalize speaking about the ultimate victim from whom the money was stolen, resulting in worse roads, worse healthcare, worse education and the rising cost of living, just to name a few.
And I'm speaking about money that's bled both within countries and also bled out of countries, particularly those in the global south, due to corruption, for example, through procurement or abuse of public resources for personal benefit. Secondly, we need to introduce victim’s compensation as standard practice, both in national and in cross-border cases, and also support victims to be heard and included in corruption redress mechanisms.
This not only requires a change in thinking beyond the current focus on perpetrators, but also changes in legislation and binding commitments at national international levels. It also requires law enforcement efforts to place victims harm and compensation firmly at the centre of their work.
Victims need to be actively included in corruption cases to ensure their views are represented and taking account of in decision making and when determining appropriate remedies. Victims also need to be informed of their rights and available redress mechanisms, and these redress mechanisms need to be accessible to victims and enforceable once decisions are made.
Thirdly, we need to ensure safe, effective ways for people to report corruption and seek redress. Complaints reporting mechanisms must be made available and safe for citizens and whistle-blowers to report corruption and other irregularities. And we also need to protect people who speak up and report wrongdoing in their communities and workplaces.
Strong, well implemented corruption reporting systems are especially important during crises such as the COVID pandemic, as the need for urgent action can undermine integrity of government action. So we really need to make sure that people are free to speak up and expose wrongdoing, which is even more critical when lives are at stake.
And fourthly, the judges flagged that prevention is always the best form of cure. We need to address corruption itself at the systemic level. The system must have strong checks and balances in place, active enforcement and active citizen engagement and social oversight.
Ways to do this include transparent and open procurement procedures, beneficial ownership registries and strong protections of fundamental rights and freedoms, including for those who speak up and report corruption. Also, we see a pivotal role for the private sector here as we seek to transform the system to prevent corruption and ensure a robust COVID recovery,in addition to provide better support to victims of corruption, responsible and accountable.
Conduct by business is central to whether entrusted power is discharged for the common good and opportunities for corruption flourish or founder. With this pandemic crisis, business leaders have an opportunity to be owners, drivers and an active part of the solution. In order to add integrity into business, rather than being intermediaries of legal compliance driven by support functions.
So what we think is also that countries must adhere to national international laws and take internal steps to prevent corruption as a minimum step, zero tolerance policies towards bribery and corruption is needed, and strong whistle-blower protections should be in place.
Furthermore, companies need to embed an anti-corruption and purpose driven business culture within their organisations and as role models, multinational corporations need to aspire to change the business environment in a positive matter to demonstrate progress.
For example, these countries should report their actions in respective key performance indicators to show all their stakeholders, including their employees, investors, communities and consumers, that they are committed to integrity in an open and transparent manner with a properly regulated and honest operating environment that increases transparency, we can work towards a sector within the business and beyond free of corruption and is.
As part of our recent Strategy, Transparency Strategy 2030, which covers our work for the next ten years. We are seeking a critical mass of business leadership, fulfilling strong integrity commitments to help us hold power to account and to prevent corruption from claiming more victims. In addition to preventing victims and to supporting victims of corruption, to access compensation and justice.
Thank you very much
RENATA: Thank you, Alison. I think that as you mentioned, transparency is it's such an important factor here, as you said, access to beneficial ownership information and to be able to have access to this information that should be open source is extremely hard in a lot of jurisdictions in the world. Like you said, the same for this is not just in the global south is also in a lot of countries. And you also mentioned the focus of the justice system in the perpetrators.
And I think that's absolutely true. There is just this, this focus on punishment. And so it should happen. But then the victims are forgotten in terms of compensation. But as you said, it's very important for victims to also be aware of their rights and for the system to protect people that speak up.
So I just want to thank you so much for your time and for the incredible work that you and your team are leading. And I hope this podcast can help at least just a little bit in raising awareness and encouraging people to pick up the phone to report cases of corruption so social change can start occurring in how the justice system treats victims of corruption. But also, as you said, how the private sector gets involved in this conversation. Thank you so much, Alison
ALISON: Thank you so much for your support. Thanks very much for having me today.
RENATA: Thank you for listening today. Please do visit our podcast page on Refinitiv dot com. And we hope you'll join us again soon for another episode of the Financial Crime Conversation podcast.
