Transparency International, Human Rights Watch and Global Witness have written to the IMF Executive Board reminding them that anti-corruption measures are needed in times of crisis, perhaps now more than ever.
We are concerned that unleashing massive amounts of money without including basic transparency and anti-corruption measures risks undoing the significant progress the Fund has made in tackling corruption in recent years.... In times of crisis such as now, transparent and accountable spending becomes more important—not less so. With the stakes higher than ever, it is critical that people can ensure their governments are using emergency funds to safeguard public health and deliver desperately needed assistance to those hardest hit.... Corruption risks do not disappear during crises such as this one. In fact, they may be exacerbated by dramatic increases in the amounts and speed of spending, as well as the weakening or breakdown of oversight mechanisms, that allow powerful actors to take advantage of the crisis for their own benefit. For example, the United States Government Accountability Office estimated that up to 16 percent of the aid spent following Hurricane Katrina was lost to improper or fraudulent activities. Even at this early stage of the pandemic, there are already dozens of media reports of crime and corruption related to COVID-19. There is a high risk that public decisions will be captured or distorted by vested private interests for their own gain, using a range of methods that can include bribery, undisclosed lobbying, and opaque political donations, as well as leveraging situations where there are conflicts of interest or revolving doors between the public and private sectors. Moreover, the consequences of corruption increase dramatically during a crisis such as this one. The United Nations Office on Drugs and Crime (UNODC) estimates that, on average, 10 to 25 percent of a public contract’s value is lost to corruption. In normal times, this loss creates significant costs for governments, businesses, and citizens. But at a time like this, it can mean the difference between life and death, food on the table or hunger, a roof over one’s head or homelessness. In addition, the global financial system as a whole remains profoundly vulnerable to the operations of corrupt networks, with significant gaps in anti-money laundering effectiveness in developed countries and major financial centers.