Opinion: Our Mealy Mouthed Approach to Corruption… the Georgian Example

by Funke Aboyade, [email protected]

I wasn’t surprised at the avalanche of emails and SMS I received following last week’s column (Presidential Nuisance…). My plan was to publish some of those reactions but upon receiving and reading the article (reproduced below) sent to me by a friend, I decided it was too good not to share with readers.

The Georgian renaissance – via the Rose Revolution in 2004 – first came to my attention when the country’s entire Police Force (steeped in corruption of course…) was sacked in one fell swoop. The sweeping and dramatic reforms which followed the Rose Revolution have ensured that in just a matter of a few short years Georgia’s corruption perception index ranking of 124 out of 133 countries in 2003 leapt to 64 out of 183 countries in 2011. From failed state in 2004, Georgia now ranks 16th out of 163 countries on the Ease of Doing Business Index.

Am I green with envy? Yes. Can we achieve this here? Yes. But not with our mealy mouthed approach to corruption, indeed our inexplicable tolerance for it. Perfect example: ‘Lawan: I Received Money, not Bribe’ per the screaming headlines last week. The story is now becoming unrecognisable.

Another good example of our insane tolerance for corruption: a look at photos or TV footage of various high ranking public officers arraigned for corruption. They all, without exception, are invariably grinning, knowing full well that nothing will come out of it. Indeed, the only script that was spoilt was the outcome of Chief Bode George’s trial. Before the (shocking to him and his supporters) verdict which sent him to prison, the High Court premises of the Ikeja High Court, Lagos on any of the trial dates was converted to a mini political rally/carnival complete with aso ebi, drinks, food warmers and souvenirs! Eko for show…

Then this. The President’s explanation during the presidential media chat, June 24 that ‘I could be investigated when I leave office’ in answer to the question why he’s refused to publicly declare his assets was, to say the least, puzzling. And troubling. Pardon my simplistic outlook but if you’ve nothing to hide, there’s nothing to be afraid of.

What the piece below shows is that it can be done with a strong, committed leader with the political will, backed by the majority of the people who have had enough.

I don’t see evidence of either yet…

Envelopes

Plamen Monovski, CIO Renaissance Asset Managers

When the prime minister comes to sell you an IPO, you, the investor, take the meeting. When that prime minister turns up with no bodyguards and shows remarkable knowledge of the company he is promoting, you, the investor, take notice. When Nika Gilauri, the premier of Georgia, tells you that the prosperity of his country has been achieved because it has become one of the “least corrupt” countries in the world, you, the investor, take note.

But it wasn’t always like that. After the demise of the USSR, Georgia was not only one of the most corrupt of the former-Soviet republics, it was one of the most corrupt countries in the world. Bribe-to-drive was the norm; police stopped cars at least twice an hour to extort a non-trivial sum of money. The then-interior minister infamously quipped: “Give me petrol only. My people will take care of their own salaries.” Being¨a traffic cop was so lucrative that you had to pay a bribe of between $2,000 and $20,000 to get the job in the first place. Graft was endemic. Georgians passed more envelopes to bent officials than the post office does letters. Meanwhile the economy crumbled and the state was left bankrupt and powerless.

The election of Mikhail Saakashvili changed everything. A bold reformer, he was swept to power in the “Rose Revolution” at the end of 2003 by the overwhelming desire for radical change. His closely-knit team is unified by a common vision and supported by a compliant parliament and judiciary.

The new government wasn’t just radical – it shocked and awed. Ministers, oligarchs and officials were sacked or arrested. Those who resisted were dealt with decisively, sometimes brutally. The state confiscated $1 billion worth of property. Custom officials bore collective responsibility; an entire shift would be punished if one officer was caught accepting bribes. Corrupt professors were kicked out with a lifetime ban from academia. But the piece de la resistance was Saakashvili’s order to sack the entire 16,000-strong police force on a single day, to replace them with some of the best and brightest university graduates. Today, Georgia ranks alongside Finland as having the least corrupt police force in the world and their standout uniforms are rumoured to have been designed by Armani.

The campaign expanded irresistibly. Tax offices were equipped with CCTV; university exam papers were printed in the UK and held in bank vaults until needed; and officials were constantly tested in sting operations. The proactive assault on graft was accompanied by a PR campaign to undermine respect for criminal groups and introduce respect for the law.

The campaign then turned to the sectors. First up was the power sector that was widely used as a cash cow for well- connected oligarchs. In less than a year, Georgia went from net importer to exporter of electricity and the sector became the target of long-term foreign investment.

Tax collection followed. Georgia’s tax base consisted of just 80,000 companies in 2003 and tax collection was a mere 12% of GDP. Saakashvili slashed red tape and introduced flat personal and corporate taxes. Eight years later over 250,000 companies are on the register, and pay the equivalent of 25% of GDP. Georgia now boasts one of the most liberal tax regimes in the world, on par with the Gulf states and Hong Kong.

Lastly came deregulation, with many rules and agencies simply abolished, removing channels of corruption in the process. Among other things, car registration became so easy that used cars became the largest export item in 2011. Georgia moved swiftly from the bottom of the World Bank’s Doing Business ranking (112) into the top 20 (16) by 2012. Foreign investment followed and fuelled a multi-year surge.

But perhaps, the most lucrative Georgian export would be the fight against corruption itself – from which many states mired in graft could benefit. The Georgians patented a process whose steps are replicable: establish early reform credibility by radical action, launch a frontal assault excluding no sacred cows, attract new blood, limit the role of the state via privatisation and deregulation, use technology and communication to maximum effect, and above all, be bold and purposeful. Georgia’s close and distant neighbours should take heed. Their prime ministers and presidents have got their job cut out for them.

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija. This piece was originally printed in This Day on June 3, 2012.

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