The Indian Ocean tsunami of December 2004 was a massive disaster, prompting an equally massive response. Some US agencies estimate that their tsunami appeals have amassed the equivalent of twice their normal annual global humanitarian budget. But it does not necessarily follow from this that problems of corruption will also be massive. Of the billions of dollars that may flow into the region, how many will be lost to corruption? A fraction of a percent, a worrying percentage? How will this compare with other inefficiencies in the system, such as mistargeting of aid, inappropriate programming and poorly timed programming? Indeed, a focus on the potential for corruption in tsunami relief and rehabilitation work neatly sidesteps issues of impartiality and politically directed rebuilding.
The international watchdog Transparency International defines corruption as the misuse of entrusted power for private benefit. With this definition in mind, this article explores three critical areas as they relate to the tsunami response:
- The pre-existing corruption environment.
- The effects of the disaster on opportunities for corruption.
- The effects of the aid influx on opportunities for corruption.
The corruption environment
Corruption is often a particular problem in disaster-prone and conflict-affected countries. Transparency Internationals Corruption Perceptions Index (CPI), for example, puts Haiti at the bottom of the list, at 145. The Democratic Republic of Congo (DRC) is 133rd, Iraq 129th. Among the tsunami countries, Indonesia sits with the DRC at 133rd, India is ninetieth, Sri Lanka sixty-seventh and Thailand sixty-fourth. Clearly, corruption is a pre-existing problem in many of the countries that have received international relief aid.
The economies of disaster-prone regions, particularly those caught up in conflict, greatly increase the potential for corruption. Civil wars, such as those in Sri Lanka and Indonesias Aceh province, facilitate links between personal power, family, tribal and religious affiliation and the exploitation of natural resources, local populations and external international resources, to fuel both personal gain and war objectives. In environments where the salaries of government officials and of soldiers or militia often go unpaid, personal survival may depend upon graft and exploitation. Your gun becomes your salary, and exploitation becomes the primary mode of governance.
The impact of the disaster
The physical effects of the tsunami are likely to have increased opportunities for corruption and exploitation. In the immediate aftermath of a disaster, many of the systems normally used to encourage accountability and reduce corruption break down. Local officials are killed, offices destroyed and records bank records, land titles, work permits lost.
If possession is nine-tenths of the law, then those who hold few legal documents have little chance of asserting their property rights. Survivors in Thailand who tried to reclaim their land in Laem Pom, part of an old tin mine site in Ban Nam Khem, the worst-hit seaside village in Phangnga, found that the devastated area had been sealed off by a group of armed men hired by the local Nai Toon (money baron), who claimed ownership over the beachfront community where some 50 families lived. As this example shows, disasters often exacerbate existing disparities in wealth and power. One aid agency active in the tsunami relief expressed this well:
As we seek to aid in the post-tsunami reconstruction effort, we must be acutely aware of the power dynamics in [this] complicated social fabric. Without understanding these dynamics, our programs run the risk of reinforcing already highly inequitable social structures.
Municipal and country authorities, faced with rehabilitating areas where the majority of the infrastructure is destroyed, are likely to err towards planning anew, as if on a slate wiped clean, rather than building on the aspirations of the disaster victims.
The effect of the aid influx
Over the past ten years the humanitarian community, donor governments, UN agencies and NGOs have done a tremendous amount to increase their level of accountability and their ability to track their financial and supply resources. Initiatives like the Sphere Project have sought to set minimum standards for operations, while the Active Learning Network on Accountability and Performance (ALNAP) and the Humanitarian Accountability Partnership International have both endeavoured to enhance the aid communitys competence in evaluation and monitoring, and to increase accountability to donors and affected communities. Within the government donor community, the Good Donorship Initiative seeks to ensure that funds are targeted more on the basis of need and less on the basis of politics or public pressure. All of these, largely selfinitiated, activities have greatly increased the accountability of the aid business, and thus reduced opportunities for corruption.
Despite these efforts, all disasters and disaster recovery operations create opportunities for profit, legitimate or otherwise. In situations of famine, grain traders often flourish, as do livestock marketers who are able to buy up herds at knockdown prices. The reconstruction of physical infrastructure presents a prime opportunity for the misuse of power and resources. At one level, this is no different from any other major construction programme in the commercial or public sector. At another level, however, aid systems create their own peculiarities which may enhance corruption. The massive influx of aid resources into the tsunami zone, often from unfamiliar sources and through unfamiliar channels, clearly provides an additional opportunity for corruption.
Implementing aid agencies, particularly those that are new to an area, or are having to rapidly scale up their interventions, have a tendency to create their own systems for delivery, service and accountability, rather then looking to use and enhance existing local systems. In effect, they build a parallel economy, creating a large pool of relatively well-paid but temporary jobs. Through initiatives like People in Aid, aid agencies are starting to reform the way they recruit, train and compensate international staff, but to date no such concerted move has been made to redress issues of inequality in the way local staff are hired, and the distorting effect agencies have on local labour markets. On the other hand, parallel systems may not always be a bad thing. In many conflict environments, parallel systems are set up explicitly to bypass corrupt and exploitative local government, commercial or warlord systems.
The scale of funding that the tsunami has attracted has posed particular problems. Few agencies had Médecins Sans Frontières (MSF)s courage or financial confidence to state clearly that they had raised sufficient funds for their tsunami relief operations, and wanted no more. Given the opportunistic nature of fundraising for relief, most agencies continued to solicit money well beyond the point where their initial appeals were met; one international agency (the International Federation of Red Cross and Red Crescent Societies) originally asked for $59 million in December 2004, revised this upwards to $155 million in January 2005, and is reported to have raised over $1.9 billion to date across its global membership. Even where active fundraising ceases, money from the public still continues to flow.
Agencies accountability systems, procurement systems and payment systems have been developed to handle a predictable level and rate of transactions. In the pressure to spend fast and furiously, the tsunami response is in danger of overwhelming these systems. There are significant problems associated with scaling up an operation with a $10 million turnover to one with a turnover of $100 million in a matter of days. Systems for accountability and the tracking of financial and other resources become overloaded. It is not uncommon for a backlog of accounting to build up, and for auditing to be ignored in the rush to supply. Agencies need to hire large numbers of local staff rapidly, often with little understanding of cultural, religious and ethic backgrounds and affiliations. In many major operations in the past, aid agencies have found themselves spending months if not years trying to unravel the webs of nepotism and minor exploitation they had inadvertently put in place. Other issues apply to the rapid build-up of international staff where, because of a lack of available experienced personnel, relatively inexperienced agency staffers may find themselves administering relatively large and complex operations. Poor targeting, oversupply and inappropriate programmes can present problems and opportunities for exploitation. Opportunities for corruption abound, as agencies seek to purchase goods locally in markets they are unfamiliar with.
Whilst the major international agencies have seen a massive increase in their funding for tsunami relief, there is anecdotal evidence to suggest that many non-traditional NGOs have also benefited from the significant expansion in public giving via the Internet in response to the disaster. Ten years ago in Rwanda, some 480 NGOs turned up in Kigali after the genocide, many of them first-timers. The tsunami-affected countries have seen a similar pattern. There are a significant number of relatively new agencies seeking to operate in a largely unfamiliar environment. There is no reason to suggest that these agencies are any less honest or accountable than their more established counterparts, but there is reason to believe that their relative inexperience makes their programming more susceptible to exploitation and corruption.
Aid agencies are seen by the public and by their financiers as holding funds in trust. They are the vital link between those with compassion and those in need. Those with compassion want their money to go to the needy, and are thought willing to give only if they are sure that their wishes are being met. Aid agencies are caught in a bind. They seek to ensure that their reporting emphasises how little they spend on overheads (suggesting that every penny goes to the needy), yet without properly funded systems of financial tracking, checks on authority, internal auditing, training and monitoring, aid may go astray. Many people certainly believe that large chunks of aid money are lost through graft. A recent opinion poll by the Program on International Policy Attitudes at the University of Maryland found that Americans show great pessimism about how effectively aid money going to Africa is being spent, with most assuming that large portions are lost to corruption. Perceptions about aid in general are little different. Against this background, it is extremely difficult for an individual agency to stand up and admit, let alone confront, issues of corruption.
In seeking to understand corruption issues better, agencies should ask themselves three sets of questions.
- What is the most likely source of significant corruption? Is it the underlying economic systems in the affected countries, the opportunities for profiteering created by the disaster, oversupply or missupply in the aid system, or the internal workings of the aid system itself?
- If our prime concern is the rebuilding of livelihoods in a sustainable manner within affected communities, how then do issues of corruption and aid misuse measure up against problems of inappropriate, ill-timed and poorly conceived aid projects? Wherein lies the greatest threat to recovery?
- The concern for accountability, which is part and parcel of the transparency and anti-corruption agenda, has encouraged agencies to work their way down the supply chain, from accountability to donors to accountability to self-set standards to accountability to beneficiary populations. Is there potential in this massive operation to carry out some serious work on this last link in the chain, and move agencies beyond what remains a largely rhetorical aim?
Dr Peter Walker is Director of the Feinstein International Famine Center at Tufts University, Boston, MA. The Centers email address is www.famine.tufts.edu. This article is a shortened vision of a background paper for the Transparency International meeting on Corruption Prevention in Tsunami Relief, held in Jakarta, Indonesia, on 78 April 2005.