Competitiveness and corruption. Presented at the workshop Corruption – how and why to avoid it in Prague, November 1998

Transparency International (TI) is a non-governmental organization that monitors and publicizes corporate and political corruption in international development. It publishes an annual Corruption Perceptions Index, a comparative listing of corruption worldwide. The headquarters is located in Berlin, Germany but operates through more than 70 national chapters.^[1]

History[link]

Transparency International was founded in May 1993 through the initiative of Peter Eigen, a former regional director for the World Bank. Founding board members included Eigen, Hansjörg Elshorst, Joe Githongo, Fritz Heimann, Michael Hershman, Kamal Hossain, Dolores L. Español, George Moody Stuart, Jerry Parfitt, Jeremy Pope and Frank Vogl.^[2][3][4] Eigen acted as Chairman and Pope was Managing Director.^[4]

In 1995, Transparency International developed the Corruption Perceptions Index (CPI). The CPI ranked nations on the prevalence of corruption within each country, based upon surveys of business people. The CPI was subsequently published annually. It was criticized for poor methodology and unfair treatment of developing nations, while also being praised for highlighting corruption and embarrassing governments.^[5]

In 1999, Transparency International began publishing the Bribe Payers Index (BPI) which ranked nations according to the prevalence that a country's multinational corporations would offer bribes.^[5]

Organization and role[link]

Transparency International is organized as a group of some 100 national chapters, with an international secretariat in Berlin, Germany. Originally founded in Germany in May 1993 as a not-for-profit organization, Transparency International is now an international non-governmental organization, and claims to be moving towards a completely democratic organizational structure. Transparency International says of itself:

"Transparency International is the global civil society organization leading the fight against corruption. It brings people together in a powerful worldwide coalition to end the devastating impact of corruption on men, women and children around the world. TI's mission is to create change towards a world free of corruption."

Since 1995, Transparency International has issued an annual Corruption Perceptions Index (CPI); it also publishes an annual Global Corruption Report, a Global Corruption Barometer and a Bribe Payers Index.

Transparency International does not undertake investigations on single cases of corruption or expose individual cases. It develops tools for fighting corruption and works with other civil society organizations, companies and governments to implement them. The goal of Transparency International is to be non-partisan and to build coalitions against corruption.

Transparency International's biggest success has been to put the topic of corruption on the world's agenda. International Institutions such as the World Bank and the International Monetary Fund now view corruption as one of the main obstacles for development, whereas prior to the 1990s this topic was not broadly discussed. Transparency International furthermore played a vital role in the introduction of the United Nations Convention against Corruption and the OECD Anti-Bribery Convention.

Corruption Perceptions Index[link]

The Corruption Perceptions Index—besides the World Bank corruption index^[6]—is the most commonly used measure for corruption in countries worldwide.^{[citation needed]} To form this index, Transparency International compiles surveys that ask businessmen and analysts, both in and outside the countries they are analyzing, their perceptions of how corrupt a country is.^{[citation needed]} Relying on the number of actual corruption cases would not work since laws and enforcement of laws differ significantly from country to country.

The Corruption Perceptions Index has received criticisms over the years. The main one stems from the difficulty in measuring corruption, which by definition happens behind the scenes. The Corruption Perceptions Index therefore needs to rely on third-party survey which have been criticized as potentially unreliable. Data can vary widely depending on the public perception of a country, the completeness of the surveys and the methodology used. The second issue is that data cannot be compared from year to year because Transparency International uses different methodologies and samples every year. This makes it difficult to evaluate the result of new policies.^[7] The Corruption Perceptions Index authors replied to these criticisms by reminding that the Corruption Perceptions Index is meant to measure perception and not "reality". They argue that "perceptions matter in their own right, since... firms and individuals take actions based on perceptions".^[8]

Competitiveness and corruption[link]

A review of the linkages between countries' competitiveness and the incidence of corruption was initiated at a Transparency International workshop in Prague, November 1998 and picked-up in the International Anti-Corruption Conference three years later.^[9]

Mara Faccio (Purdue University, USA) has issued a number of papers on this subject, including a study entitled “Differences between Politically Connected and Non-Connected Firms: A Cross Country Comparison” ^[10]

Critics[link]

The Transparency International Finland Director Jarmo Mäkinen is director of the Confederation of Finnish Industries. He denies the conflict of interests.^[11]

See also[link]

• International Non-Governmental Organisations Accountability Charter
• Transparency (behavior)
• Transparency International Slovakia

References[link]

External links[link]

Wikimedia Commons has media related to: Transparency International

• Official site | TI's mission statement
  • List of Transparency International National Chapters

Sergei Magnitsky
Born	Sergei Leonidovich Magnitsky (1972-04-08)April 8, 1972 U.S.S.R.
Died	November 16, 2009(2009-11-16)
Occupation	Auditor

Sergei Leonidovich Magnitsky (Russian: Сергей Леонидович Магнитский; 8 April 1972 – 16 November 2009) was a Russian attorney whose death in police custody generated international media attention and launched an investigation into allegations of abuse.^[1] Magnitsky, who had alleged wide-scale tax fraud sanctioned by officials before being himself arrested, died days before the one year limit that he could be held without trial would expire.^[2] In total, Magnitsky served 358 days in prison.^[3] In December 2010, British human rights organization Redress filed a 100-page report to United Nations special rapporteurs on human rights.^[4] The Economist calls the alleged torture and killing of Magnitsky "gruesome."^[5] His case has become an international cause célèbre.^[6]

Background[link]

Magnitsky was a Firestone Duncan attorney representing a UK-based investment advisory firm Hermitage Capital Management on charges of tax evasion and tax fraud.^[7] He was a specialist in civil law.

Over the years of its operation, Hermitage had supplied information to the press on a number of occasions related to corporate and governmental misconduct in alleged corruption within state-owned Russian enterprises.^[8] Company co-founder Bill Browder was soon expelled from Russia as a national threat, though Browder himself has indicated that he represented only a threat "to corrupt politicians and bureaucrats", believing that the ouster was conducted to leave his company open for exploitation.^[1] In November 2005, Browder arrived in Moscow to be told his visa had been annulled. He was deported the next day and has not seen his Moscow home for 10 years.^[6]

In June 4, 2007, Hermitage's office was raided by the police. The offices of Firestone Duncan, Hermitage's law firm, were also raided. In both cases, tax documents were stolen.^[9] In October 2007, Browder received word that one of the firms maintained in Moscow had a judgement against it for an alleged unpaid debt. This was the first Browder had heard of it, according to him.^[6]

Exposing of Scandal[link]

In his investigations into the charges against Hermitage, Firestone Duncan attorney Magnitsky came to believe that tax fraud had been perpetuated, but not by Hermitage: evidence he discovered suggested a group of conspirators had stolen the seals and documents of Hermitage and used them to fraudulently reclaim $230m (£140m) of Hermitage's taxes.^[2][10] Magnitsky's testimony implicated police, the judiciary, tax officials, bankers and the Russian mafia.^[2] In spite of the initial dismissal of his claims, Magnitsky's core allegation that Hermitage had not committed fraud but had been victimized by it would eventually be validated when a sawmill foreman pled guilty in the matter to "fraud by prior collusion", though the foreman would maintain that police were not part of the plan.^[10] Before then, however, Magnitsky had himself been brought under investigation by one of the policemen he had testified was behind the fraud. According to Browder, Sergei was "the 'go to guy' in Moscow on courts, taxes, fines, anything to do with civil law."^[6]

According to Magnitsky's investigation, the documents that had been stolen in June 2007 were used to forge a change in ownership.^[6] The thieves then used forged contracts to claim Hermitage owed $1 billion to shell companies. Unbeknownst to Hermitage, those claims were later authenticated by judges. In every instance, lawyers unknown to Hermitage pled guilty on the organizations behalf.^[6]

The new owner, based in Tatarstan, turned out to be Viktor Markelov, a convicted murderer released only two years into his sentence.^[6] The company's fake debt was then used to claim a tax break of $230 million, issued Christmas Eve of 2008. It became the largest tax rebate in Russian history.^[6] Hermitage contacted the Russian government with the investigation's findings. The money, which was not Hermitage's, belonged to the Russian people. Rather than Hermitage, the Russian authorities opened a criminal case against Magnitsky.^[6]

Illness and death[link]

Magnitsky was arrested and imprisoned at the Butyrka prison in Moscow in November 2008 after being accused of colluding with Hermitage.^[2] Held for 11 months without trial,^[2] he was, as reported by The Telegraph, "denied visits from his family" and "forced into increasingly squalid cells."^[10] He developed gall stones, pancreatitis and calculous cholecystitis, for which he was given inadequate medical treatment during his incarceration.^[2] Surgery was ordered in June, but never performed; detention center chief Ivan P. Prokopenko later indicated that he "...did not consider Magnitsky sick...Prisoners often try to pass themselves off as sick, in order to get better conditions."^[11]

On November 16, eight days before he would have had to have been released if he were not brought to trial, Magnitsky died for reasons attributed first by prison officials as a "rupture to the abdominal membrane" and later to heart attack.^[2] It later emerged that Magnitsky had complained of worsening stomach pain for five days prior to his death and that by the 15th was vomiting every three hours, with a visibly swollen stomach.^[11] On the day of his death, the prison physician, believing he had a chronic disease, sent him by ambulance to a medical unit equipped to help him, but the surgeon there — who described Magnitsky as "agitated, trying to hide behind a bag and saying people were trying to kill him" — prescribed only a painkiller, leaving him for psychiatric evaluation.^[11] He was found dead in his cell a little over two hours later.

Journalist Owen Matthews described his suffering in Moscow's notorious prison, Butyrka.

According to [Magnitsky's] heartbreaking prison diary, investigators repeatedly tried to persuade him to give testimony against Hermitage and drop the accusations against the police and tax authorities. When Magnitsky refused, he was moved to more and more horrible sections of the prison, and ultimately denied the medical treatment which could have saved his life.^[12]

Aftermath[link]

According to Russian news agency RIA Novosti, Magnitsky's death "caused public outrage and sparked discussion of the need to improve prison healthcare and to reduce the number of inmates awaiting trial in detention prisons."^[13]

An independent investigatory body, the Moscow Public Oversight Commission, indicated in December 2009 that "psychological and physical pressure was exerted upon" Magnitsky.^[14] One of the Commissioners said that while she had first believed his death was due to medical negligence, she had developed "the frightening feeling that it was not negligence but that it was, to some extent, as terrible as it is to say, a premeditated murder."^[11]

An official investigation was ordered in November 2009 by Russian President Dmitry Medvedev.^[15] Russian authorities had not concluded their own investigation as of December 2009, but 20 senior prison officials had already been fired as a result of the case.^[14] In December 2009, in two separate decrees, Medvedev fired deputy head of the Federal Penitentiary Service Alexander Piskunov and signed a law forbidding the jailing of individuals who are suspected of tax crimes.^[16] Magnitsky's death is also believed to be linked to the firing of Major-General Anatoli Mikhalkin, formerly the head of the Moscow division of the tax crimes department of the Interior Ministry.^[17] Mikhalkin was among those accused by Magnitsky of taking part in fraud.

Wikinews has related news: Russian police to 'check' officer allegedly involved in large theft and murder

Opalesque.TV released a video on February 8, 2010, in which Hermitage Capital Management founder Bill Browder revealed details of Sergey Magnitzky's ordeal during his eleven months in detention,^[18] while the Russian Untouchables group prepared a film Russian Untouchables. Episode 1: Artem Kuznetsov about his prosecutors.^[19] On 25 June 2010 radio-station Echo of Moscow announced that Russian Ministry of Internal Affairs Department for Own Security started investigations against Lieutenant Colonel Artyom Kuznetsov, who has been accused of improper imprisonment of Magnitsky. The investigation was in response to appeal by the Hermitage Capital Management and United States Secretary of State Hillary Rodham Clinton.^[20] In February 2011, the investigation, which had not yet identified any suspects, was extended to May.^[21]

In November 2010, Magnitsky was given a posthumous award from Transparency International for integrity. Magnitsky, according to the awards committee, "believed in the rule of law and died for his belief."^[6] A film produced to highlight Magnitsky's persecution has been shown before in Canadian, German, Estonian, Polish, British, and European parliaments and the American congress.^[6] Hermitage's CEO, Bill Browder, created the film to help persuade foreign governments to issue a visa ban on sixty individuals believed to be involved in the scandal and cover up.^[6]

In July 2011, Russia’s Investigate Committee for the first time acknowledged that Mr. Magnitsky died because prison authorities restricted medical care for him.^[22] Russian authorities also opened criminal cases against the two doctors who treated him, Dr. Larisa Litvinova who managed his treatment towards the end and Dr. Dmitri Kratov who was the chief medical officer at Butyrskaya Prison. Dr. Kratov was demoted soon after Mr. Magnitsky’s death. Dr. Litvinova can get up to three years of prison, if convicted of causing death through professional negligence; while Dr. Kratov was charged with involuntary manslaughter from negligence and is facing five years in prison.^[23] An independent prison watchdog commission reported that prison doctors were pressured by investigators to deny treatment, and Dr. Litvinova disclosed to the Public Oversight Commission that she was trying to get approval for Mr. Magnitsky’s treatment. However, investigators looking into the death of Mr. Magnitsky cleared Oleg F. Silchenko, who oversaw the investigation of Mr. Magnitsky, of any wrongdoing.

In February 2012, the Russian police announced their intention to resubmit for a second trial, which would make Magnitsky the first Russian citizen to be tried posthumuously in the country.^[24]

Increasing international tension[link]

In late 2010, international attention to the matter intensified, with the European Parliament calling for 60 officials believed to be connected to Magnitsky's death to be banned from entering the European Union and the Parliament of Canada resolving to deny visas to and freeze the Canadian assets of allegedly involved officials.^[25] The EU Parliament has also urged members to freeze assets of officials, while similar measures are under consideration in the United States.^[26][27] There, in October 2010, Senator John S. McCain co-sponsored the Justice for Sergei Magnitsky Act, which would forbid entry to the U.S. to 60 individuals named in court documents related to the Magnitsky case. McCain says the law will help to "identify those responsible for the death of this Russian patriot, to make their names famous for the whole world to know, and then to hold them accountable for their crimes."^[28] The law is considered analogous to the Foreign Corrupt Practices Act of 1977 in the precedent it hopes to create.^[29] In July 2011, the U.S. revealed that dozens of Russian officials were barred from entering the U.S. for their possible involvement in the detention of Mr. Magnitsky.^[30]

The Russian Foreign Ministry described the Canadian resolution as "an attempt to pressure the investigators and interfere in the internal affairs of another state",^[31] while in a November statement the head of the lower house's international committee Konstantin Kosachyov criticized the European Parliament's conclusions, indicating that sanctions violated the "presumption of innocence" principle and should wait the resolution of the Russian court.^[32] Bloomberg reported in December that, according to an Interfax story, "identical measures" would be taken by Russia if a European Union ban was effected.^[27] In mid-December, the European Parliament passed the resolution allowing the officials to be banned by member states and their assets to be seized.^[33]

In January 2011, the United Nations Special Rapporteur on Torture, Juan E. Méndez, opened an investigation into Magnitsky's treatment and death.^[34]

References[link]

External links[link]

• Who was Sergei Magnitsky?, profile on russian-untouchables.com
• Investigation of Serget Magnitsky death by the Council to the President of Russia (Russian)
• Суть времени №28 ("The essence of the time #28", in Russian). Infamous Russian politologist Sergei Kurginyan sets out his version of the deep roots of Sergei Magnitsky case: Kurginyan explores Magnitsky's case ties with transnational finance structures of the late 1990s and present; Magnitsky's case ties with the financial "jobbery" of Russian default times (1998) by Bill Browder and Edmond J. Safra; Magnitsky's case ties with present scenario of "orange revolution" being prepared for Russia (Stanislav Belkovsky, Alexey Navalny, Yungers, Karaganov, Gene Sharp).

Peter Eigen

Peter Eigen (born June 11, 1938 in Augsburg, Germany) founded the Advisory Council of Transparency International (TI), a non-governmental organization promoting transparency and accountability in international development since 1993. Headquartered in Berlin, TI supports National Chapters in more than 90 countries.

A lawyer by training, Eigen has worked in economic development for 25 years, mainly as a World Bank manager of programmes in Africa and Latin America. Under Ford Foundation sponsorship, he provided legal and technical assistance to the governments of Botswana and Namibia, and taught law at the universities of Frankfurt and Georgetown.

In September 2001, Eigen joined the Carnegie Endowment for International Peace as Visiting Scholar while teaching at Johns Hopkins University/ SAIS. He also joined the Board of The Centre for International Environmental Law (CIEL) and since 2002, has been teaching as an Honorary Professor of Political Science of the Freie Universität, Berlin. In 2005, Eigen chaired the International Advisory Group of the Extractive Industries Transparency Initiative (EITI) and became Chair of EITI in 2006.

In 2000, he received the award of Honorary Doctor of the Open University, UK and in 2004, received the Readers Digest Award "European of the Year 2004".

From 1988 to 1991 he was the Director of the Regional Mission for Eastern Africa of the World Bank, and from 1999 to 2001, Eigen was a faculty member of the John F. Kennedy School of Government at Harvard University.

Eigen is a member of the Africa Progress Panel (APP), an independent authority on Africa launched in April 2007 to focus world leaders' attention on delivering their commitments to the continent. The Panel launched a major report in London on Monday 16 June 2008 entitled Africa's Development: Promises and Prospects.^[1]

In 2007 Peter Eigen, together with Burkhard Gnärig, founded the Berlin Civil Society Center, and is currently the organisation's Chair.^[2]

In 2004 he married Gesine Schwan, the social–democrat candidate for the federal presidential elections in Germany in 2004 and 2009.

References[link]

External links[link]

• Africa Progress Panel Website
• Transparency International Website
• "How to expose the corrupt", talk at TED, Berlin Nov. 2009
• Berlin Civil Society Center official website

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