Good afternoon. It is a great pleasure to be with you today to address the vital issue of corruption in the Americas. As a citizen of the region myself, it is no surprise that I harbour a strong desire to see the Americas prosper. Reducing the damaging impact of corruption on lives, democracies and economies is critical to the region’s long-term prosperity and stability, and to lifting millions of its citizens out of poverty.

Alternative: first paragraph in Spanish:
Buenas tardes. Es un gran placer para mi estar aquí con ustedes hoy para abordar un tema tan importante como es la corrupción en las Américas. Siendo yo misma ciudadana de la región no es de sorprender que tengo un deseo muy profundo de ver a la región prosperar. Reducir el impacto devastante de la corrupción sobre la vida de las personas, las democracias y las economías de la región es esencial para generar prosperidad, estabilidad, y fundamentalmente, aliviar a millones de ciudadanos de la pobreza.

Let me set the stage for my remarks by telling you about my recent trip to Guatemala for the 12th International Anti-Corruption Conference. I found an extraordinarily dedicated and diverse group of individuals there – over 1000 corruption fighters from all walks of life, from 115 countries around the world and from _more than 20 countries in the Americas, united in common purpose.

Six Central American presidents – from Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama - as well as representatives from Belize and the Dominican Republic, signed the Guatemala Declaration, committing their countries to concrete steps in the fight against corruption and promotion of transparency. This has sent a powerful signal that governments are summoning the political will to give the region’s anti-corruption effort the necessary emphasis and momentum.

Four simple truths emerged from this important conference, and were reinforced by my subsequent visits with the leaders of Panama, Peru and Chile. Countries cannot afford to be complacent about corruption. Expressions of political will, while necessary, are not enough; governments must take concrete actions. A comprehensive approach is required involving the judiciary, parliaments, and the executive working with civil society organizations and the business sector. Most importantly, though, the people must demand accountability from their leaders.

Throughout my travels in the region and beyond, I have witnessed how corruption undermines democracies, distorts economies and traps people in poverty. Corruption does not make a country poorer just by undermining its economy. It makes the poor poorer because part of their meagre earnings, their non-existent disposable income, must pay for basic services that should be free, or to shorten an otherwise long wait for these services.

Essential goods and services – food and medicines – are often diverted by corruption, leaving people desperate and struggling to obtain food, education and medical care for themselves and their children. Poor people in Mexico spend 17 percent of their annual income on bribes to get access to such basic services.

But resources that go missing through corruption are also diverted from establishing the systems that ensure transparency and accountability in government. This feeds a vicious cycle, where those with access to funds or bribes take what they can -- because they can -- locking the poor in their poverty.

The region today - challenges
Here is a shocking statistic: 224 million people in Latin America live in poverty.
Source: The equity gap, ECLAC 2000 http://www.eclac.org/publicaciones/xml/7/4767/equitygapII.pdf

Quote from different source: “Nowadays, there are about 240 million individuals living under the poverty line. Almost half the population of Latin America must live with less than one US-$ per day.” Rohleder, Jörg, Poverty in Latin America, Internet Seminar and Neoliberalism and Neostructuralism, http://tiss.zdv.uni-tuebingen.de/webroot/sp/barrios/themeB3a.html

And here is another: Of the 30 countries of the Americas included in Transparency International’s 2006 Corruption Perceptions Index earlier this month, 25 scored below five on a scale of zero to ten, meaning corruption there is perceived by experts as a serious problem. More than a third scored below three, meaning corruption is seen as rampant.

This is a sobering reminder about the pervasiveness of graft throughout the region. And it is not a one-off result. There is a correlation between the CPI and other, more local, measurement exercises.

The countries of Latin America have the greatest inequality in the world: the richest ten percent of Latin Americans earn 48 percent of the region’s total income, while the poorest tenth earn just 1.6 percent, according to the World Bank. And while generalisations are sometimes dangerous, this one tells a compelling story of why fighting corruption matters so much to the future of the Americas.
Source: Inequality in Latin America & the Caribbean: Breaking with History? http://lnweb18.worldbank.org/LAC/LAC.nsf/ECADocByUnid/4112F1114F594B4B85256DB3005DB262?Opendocument

Some 10 percent of GDP in the Americas is lost to corruption annually, according to the Inter-American Development Bank. And it crosses borders: money-laundering transactions in the region are estimated at between 2.5 and 6.3 percent of annual GDP.
Source: Money Laundering: What Do We Know? P. 242 http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=457178

But influence isn’t exercised just through illegal monetary transactions. Opaque campaign financing, trafficking in influence, control of information and extortion are all tools of the abuse of power for private gain. As a result, public policies are seriously distorted, and resources misallocated.

Many countries have now established formal democratic systems. Reasonably free elections have produced a new generation of leaders, many of them elected on anti-corruption platforms. This is a major achievement after decades of military dictatorships and rigged elections. And after years of recession, greater fiscal discipline and lower inflation rates are producing economic growth, and exports are thriving

Yet, there is growing concern about the quality and durability of these new democracies. The institutions that underlie a fully functional democracy have yet to measure up in Latin America to the standards of those in countries where democracy took root long ago. Last year’s Global Corruption Barometer indicated widespread dissatisfaction with political parties and public institutions throughout the region.

The 15 countries of Latin America included in the Barometer ranked political parties and parliaments as those most affected by corruption, with the police and the judiciary following close behind. (Source: Report Global Corruption Barometer 2005, p.5) We also find similar results in North America. In the US, for example, Congress has been tarnished by special interest politics, as we have seen in bribery and lobbying cases concerning Randy Cunningham, James Traficant and Jack Abramoff.

In a disturbing sign of continuing pessimism, half the Barometer respondents in five countries – Costa Rica, Ecuador, Mexico, Nicaragua and Venezuela – expressed a belief that corruption will worsen. Nicaraguans were the most pessimistic, with more than 6 out of 10 believing the situation will get much worse.

On this basis one can reasonably assume that the region’s citizens do not yet perceive positive changes as a result of their new leadership’s anti-corruption pledges.

That the twin challenges of democracy and economic development persist in concert is no coincidence. Democracy is not a luxury, or an issue of ideology. It is a fundamental precondition for social and economic development.

This is clearly acknowledged in the Inter-American Charter on Democracy. It says: “Democracy and social and economic development are interdependent, and are mutually reinforcing,” and that “democracy is essential for the social, political, and economic development of the peoples of the Americas.” Only effective, independent and accountable institutions and the rule of law can ensure that public policies are pursued in the public interest, not for private or political gain.

Fighting corruption is not easy, and we need to stress the role of bribe payers and the professional facilitators who give a façade of legitimacy to corrupt acts, and the resilient embedded networks. They bear an important responsibility for the persisting problem.

Encouraging progress

The region has seen some progress in recent years. Transparency has increased considerably, reflecting the trend around the world to acknowledge its importance. Many stakeholders now recognise the cost of corruption and they are joining the fight, changing their habits and taking up leadership in their respective fields. This includes companies, local political leaders, journalists and civil society organisations, who help generate awareness, push for reform and monitor progress.

Some of them also put their lives on the line, standing up to the corrupt in the face of immense pressures and threats. Dr. Ana Cecilia Magallanes Cortez, the Peruvian prosecutor was the leading force in the prosecution of some 1500 members of the criminial organization headed by Vladimiro Montesinos, the primary collaborator of former President Alberto Fujimori. She, was honoured with Transparency International’s Integrity Award earlier this month in Guatemala for her extraordinary courage in pursuing these cases despite threats to herself and her family. Such acts of courage inspire us all.

This year’s 10th anniversary of the conclusion of the Inter-American Convention Against Corruption is an important milestone. This multilateral framework against corruption and its monitoring mechanism -- or MESICIC as it is known -- play an important role ensuring that governments translate their commitments into action.

TI has been privileged to work with the OAS Secretariat to the MESICIC and its Committee of Experts. Many TI national chapters have participated in the follow up process, submitting written reports and participating in consultations at the OAS.

The Committee has issued valuable reports on country progress, including important recommendations for strengthening national systems to reduce corruption. Implementation of these recommendations will be critical to the success of the Convention. We welcome the Committee’s attention to ensuring that action takes place in the countries.

We would like to see greater civil society engagement in developing action plans and more public reporting on progress in this arena. We are hopeful that a recent US government contribution of $1 million to the Inter-American Anti-Corruption Fund and a recent commitment of support from Inter-American Development Bank President Luis Alberto Moreno will lead to greater civic engagement and progress implementing the recommendations.

The real long-term challenge clearly lies in effective implementation and enforcement. There is a high risk that the anti-corruption agenda will lose credibility if we cannot demonstrate that it has had an impact.

However, ten years after conclusion of the Convention, the MESICIC has completed a review of only three articles, and it appears that some countries may be waiting to take action until it is time for them to be reviewed. We must not allow the review process to delay the action necessary to achieve the reduction in corruption that the Convention promised.

It is for this reason that TI urged the Second Conference of States Parties meeting here in Washington, DC last week, to accelerate the pace of reviews and, most important, called on each States Party to report to the 2007 General Assembly on steps it has taken since ratification to implement the entirety of the Convention. States Parties took on obligations when they ratified the Convention years ago. It is time for this generation of Latin American leaders to publicly account for progress in fulfilling these obligations. By doing so, they will reassure citizens across the hemisphere that they are moving ‘beyond words and paper’ and are acting against corruption.

This initiative must not lose momentum. Keeping it on track demands stronger commitment at the top, because no fight against corruption can succeed without leadership. It is also important that the anti-corruption effort not be seen as competing with other important initiatives, such as increasing economic development and reducing poverty. In fact, fighting corruption is a prerequisite to reducing poverty and increasing economic development.

Full implementation of the anti-corruption agenda implies a radical change of political culture and practices. A primary element must be to institutionalise a culture of accountability, based on a full understanding of its pivotal role in an equitable and prosperous society.

Transparency and accountability are preconditions to the full empowerment of citizens. Accountability in the public sector means that public authorities systematically provide information, including systematic access to information, transparent public administration, whether in public contracting, political finance, or a multitude of other areas. Notably, the International Monetary Fund’s Revised Code of Good Practices on Fiscal Transparency provides that the publication of fiscal information should be a legal obligation of governments. In this hemisphere, five countries now have laws on access to information, and others are enacting them
Last week in Guatemala, Secretary General Jose Miguel Insulza spoke at the Opening Plenary of the International Anti-Corruption Conference and underscored that civil society participation is fundamental to preventing and denouncing corruption.
The OAS has provided numerous opportunities for civil society to cooperate in efforts to reduce corruption. Many lessons have been learned in the last decade, most importantly that we are all in this together. Whether as public authorities, as business people or as members of civil society, we must accept responsibility and be fully accountable for our actions.

A joint approach will magnify our impact. It will allow us to exchange experiences, coordinate our approach, and promote common standards, indicators and programmes. This means working together as development agencies and civil society organisations internationally, and also, most importantly with diverse stakeholders on the ground.

Through our active network of chapters in the Americas and throughout the world, Transparency International produces a range of information about corruption in order to guide reform efforts, assist governments and business in the design and implementation of concrete reforms, and monitor implementation.

For example, this May we will publish the first edition of the Transparency in Political Finance Index, which will assess levels of accountability and transparency in political finance in eight Latin American countries. This information will help assess strengths and weaknesses, and assist stakeholders in the development of reforms. It is also important to raise public awareness, because social demand for transparency is essential to sustain the anti-corruption agenda.

The critical and independent voice of civil society must be heard from the beginning; it can drive the process and mobilise broad public support to accompany reform. It is the voice of the people.

Yet, there is a disturbing trend to “regulate” civil society with a number of countries enacting or proposing laws that significantly restrict the activities of civil society organizations. We are deeply concerned about the freedom and protection of civil society and its ability to function without government interference. Given the essential role of civil society in the fight against corruption, it is vital that the OAS takes a strong stand in support of civil society freedom to organize and operate without restriction.

As I leave here today, I am on my way to the first Conference of States Parties for the United Nations Convention Against Corruption, the first truly global anti-corruption convention. 140 countries have signed the UNCAC and 80 have ratified to date, including 16 nations from the Americas. This is an achievement with tremendous potential. I am pleased to conclude that the light lit by our leaders in the Americas in 1994 continues to inspire reformers around the world.

Thank you very much for your attention and for your warm welcome.