DI R E KT ION FÜ R E N T W IC K L U N G U N D Z U SA M M E NARB E I T DE Z A Eidg.

Departement für auswärtige Angelegenheiten

DIR EC T ION DU DEV E LOP PE M E N T E T DE L A COOPE RAT IO N DDC Département fédéral des affaires étrangères
DI RE Z ION E DE L LO SVI LU P PO E DE L L A COOP E RA Z ION E DSC Dipartimento federale degli affari esteri
SWIS S AG E N CY FO R DE V E L O P M E N T A N D CO OPE R AT IO N SDC Federal Department of Foreign Affairs
AGE NC IA SUI Z A PA RA E L DESARROL LO Y L A COO P E RAC IO N COS U DE Departamento Federal de Asuntos Exteriores

Combating Corruption
Guidelines
Combating Corruption
Guidelines

Eigerstrasse 73, 3003 Bern, Telephone (031) 322 21 11

 Impressum
The present guidelines were drawn up by the Corruption Working Group:

Head of the Group

Thomas Greminger Head of the Political and Research Section, SDC

Members
– Dominique Crott Head of the Legal Section
– Stephan Husy Head of the CIS Section
– Marcel Johner Environment, Forest and Energy Section
– Hans Jost Head of the Inspectorate
– Hanspeter Maag Head of the Asia II Section
– Stephan Moll Humanitarian Aid/Disaster Relief Division
– Carin Salerno East Africa Section

Secretariat
– Martin Matter Political and Research Section
– Gaby Schreier Political and Research Section

The Working Group would like to thank Prof. Mark Pieth (Basle University) and Prof. Rolf Kap-
pel (NADEL/Zurich Federal Institute of Technology) for their constructive comments.

The present guidelines were approved by the the Board of Directors of the SDC on 25th Sep-
tember, 1998.

Graphics title page

Hannes Binder
EDMZ Nr. 43227

2
Contents

Foreword 4

I Introduction 5

II The SDC’s Aims 7

1. Appropriate use of public funds 7
2. Promoting good governance 7

III Basic Principles for Combating Corruption 9

1. Prevention 9
– Creating awareness 9
– Deconcentrating power and promoting counter-power 9
– Reducing opportunities for corruption 10
– Guaranteeing acceptable incomes 10
– Promoting moral integrity 11
– Establishing transparency 11
– Maintaining supervision 11
2. Repression 12
– The judicial basis 12
– Political support 13
– Independence and effectiveness of the judicial system 13
– Freedom and responsibility of the media 14

IV Operational Guidelines 15
1. Coherence in development cooperation policy 15
2. Measures to be taken within international cooperation 15
– Transverse measures 15
– Promoting good governance: specific measures to support 17
the fight against corruption
– Exerting influence on multilateral institutions 18
– Political dialogue and conditionality 18
3. Measures to be taken within the SDC 19
– List of measures 20

Appendices
1. Checklist for warning signs 22
2. Procedure in the case of suspected corruption 23
3. Anti-corruption clauses for SDC contracts 24
3
 Foreword

Today corruption is no longer a problem which concerns only developing countries and Eastern
Europe. Corruption has become a serious aspect of development policy for international donors
in general as well as for Switzerland and its partner countries. The Swiss Agency for Develop-
ment and Cooperation (SDC) is aware of the fact that it is often working in an environment which
is susceptible to corruption, and for this reason it treats the problem very seriously.

Corruption cannot be dealt with as a general phenomenon; it has to be faced on a small as well
as a large scale, in the public as well as the business sector, and at all social levels. More often
than not, however, it is the poorest population groups which suffer the most through corruption.
If funds destined for development aid find their way into foreign pockets instead of a health pro-
gramme, for example, the negative effect on the image of state development cooperation is con-
siderable. Corruption does even more damage, however, since it undermines the political and
economic preconditions for long-term development. The fight against corruption must therefore
be seen in relation to promoting favourable political and economic conditions (good gover-
nance).

The Guidelines North-South drawn up by the federal government, which forms the conceptual
basis of Swiss development cooperation, urge us to make every effort to devise concrete mea-
sures to overcome the problem of corruption in international cooperation. Accordingly, the SDC
set up an internal Working Group to draw up the present guidelines for combating corruption.
These guidelines describe the SDC’s measures to fight corruption in and with its partner coun-
tries. On the one hand, we must ensure that public funds are used appropriately, and on the oth-
er, we must help to improve the framework for development.

There is no patent recipe for solving the problem of corruption. The guidelines show clearly,
however, that a successful strategy must be implemented in various contexts; it is only through
carefully selected preventive and repressive measures, political will and the back-up of socio-
political reforms, which are all tailored to local conditions that corruption can be significantly
reduced. We aim to take positive measures to support the efforts our partners are making and to
give weight to the fight against corruption in political dialogue and multilateral institutions. As
far as concerns our own activities, we are obliged to consider our controlling role carefully at
all times.

Walter Fust
SDC Director

4
I Introduction

In many developing countries corruption is an omnipresent evil. There is not a single country in
the world where corruption does not occur, but in developing countries its effects are especial-
ly disastrous; poor countries can least afford to have fraud committed against the state, their
competitiveness ruined and the legal stability undermined. The fact that too many developing
countries are in dire economic straits today – even those with ample natural resources – is
strongly linked to the susceptibility to corruption of the ruling class.

What is corruption exactly? Through its Latin root 1 the word corrupt describes someone who
lacks moral integrity. Corrupt practices are therefore those which are contrary to the generally
accepted code of behaviour. Corruption in public administration implies unethical behaviour
among civil servants.

Ethical values vary from one culture to another, so that different norms apply for corrupt prac-
tice in different countries. Although corruption is very common, it is never normal. In interna-
tional development policy today it is generally agreed that the term corruption can be applied
to all cultures, despite cultural differences, and that the difficulty of making a distinction
between acceptable and innacceptable behaviour applies only to individual cases. Corruption is
more common in an environment where institutions such as the legislative body or the judicial
system are weak, the rule of law is not respected, clientelism is the norm, the administration
lacks independence and professionalism, and where the civil population does not have the means
to apply pressure to bring about change.

Corruption is encountered in public administration and politics as well as in the economy. Cor-
ruption may occur wherever one person receives a mandate from another or from an institution.
In the sense of abuse of authority and trust for personal profit, corruption comprises more than
the punishable offence of bribery 2. Accordingly, the following definition shall apply to the pre-
sent guidelines:

Corruption is the behaviour of people entrusted with public or private tasks who disrespect their
duties in order to gain unfair advantage of any kind. 3

For practical reasons it is useful to make a distinction between grand and petty corruption. Typ-
ical cases of grand corruption involve high-level civil servants, major decisions or contracts and
large sums of money. In contrast, petty corruption usually involves minor officials, routine goods
and services and smaller amounts of money. It would be wrong, however, to make light of petty
corruption, since it is frequently the poorest population groups which are most affected by it.
Corruption should also be distinguished from small gifts offered as an expression of friendship
and mutual appreciation. The distinction between socially acceptable gifts and corruption, which
is not identical in every cultural context, must be taken into account. It is often helpful to dif-
ferentiate between systematic corruption, which involves an entire government or ministry, and
individual corruption which is an isolated and sporadic occurrence.

The present guidelines have been drawn up for the benefit of the SDC and its partners and
demonstrate how the SDC aims to guard against and combat corruption. For this purpose the 5
 main aims are given first and the general principles for combating corruption are then described.
The fourth section comprises guidelines for applying these principles in the SDC’s daily oper-
ations. Development policy, as well as multilateral and bilateral development cooperation, coop-
eration with Eastern Europe and internal measures are addressed. The SDC is aware that it and
other international players have only limited experience in this field. The guidelines should
therefore be understood as work in progress.

1 Corrumpere = to debase.

2 Corruption is defined as a punishable offence only in the French and Italian versions of the Swiss Penal Code, and is equated
with bribery. In addition, there is a series of so-called corrupt offences, which include in particular punishable acts against the
civil service and professional code according to the terms of Section 18 of the Penal Code, namely abuse of position, demand-
ing excessive fees, disloyal execution of duties, accepting bribes and gifts, and falsifying documents.

3 Thisis the working definition used by a working group set up by the Head of the Ministry of Justice and Police; cf. the work-
ing group’s Final Report entitled Security Monitoring and Corruption, October 1996, p. 24. The World Bank defines corrup-
tion more precisely as the abuse of public office for private gain. Limiting corruption to the public sector is only for pratical
purposes: bribery (…) in the public sector (…) should be the Bank’s main concern, since the Bank lends primarily to govern-
ments and supports government policies, programs and projects. cf. Helping Countries Combat Corruption. The Role of the
World Bank, September 1997, p. 9.
A distinction is made between active and passive corruption in the current revision of the Swiss Penal Code (report and pre-
6 liminary draft, para. 232).
II The SDC’s Aims

The overriding aim of all the SDC’s efforts is to make the most effective contribution to develop-
ment in partner countries. Corruption undermines these efforts and prevents the SDC from
achieving its aims as laid down in the organisation’s development policy. For this reason, the
SDC must do all it can to prevent corruption within the framework of its own activities on the
one hand, and to help create favourable conditions for development on the other. The thrust of
the SDC’s anti-corruption strategy therefore has two main aspects: to ensure that the public funds
made available to it are used appropriately and to promote good governance.

1. Appropriate use of public funds

As part of the federal administration, the SDC is obliged to respect the basic principles of reg-
ularity, priority, efficiency and economy in the way it uses its funds. According to Article 33 of
the federal law on finance:

Each office is responsible for ensuring that the funds and resources provided are used wisely,
efficiently and economically. They may only enter into financial agreements and make payments
within the limits of the amounts allotted to them. Such funds may be used only for the approved
purpose and for essential needs.

Since in the field of international cooperation and humanitarian aid relatively important finan-
cial transactions are concluded through decentralised structures, and against a difficult and often
corrupt background, there is enormous potential for corruption. This fact means that the SDC
must take extra special care, since misappropriated funds represent a financial drain on both the
SDC and the development process. Even if only small sums disappear the damage to the organ-
isation’s image can be considerable; each case of misappropriation of public funds undermines
the federal authorities’ trust and in the end the public’s faith in the SDC. This can in turn weak-
en Switzerland’s international solidarity.

2. Promoting good governance

The north-south model drawn up by the federal government requires the corresponding federal
offices to apply the OECD (Organization for Economic Cooperation and Development) guide-
lines for good governance, which were drawn up with Swiss participation. According to these
guidelines, administrative reforms and combating corruption are important aspects of good gov-
ernance 4. Potential means range from positive measures to political dialogue and so-called con-
ditionality. In this connection the finality of our efforts must be constantly borne in mind: our
task is to help improve basic conditions in our partner countries so that the development aims
laid down can be achieved.

4 cf. DAC Orientations on Participatory Development and Good Governance, Paris, OECD, 1995.
8
III Basic Principles for Combating Corruption

How can we combat corruption? On the assumption that there are no universally applicable,
patent recipes for fighting corruption, these basic principles have been drawn up in general terms
and thus need to be adapted for concrete use in each individual case. Chapter IV describes the
role the SDC can play in applying them.

The framework for combating corruption rests on two pillars: prevention and repression.

1. Prevention

The keywords for preventing corruption are: creating awareness, deconcentrating power and pro-
moting counter-power, reducing opportunities for corruption, guaranteeing acceptable incomes,
promoting moral integrity, establishing transparency and maintaining supervision.

■ Creating awareness
All players, including those involved in international cooperation, should know what is allowed
and what is not allowed with regard to the execution of their duties. This means that everyone
should be familiar with the minimum standards required under law and in particular under
administrative law. In those cases where corruption is a question of degree, a code of behaviour
should be drawn up to lay down clear limits. Since they must set a good example, higher ranks
have an added responsibility and should therefore be especially aware of the problem of cor-
ruption. The role-model aspect of players in the field of international cooperation is particularly
important: their behaviour must be examplary!

Creating awareness also implies, however, educating the general public as to the direct conse-
quences of corruption. The fact that in the end the damage done by corruption has to be paid for
by the general public, especially in the domain of international cooperation, is not generally
recognised. This needs to be explained openly. The hidden cost of corruption must be made clear:
potholes in roads, funds missing from pension schemes, or a shortage of medicines in a hospi-
tal pharmacy are often the result of corruption. The man and the woman in the street must be
aware of the effect of corruption at grass-roots level. Only a population group with this
knowledge can exert enough pressure to combat corruption.

■ Deconcentrating power and promoting counter-power

The basic prerequisite for any corrupt practice is power – power in the form of de facto respon-
sibility for material resources or power in the sense of the authority to take decisions indepen-
dently which are binding for third parties. Power corrupts, absolute power corrupts absolutely,
as the saying goes. For this reason, division of power and reducing individual power are effec-
tive methods of combating corruption.

A basic cautionary rule to prevent corruption is to avoid allowing individuals to manage large-
scale resources or take decisions of any magnitude. The principle of shared responsibility should 9
 therefore be applied. Internal guidelines, and compulsory reporting and approval processes can
be effective in limiting the scope of power of any one player.

It is often necessary to encourage counter-power in order to implement this principle on a polit-

ical and social level. In this connection, a broad-based democratic system, support for the civil
society and empowerment of grass-roots organisations are of decisive importance. As far as the
economy is concerned, a free market system and avoidance of monopolies or oligopolies are
effective tools in combating the abuse of power.

■ Reducing opportunities for corruption

Another important way of fighting corruption involves rescinding unnecessary regulations, sim-
plifying the issuing of permits, doing away with licences and lowering excessive customs duties
and taxes, thus reducing opportunities for bribery and extortion. Issuing permits is an ideal
opportunity for corrupt civil servants to earn some additional income. Complicated and lengthy
procedures allow them to demand a high price for a signature and an official stamp – and a rap-
idly processed application. It is clear that changes in rules and regulations must be introduced
with care. It must not be a matter of removing important state functions but of repealing regu-
lations which are seen as superfluous, inappropriate or ineffective.

In situations where a free market economy can develop, privatisation of state-owned sectors is
a valuable tool in the fight against corruption. In this respect it should be noted, however, that
the privatisation process itself can be a mine of opportunities for corruption. Nevertheless, the
state should restrict itself to a supervisory role in particular in the financial sector, in order to
best avoid politicians having any influence over the granting of loans by national banks or the
payment of state pensions.

■ Guaranteeing acceptable incomes

For many civil servants corruption is a matter of survival because the salary they receive is below
subsistence level. In order to reduce corruption such salaries should be raised wherever possible;
the best way to do this is as part of comprehensive administrative reforms. Such a plan should
also include redimensioning departments which employ an excessive number of people and
checking lists of salaried employees (in order to eliminate non-existent employees). The state
can raise funds in order to increase civil servants’ salaries by charging for goods and services
which have so far been provided free, through a concerted effort to prevent customs duty and
tax fraud and by reducing excessive military spending.

A guaranteed acceptable income is a necessary although not infallible condition for encoura-
ging moral integrity.

10
■ Promoting moral integrity
An employee of integrity always puts the interests of the state or the company before his or her
own, and those priority interests alone govern his or her behaviour. The first prerequisite for
moral integrity is a clear, conscious differentiation between one’s function and oneself, although
this notion may well run contrary to many traditions and thus be difficult to accept.

Since only those employees who see themselves as part of a whole will act accordingly, it is
important to promote the players’ identification with the higher aims of the state or the compa-
ny. A basic condition for achieving this identification is an acceptable level of remuneration 5.
Remuneration covers not only a fee or salary; a system of promotion based on performance and
ability, opportunities for further training and social recognition for services provided also have
their value. In this connection it is important to build up a corporate culture which provides the
necessary motivation for its employees. Furthermore, the public image of the department or
company also helps to establish identification with one’s employer. A favourable corporate cul-
ture will affect the staff since they will be happier to identify with a positive organisation.

■ Establishing transparency
Transparency in public administration fulfils two purposes: it provides increased empowerment
for the general public and makes supervision easier. Transparency means that all regulations,
procedures and processes should be accessible and generally comprehensible. All relevant rules
must be easily available to all parties concerned. Decisions must be handed down in writing and
properly justified. In the case of administrations, the general principle of public access should
apply and secrecy should only be permitted in exceptional circumstances. This also applies to
civil servants’ identity.

Transparency facilitates supervision, but it will only work as a preventive measure if it is com-
bined with supervision.

■ Maintaining supervision
Corruption is made possible through a lack of or insufficient supervision. It is therefore neces-
sary for managerial staff to set up a reliable system of internal supervision. Superiors must be
aware of the potential for corruption in the various activities of those who work for them and
pay special attention in sensitive areas. It is also the responsibility of each and every employee
to ensure that rules and regulations are respected in their own areas.

Special supervisory bodies may advise managerial staff on how to fulfil this task; they should
also carry out their own additional inspections, however. The important criterion is that they
should be independent. This can be achieved by appointing various supervisory bodies to various
institutions: for example in public administration, supervisory bodies can be mandated to check
on the parliament, the president, the head of government, the minister of finance or the various
heads of state departments. Some supervisory tasks can be carried out by bodies outside the
administration itself, i.e. delegated to either international private organisations or supranational 11

5 In addition, what is considered acceptable remuneration may vary enormously from one culture to another, a fact which must

be recognised and taken into account as far as possible.

 authorities. Internal and external auditors with overlapping mandates will complement each oth-
er’s work. At a local level supervisory units can also be organised on a militia basis. Require-
ments including a basic knowledge of accountancy and familiarity with the relevant regulations
would ensure that local-level supervision is effective.

Inspections should be a surprise; they should therefore be carried out at irregular intervals. Spot-
checks can also be carried out. If an inspection reveals evidence of corruption, repressive mea-
sures must be taken immediately.

2. Repression

Repression is clearly the second tool in the strategy for combating corruption, i.e. after preven-
tive measures. Repressive measures should be used on the one hand to prevent corrupt players
causing further damage (special prevention) and, on the other, to discourage copycat behaviour
(general prevention).

In a constitutional state there is no point in instituting repressive measures when corruption

is already widespread; they must be implemented before the situation becomes too serious.
Corruption can only be successfully repressed when firstly a competent judicial system exists,
secondly there is political support, thirdly the responsible institutions are able to act inde-
pendently, fourthly they have the back-up of the necessary know-how and a sufficient infra-
structure, and fifthly the media are free to report cases of corruption and do so in a responsible
manner.

■ The judicial basis

One essential condition for combating corruption is the existence of practical provisions in local
criminal and administrative law. These provisions must cover a full range of offences from pil-
fering to money-laundering. In many countries, including Switzerland, criminal law still has
some delicate deficiencies which cannot be made up for without good collaboration between the
lawmakers and those who apply the law. Exchanging experience at an international level can
also help to keep criminal law up to date. From a preventive point of view, the purpose of clear
criminal and administrative regulations is to define what is allowed and what is not.

Many offences involving corruption present the criminal investigators with enormous technical
problems: there are often only accomplices and no witnesses, and corrupt practices can easily
be disguised. Ways of protecting the plaintiff and witnesses must be examined (whistle-blower
protection), as well as the question of the suitability of a state’s evidence ruling. Furthermore,
under certain circumstances politicians and civil servants can be required to regularly reveal the
source of their wealth. Sanctions may include barring corrupt politicians from public office.

Prosecution must, however, remain a last resort in the fight against corruption. The demand for
12 deterrent sentences (e.g. the death penalty in certain Asian countries) is dangerous and not a
suitable way to combat corruption at grass-roots level. The maximum punishment for crimes
involving corruption should be in proportion to the seriousness of the offence.

In addition to criminal law, the scope of administrative and civil law should also be used to the
full. The inclusion of corruption clauses in contracts should be combined with provisions con-
cerning contractual liability and sanctions. Companies which accept bribes should be black-
listed. Professional organisations can also make an important contribution by setting standards,
for example, which go beyond legal minimum requirements. Non-observance of such standards
would result in the company in question being barred from the relevant professional organisa-
tion and, by implication, from practising its trade.

■ Political support
If legal provisions are going to have any meaning a political climate must be created in which
the public prosecutor is able to bring charges against any corrupt persons, be they high-ranking
military staff, influential politicians within the ruling party or other leading personalities. A
credible anti-corruption campaign relies on back-up from the highest level of state administra-
tion. Such a campaign must not on any account degenerate into a witch-hunt, however, which
bypasses constitutional law and fosters the dangerous illusion that the problem can be solved by
eliminating a few corrupt elements. Experience shows that quick and sweeping anti-corruption
measures are a more effective deterrent than sacrificing a black sheep now and again.

A strong civil society is capable of creating a political climate which will help to combat cor-
ruption. Non-governmental organisations which deal with corruption can convert spontaneous
indignation and diffuse attitudes among the general public into concrete demands and follow
them up with continued pressure.

■ Independence and effectiveness of the judicial system

Investigating authorities, administrative courts, in fact the judicial system as a whole plays a
major role in combating corruption. It goes without saying that these institutions must be
anchored in a democratic and constitutional system and respect the rules laid down by it. It is
against such a background that they can enjoy the greatest degree of independence. If they are
to fulfil their tasks correctly they must be free to act, regardless of the position or reputation of
the person under investigation. They must be sure that they will suffer no disadvantages because
they have carried out their duty. In particular, they must not be corrupt themselves. Preventive
measures and (self-)supervision are especially useful in this area.

The gatekeepers – persons who control access to justice – must be carefully scrutinised. Nor-
mally a public prosecutor must issue a transferral before proceedings can be started. If the areas
of responsibility of several prosecutors overlap it is easier to avoid cases being abandoned in the
early stages.

13
 Investigating bodies and the judiciary should be independent and be given political support – as
long as their institutional capacity is insufficient they will not be very successful in their fight
against corruption. In order to perform properly they must have staffing and financial resources,
know-how and a suitable infrastructure at their disposal. The quality of the work they do must
meet the most stringent requirements, as they are involved in serious accusations which should
not be made lightly.

■ Freedom and responsibility of the media

The media can play a repressive role in two respects: on the one hand, they can publicise proven
cases of corruption and thus bring the repressive apparatus into operation, and on the other, they
can pillory convicted civil servants and politicians. In this way they increase the deterrent effect
of punishment through the judicial system.

Publishers must be granted freedom in their work and the media must be highly professional if
they are to carry out these tasks in a reliable manner. On the one hand, they must not fear the
most powerful people in the land nor should they have any reason to fear them. On the other
hand, to ensure credibility they must avoid sensational, unfounded acccusations; it is all too easy
to use accusations of corruption for political purposes. If they are to fulfil their obligations
regarding good practice and their demanding task journalists need time, a solid training and a
series of common professional rules and regulations.

It must never be forgotten that people working in the media can also be bribed. The most effec-
tive tool against this is to have a broad palette of media operators: one newspaper (or radio or TV
channel) of many will pick up on a story that could easily have been covered up if there was only
one information outlet. One media operator can correct a wrong impression given by another.

14
IV Operational Guidelines

This chapter deals with what the SDC can contribute towards implementing the general prin-
ciples described in the previous chapter. In this connection the organisation has at its disposal a
variety of tools, depending on the context of the fight against corruption. The SDC can take
action at the level of national politics, within its own walls, or in bilateral or multilateral coop-
eration, a distinction being made between transverse and specific measures.

1. Coherence in development cooperation policy

If it is to enjoy credibility, Swiss international cooperation’s commitment to fighting corruption

must actively build on a basis of coherence in development cooperation policy. It is contradic-
tory to encourage foreign governments to try to combat corruption and at the same time to
begrudge them legal assistance in their fight, to tolerate bribery of foreign officials in one’s own
country, or even to allow bribes to be deducted from taxable income as professional expenses.
Such contradictions between one’s own laws and demands made on partner countries with regard
to development cooperation need to be eliminated in Switzerland and in other industrialised
countries. It is the SDC’s task to actively show its support for coherence in development coop-
eration policy within the federal administration and vis-à-vis the general public, in line with the
north-south model. This it can do through participating in working groups, consultancy work
for public offices and helping to draw up reports, through maintaining personal contact with
decision-makers and through direct contact with the general public.

Moreover, coherence in development cooperation policy obliges the SDC to take full account of
the example it sets as a development agency vis-à-vis its partners.

2. Measures to be taken within international cooperation

In international cooperation the SDC enjoys a partner status, the main responsibility for develop-
ment lying with the SDC’s partners. Both sides, however, must be conscious of the fact that coop-
eration depends on a number of basic conditions. The resources supplied by the SDC may only
be used for the purposes agreed upon in advance and laid down in the corresponding contract.
They may not be used to cover losses incurred through corruption. In extreme cases, sanctions
against partners must be not only used as a threat but put into practice.

■ Transverse measures
In almost all areas of international cooperation and humanitarian aid there is a possibility of
corruption, for which the SDC must make sufficient allowance when planning and imple-
menting its programmes. The organisation can minimise this risk by choosing its partners and
the tools it uses with care. If materials are acquired in a regular manner and contracts are drawn
up prudently, it should be possible to prevent problems arising and, if needs be, to deal with
any case of corruption in an appropriate way. The following points should be taken into con-
sideration: 15
 A) Planning and partner assessment
– corruption or the risk of corruption in country and sector programmes, annual programmes,
credit applications, contractual negotiations and within the framework of environmental moni-
toring in connection with development policy should be addressed as a topic in its own right;
– the compulsory use of funds (short-term projects aimed at using up the budget) should be
avoided through long-term planning and alternatives should be kept in reserve;
– politicians should be prevented from using development projects for the personal benefit of
their constituency members;
– power centres in the SDC and other projects should be identified. They should not be allowed
to be misused in order to strengthen authoritarian and undemocratic structures;
– the managerial and administrative ability as well as the weaknesses of partner organisations
should be assessed in detail, and in particular internal control mechanisms and rules con-
cerning power of signature should be checked;
– cooperation should be adapted to the managerial and administrative ability of local partner
organisations; weak points should be eliminated and in particular assessment and auditing
ability should be strengthened;
– partner organisations should be encouraged to reveal corrupt practices within their pro-
grammes and projects.

B) Drawing up contracts
– all contracts should be worded and supervised according to current regulations;
– effectiveness of transfers of funds: funds advanced must be in suitable amounts and must be
checked; suitable bank accounts; financial security; checking rules concerning signatures;
direct transfer of funds avoiding middlemen (e.g. ministry – association or other non-govern-
mental organisation – project);
– the relevant regulations concerning operational implementation, book-keeping and finance must
be observed: the regulations laid down in the general conditions and provisions etc. of the con-
tract must be adhered to. If the book-keeping and auditing is delegated to a state or partly state-
run institution the auditing system used by the corresponding public sector should be checked
and the contract must stipulate that the SDC has the right to inspect the books kept by the part-
ner. The SDC must also have the right to demand a second audit by a jointly appointed, neutral
institution if irregularities are discovered or if the original audit is deemed unsatisfactory;
– International Accounting Standards (IAS) should be introduced for the book-keeping, includ-
ing the necessary training;
– an anti-corruption clause (see Appendix 3) should be included in all contracts and its impli-
cations should be explained;
– financial systems should be straightforward and transparent;
– free access to the project as well as to all relevant books and documents should be guaranteed
through stipulations in the contract;
– the control mechanisms to be used if corruption is suspected should be stipulated in the con-
tract;
– the stipulations to be included in the contract concerning liability and sanctions must be
agreed upon;
16 – regular inspections should be carried out.
C) Acquisition procedure
– the current Acquisition Instructions 9A and 9B and the Operational Principles for Awarding
Contracts should be followed carefully;
– authority with regard to placing orders or awarding contracts should be restricted;
– a project should be abandoned if grand corruption is necessary to complete it;
– the mandatary should be offered fair compensation if a project has to be abandoned;
– the SDC must intercede politically if a project has to be abandoned owing to grand corrup-
tion;
– all available sources of information and influence, including examination of inspection
reports, should be used in the case of a project funded jointly through multilateral institutions.

D) Monitoring and implementation

– procedures should be monitored with reference to contractual stipulations; any deviations
from agreed procedure must be discussed;
– statistics should be used in order to expose irregularities (comparisons with similar projects);
– expenditure should be monitored formally and materially;
– electronic programmes which cannot be manipulated should be used for project bookkeeping;
– implementing agencies and mandataries should be encouraged to report any cases of corrup-
tion in projects through guarantees of fair compensation.

■ Promoting good governance:

specific measures to support the fight against corruption
Helping to create favourable political and economic conditions is already one of the main objec-
tives in a series of country programmes. It is possible to introduce a specific programme focus
Support for Combating Corruption within the framework of this or another aim in which questions
of good governance play a major role. This is particularly appropriate in those partner countries
where corruption significantly hinders the process of development but at the same time powers
exist in civil society and/or within the state which are determined to stamp out this problem.

Basically, all measures should be considered which can be included in the strategy mentioned in
Chapter III. The constructive character of these measures should be emphasised – they should be
seen by all those concerned as an opportunity to master the problem. The measures cannot be
implemented without committed partners and political support. Those to be considered include:

A) Civil society
– creating awareness among the general public through methods of communication (from elec-
tronic media to street theatre) adapted to suit the target population group;
– training journalists: how to carry out an investigation, how to handle cases of corruption;
– empowering those who suffer as a result of corruption through information on civil rights and
legal advice;
– negotiating moral integrity pacts 6 between the authorities and companies for open calls for
tenders in certain sectors.
17

6 In a moral integrity pact all the parties involved in calling for tenders, i.e. government departments, administration and pri-

vate suppliers or companies, undertake to avoid all forms of corruption and to ensure transparency. Violation of this undertak-
ing will be punished by, for example, barring the guilty party from being awarded any public contracts for a given period.
 B) Administrative reforms
– in-depth research into the characteristics of corruption in the sector or institution in question;
– technical and financial support for administrative reforms (concept and implementation)
based on knowledge acquired;
– setting up institutions: for example, appointing an ombudsman to facilitate contact between
the public and the administration, to deal with complaints and to suggest measures to be taken
within the administration;
– capacity building in the fields of management, use of human resources, controlling and audit-
ing within the administration.

C) Controlling bodies, judicial system

– strengthening the existing legal system;
– training and providing logistical support for special anti-corruption units;
– training and providing logistical support for the judiciary;
– offering book-keeping courses for lay people in order to promote public participation in moni-
toring the administration and auditing at a local level.

These measures can be implemented bilaterally, as part of a multilateral programme or in col-

laboration with non-governmental organisations.

■ Exerting influence on multilateral institutions

A considerable part of Swiss development cooperation is carried out through multilateral organi-
sations. It is the duty of Swiss delegates in the managerial bodies to help to ensure that the pub-
lic funds invested here are also used appropriately as well as to promote good governance. In
this respect the multilateral organisations also need to have a strategy for combating corruption
within and outside the institution. The role each organisation can play in helping to promote
good governance depends on its own particular strengths.

The obstacle to development that corruption represents must also be taken seriously by multi-
lateral organisations. Swiss delegates must raise the topic whenever necessary and must insist
that the pressure that the organisation can exert be used to encourage a given government to fight
corruption. In this respect the Bretton Woods Institutions should play a leading role. Double
standards – one rule for large countries, another for smaller countries, for example – must not
be tolerated. In the same way, the performance-based lending system operated by the World
Bank’s International Development Association (IDA) should be supported. Standards should be
applicable to both the seriousness of the fight against corruption and the absolute level of cor-
ruption.

■ Political dialogue and conditionality

The SDC pursues political dialogue with high-ranking representatives of the partner country
who are responsible for the basic conditions for development programmes. In this way the SDC
18 can draw the attention of major decision-makers to the problem of corruption, point out the
damaging effects it can have (including on governability) and remind them of promises that have
been made. The degree of governmental commitment to the fight against corruption can be esti-
mated from monitoring the development cooperation environment, but equally from political
dialogue. This can also be used as an opportunity to identify and decide on specific, positive
measures to surmount the problem.

If the government is not willing to change its tack and takes no other anti-corruption measures,
conditions and legal consequences must be made clear. Postponing or abandoning a project
should only be a last resort if the following is shown to apply:

1. The aims laid down for the cooperation project cannot be achieved or an unacceptable increase
in costs will be incurred owing to corruption.

2. The authorities responsible are making no serious effort to eliminate corruption.

Efforts to coordinate with bilateral and multilateral donor institutions should be made, with
respect to both political dialogue and conditionality. If international cooperation is abandoned
in one sector it does not necessarily mean that it must be abandoned in others.

3. Measures to be taken within the SDC

On the basis of the role-model function of the SDC that has already been mentioned several
times, it is especially important that the organisation does all it can to prevent corruption with-
in its own ranks, i.e. in relation to its own staff and mandataries such as consultants. Firstly,
employees at all levels should be made aware of the problem and their abilities should be pro-
perly valued. This applies in particular to administrative staff. Consistent implementation of the
PEMI (planning, evaluation, monitoring and implementation) system can provide considerable
support in this context. It is essential, however, that staff at all levels fulfil their monitoring tasks
and duties at all times. If corrupt practices are discoverd within the SDC they must be dealt with
appropriately. The organisation must take disciplinary measures against corrupt employees, even
going so far as to dismiss them.

However much care needs to be taken, precautionary measures should not destroy our local
employees’ faith and sense of responsibility. Mutual trust remains an essential element of any
productive cooperation. At the same time, risks must be recognised and minimised.

19
 ■ List of measures
A) Human resources
– careful and transparent selection of staff;
– fair salaries and fees (according to performance, level of responsibility, market conditions);
– social appreciation of all tasks and positive recognition of performance (in particular by supe-
riors);
– carefully discussed and worded job descriptions, in particular information concerning the sig-
nificance of the tasks involved in relation to the project as a whole, clear regulations con-
cerning competencies, areas of responsibility and authority.

B) Creating awareness
– drawing up and distributing a code of behaviour for managerial staff and others in positions
of particular risk as compulsory guidelines for fulfilling the tasks in question;
– informing employees, in particular managerial staff, about the risks and the damaging con-
sequences of corruption;
– further training and information so that rules and regulations, including those concerning
book-keeping, are observed more strictly.

C) Monitoring
– checking that rules and regulations, including those concerning book-keeping and contractual
conditions, are being adhered to;
– consistent application of the shared-responsibility principle (e.g. need for two signatures);
– written justification and efficient filing system for all business transactions;
– regular monitoring and spot-checks by superiors in areas which are known to be sensitive;
– internal and/or external audits by qualified people;
– investigation if corruption is suspected and prosecution of guilty parties if necessary;
– systematic assessment of all cases of corruption; feedback to Directorate;
– compilation of best practices with regard to combating corruption (best handling of bad prac-
tices);
– inspections.

The Warning signs and Procedure in the case of suspected corruption checklists should be
strictly adhered to.

20
Appendices

21
 1. Checklist for warning signs

In this context the regulations laid down in the SDC Instruction 13 Misappropriation of Funds,
in particular Appendix 1, apply, as well as the following:

– delay in submitting operational and financial reports;

– significant and unjustified deviation from operational plan;
– excessive budget in relation to proposed activities;
– unjustified changes in the budget or accounts;
– muddled or badly kept books;

– discovery of irregularities in operational reports as well as in financial and auditors’ reports;

– unusual short or long-term expenditure items;
– inappropriate commission in relation to expenditure;
– poorly defined responsibilities in fund management (separate or joint fund management; who
does what and how?);

– excessive remuneration;
– flaws in acquisition procedures (goods and services and deliveries);
– poorly kept inventory;
– delayed deliveries;

– repeated purchase of small quantities of goods from the same supplier;

– discovery of weaknesses in the countries’ administrative systems and/or the administrative
ability of local partner;
– non-observance of preventive measures;
– an employee who refuses to accept a new position even if it involves promotion;

– an employee who regularly works late when there are very few other people present;
– opulent life-style, e.g. expensive cars or accommodation;
– personal dependence, preferences;
– unusual, peculiar or irregular (administrative) procedures.

22
2. Procedure in the case of suspected corruption

Measures to be taken upon discovery of irregularities or corruption in international coop-

eration and humanitarian aid projects.
Defining an irregularity as corruption depends on the context. In view of the varying background
conditions guidelines can only be drawn up in the knowledge of the specific circumstances of
the case. An accusation of corruption must be based on evidence of irregularities. Simple sus-
picion is not reason enough to accuse someone of corruption. In any case, the measures taken
must be chosen with great care; first and foremost, they must be based on the contractual stipu-
lations agreed by the parties involved. The measures indicated below are of a general nature and
must be adapted to each individual case. The numbering is random and is not a guide as to the
order in which they should be implemented.

A) Internal procedure within the SDC

– as indicated in Appendix 2 of Instruction 13;
– inventory of cases of corruption – evaluation – ascertaining previous cases.

B) Procedure vis-à-vis partner

1. The partner should be requested to produce a report, the points which must be addressed being
clearly and precisely indicated. A deadline should be set for submitting the report. The con-
tents should then be discussed. Measures should subsequently be taken jointly to eliminate
the irregularities. Another deadline should be set for implementing the measures.

2. The SDC’s right to examine the partner’s book-keeping and other documents is to be exer-
cised. This inspection may be carried out by a jointly appointed external auditor if this con-
forms with the terms of the contract.

3. A criminal investigation should be instigated or other legal measures taken (e.g. annulment
of the contract with the accused party) in consultation with the Legal Division.

4. If the measures listed under (1) are not completed before the deadline or if the irregularities
are considered to be very serious, the following should be done:
a) Notification of the formal suspension of the agreement; such action must be based on the terms
of the contract, and/or
b) notification of a stop on payments;
c) in extreme cases the contract is to be annulled.

5. If corruption is suspected in relation to acquisitions: contractual documents should be request-

ed or a representative should sit in on meetings where decisions are taken on awarding con-
tracts.

6. Political statements.

23
 3. Anti-corruption clauses for SDC contracts

■ Anti-corruption clause for agreements with governments

The contracting parties share a common concern in the fight against corruption, which jeopar-
dizes good governance and the proper use of resources needed for development, and, in addi-
tion, endangers fair and open competition based on price and quality. They declare, therefore,
their intention of combining their efforts to fight corruption and, in particular, declare that any
offer, gift, payment, remuneration or benefit of any kind whatsoever, made to whomsoever,
directly or indirectly, in order to be awarded the present agreement, or during its execution, will
be construed as an illegal act or corrupt practice. Any act of this kind constitutes sufficient
grounds to justify annulment of the present agreement or for taking any other corrective measures
foreseen by applicable law.

■ Anti-corruption clause for other contracts

The contracting parties shall neither offer a third person nor seek, accept or get promised directly
or indirectly for himself or for another party any gift or benefit which would or could be con-
strued as an illegal or corrupt practice.

24
DI R E K T ION FÜ R E N T W IC K L U N G U N D Z U SA M M E NARB E I T DE Z A Eidg. Departement für auswärtige Angelegenheiten
DIR EC T ION DU DEV E LOP PE M E N T E T DE L A COOPE RAT IO N DDC Département fédéral des affaires étrangères
DI RE Z ION E DE L LO SVI LU P PO E DE L L A COOP E RA Z ION E DSC Dipartimento federale degli affari esteri
SWIS S AG E N CY FO R DE V E L O P M E N T A N D C O OPE R AT IO N SDC Federal Department of Foreign Affairs
AGE NC IA SUI Z A PA RA E L DESARROL LO Y L A COOP E RAC IO N COS U DE Departamento Federal de Asuntos Exteriores

E i g e r s t r a s s e 7 3 , 3 0 0 3 B e r n , Te l e p h o n e ( 0 3 1 ) 3 2 2 2 1 1 1