Combating Corruption in Southeast Asia Clay Wescott Introduction This chapter will examine recent progress of Cambodia, Laos, Thailand and Viet Nam to set up effective institutions to fight corruption in the public sector, drawing on governance assessments recently carried out by the Asian Development Bank. It will make recommendations both for improving ongoing efforts at the country level, and for joining forces at the regional level. Anti-corruption efforts in these four countries reveal both similarities and differences, making the sub-region interesting for comparative analysis of the causes and consequences of different approaches. Background The effort to combat corruption has moved to the center of the debate about good governance, economic growth and poverty reduction. The impetus behind this move has come from many sources. Increasing flows of aid and foreign investment have increased the temptations for gatekeepers. The end of the cold war has reduced the willingness of donor countries providing aid to ch10.pmd 237 10/25/02, 5:22 PM238 C l a y We s c o t t overlook financial improprieties in light of broader geopolitical interests. Donor country fatigue has placed increasing pressure upon foreign assistance agencies to demonstrate that they are delivering maximum value for the money. The negative example of a handful of “kleptocratic” regimes has underscored the danger of political and social collapse if widespread corruption is allowed to fester unchecked. Another factor is that in an era of increasing trade liberalization, an economic crisis such as occurred in the region in 1997 may be precipitated by pent-up structural weaknesses, including a combination of financial market, corporate and governance problems. For years, governance weaknesses had been eating away at the foundations of east Asia. Aside from the inherent fragility of a macroeconomic framework increasingly financed by short-term external debt, there was outward tolerance of the deterioration of public/private co-operation into closed circles of influence and privilege. Further, there was obliviousness to the mounting, and largely invisible, economic costs deriving from the lack of transparency and accountability and the shrugging acceptance of corruption. Indeed, there was even a benevolent view of rent-seeking and private collusion as necessary lubricants for the system. The weaknesses were not limited to the government or to lax supervision of the banking system, but included grave problems of corporate governance in the private sector itself, stemming from a lack of transparency and absence of strong competitive checks and balances. Citizens in the region have served notice that they are no longer willing to tolerate such gross abuses of the public trust for private gain. The liberalization of the press has enabled journalists to write more freely about official indiscretions. Improvements in education and increased information flow between countries have made their public more aware of anticorruption efforts in other countries and less willing to tolerate systematic abuses at home. The rise of new global nongovernment organizations (NGOs) dedicated to fighting corruption has helped to bring and keep the issue in the spotlight. Foreign investors are also favoring countries that make concrete progress in their structural reforms
Laos Corruption in Laos is a key constraint at all levels: “The politically powerful avoid paying tax, accept ‘commissions’ for facilitating projects or awarding contracts, and pocket pay-offs for ch10.pmd 245 10/25/02, 5:22 PM246 C l a y We s c o t t reducing charges, duties or taxes for family and friends” (Stuart-Fox 1997, p. 207). Donor-funded procurements are rigged to include funds for cars for personal use and ministers try to commandeer cars provided to support donor projects for their personal use. This sets an example for lower-level officials, who supplement their low salaries through similar behavior. New opportunities for corruption opened up as economic reforms started to take hold in the 1980s. For example, giving provinces the right to trade directly with neighboring countries has opened the way for trade-related graft. The opening up to foreign investment has introduced opportunities to collect money to facilitate required authorizations, and the enhanced political and economic role given to the army has provided new opportunities for smuggling. Corruption has also spread to personnel management, leading to the rapid promotion of those close to powerful leaders (Stuart-Fox 1997). This behavior reduces government revenues, misallocates expenditures, reduces foreign investment, and erodes public trust. Many people believe that corruption has become so pervasive that it is now the main impediment to reform (Evens 1998). Naturally officials fear that their own actions will be dis-covered, and are uncertain what their status would be in a setting with less corruption. The current government has taken many actions to address the problem, including setting up an anti-corruption commission in 1993, placing new controls on illegal logging, and publicly condemning lavish consumption (Khaosan Pathet Lao, news bulletin cited in Stuart-Fox, 1997). Laos experienced its share of conflict until 1975, when the Lao people’s democratic republic (PDR) was established. Since then, and unlike the situation in Cambodia, the ruling Lao people’s revolutionary party (LPRP) has shown itself to be remarkably resilient. Transitions of power have tended to be smooth, the new generation of leaders has proven more open to reform, and the Politburo now has some ethnic diversity. Organized opposition to the LPRP is ch10.pmd 246 10/25/02, 5:22 PMC o m b a t i n g C o r r u p t i o n i n S o u t h e a s t A s i a 247 weak. A number of small guerrilla groups exist, bandits launch occasional attacks, and a few dissident groups are based in the USA and Eastern Europe. The media are entirely State controlled. This political stability has helped to underpin the gradual development of institutions that could address corruption, although the necessary achievements are far from complete. There is some progress in three areas: establishing a constitutionally-based foundation for rule of law, a gradual expansion of political participation, and improvements in public financial management. A more robust system of rule of law can begin to punish corrupt officials. Expanded participation can expose and challenge leaders to rein in corrupt behavior, and improved financial management provides tools both to prevent corruption, and to catch corrupt officials in the act. Constitutional Foundation The foundation for an integrity system based on rule of law in Laos came when the supreme people’s assembly adopted the constitution in 1991 (Savada, 1994), declaring the country to be a people’s democratic state. Although the assembly had been charged with drafting a constitution in 1975, it gave the task a low priority. However, international development agencies were reluctant to invest in Lao PDR in the absence of fixed, knowable law. Following Politburo approval in 1990, a draft constitution was made public. Despite calling for discussions of the draft, first among party and government officials and then among the public, the LPRP viewed disagreement with its party line unfavorably, and reiterated that a multiparty system would not be forthcoming. While the 1991 constitution contains elements of an earlier revolutionary orthodoxy, it is clearly influenced by the economic and political liberalization within Lao PDR and the dramatic changes in the wider socialist world. The constitution establishes the legality of a set of authorities that resemble the traditional differentiation between executive, legislative, and judicial branches of government. The delineation ch10.pmd 247 10/25/02, 5:22 PM248 C l a y We s c o t t does not imitate any particular model (neither Vietnamese, nor Russian, nor French), but it pays respect to the idea of basic responsibilities lodged in designated institutions. Even though the constitution has not changed the imbedded patterns of the Laotian political system or threatened the party’s dominant role, it has the potential to protect human rights and respect for the law, by the rulers as well as the ruled. It is expected that the observation of crumbling of communist regimes elsewhere, accompanied by widespread pro-democracy movements, will direct that Lao PDR will accede to growing demands for a more dependable rule of law. Some heartening legal and judicial improvements have taken place, including the evolution of an identifiable system of legislation, the publicizing of laws and decrees, the expansion of legal training, the completion of a bench book for judges, and the development of a private Bar. However, the vast majority of new laws have not yet been enforced. The legal system’s overall capacity remains weak and faces many of the same systemic problems as the civil service. These problems cannot be addressed with donor-funded projects alone, but require political commitment and financial support. As a result, businesses will continue to be hampered by ambiguous rules, opaque enforcement procedures, and opportunities for administrative intervention and discretionary actions. Laws tend to be enforced in ways that benefit vested interests. Political Participation A gradual expansion of participation is another feature of the emerging integrity system. Lao PDR is, at best, at the very beginning of democracy. At present, the public participates in only two elections, namely, those for the National Assembly and for village heads. Even so, within this apparent democracy the party controls elections and determines the outcomes by pre-selecting the candidates. At the national assembly election in December 1997 only four nonparty candidates were selected to stand, of which only one gained ch10.pmd 248 10/25/02, 5:22 PMC o m b a t i n g C o r r u p t i o n i n S o u t h e a s t A s i a 249 a seat. Since then, some positive changes have taken place: members now discuss and vote on draft laws and do not enact all those submitted; an electronic voting system allows secret ballots; microphones permit members to speak from their seats, thereby promoting more debate. A department of citizens’ complaints and petitions has been established. Nevertheless, much more work is needed to make the national assembly a truly effective legislative body. Agenda setting needs to be more systematic and validated through nationwide public consultation; legislative drafting and floor deliberation processes need to be streamlined and legal draftspersons should be better trained. Legislative committees should be given more technical skills; session proceedings should be documented; and new laws, regulations, and session proceedings should be disseminated more widely and systematically. The National Assembly is proceeding to address these and other improvements with support from a UNDP project (Reyes 1999). Improving Financial Management Improvements in public financial management constitute a third feature of the integrity system. Lao PDR is a member of the International Monetary Fund (IMF), which in 1998 laid down an international code for public financial management (IMF, 1998). The code covers four broad requirements: clarity of roles and responsibilities; public availability of information; open budget preparation, execution, and reporting; and independent assurances of integrity. The government has made some progress in moving toward these requirements. As concerns role clarity, the constitution requires the national assembly to approve both the budget and the development plan, but contrary to the code, the national assembly does not receive detailed information on the budget. There is also no indication that the national assembly approves or reviews extra-budgetary spending, quasi-fiscal activities, or government equity holdings. ch10.pmd 249 10/25/02, 5:22 PM250 C l a y We s c o t t Lao PRD generally does not comply with the code’s requirement for public availability of information. While a budget document was released to the public for the first time in 1997 for fiscal year (FY)1997/98, it did not cover extra-budgetary activities, contingent liabilities, tax exemptions, quasi-fiscal activities, or original and revised estimates for the preceding two years, or fiscal reporting practices as required by the code. Nevertheless, publishing the budget was a promising step toward compliance, although no such publication was released for FY1998/99. The FY 1997/98 budget did not conform to the code’s requirement for open budget preparation, including public disclosure of economic forecasting assumptions, fiscal risks, overall budget balance, and accounting standards. As concerns independent assurances of integrity, government accounts are incomplete, inconsistent, and difficult to comprehend, and there is no independent audit authority (World Bank, 1997: pp. 99–113). The ministry of finance’s department of financial Inspection only inspects the accounts of government organizations where financial problems are known to have occurred. This limited role is reportedly due to the lack of staff and expertise. The ADB has provided technical assistance to help set up a national audit office; however it is under the office of the Prime Minister, and thus not in compliance with the minimum standard of independence. The IMF’s code also calls for the administrative application of tax laws to be subject to procedural safeguards. Here the situation has recently improved with assistance from a UNDP/IMF project (IMF/UNDP, 1999). Various reforms have reportedly improved the filing rate from 30 to 80 percent and increased collections significantly. Customs procedures have also improved, although customs revenues have not, probably because of low [quoted] valuation of imported goods, smuggling, and the tariff reductions required by ASEAN. Largely because of problems on the revenue side, the fiscal deficit has gradually worsened since the late 1980s, and reached 14.8 percent of GDP in 1998, excluding grants. For the first time, part ch10.pmd 250 10/25/02, 5:22 PMC o m b a t i n g C o r r u p t i o n i n S o u t h e a s t A s i a 251 of this deficit was not covered by foreign assistance and had to be financed by the Central Bank. Even when the government is determined to move on a specific issue, capacity for market-oriented development management, including indicative planning, policy formulation, and coordination, is limited. Until conditions change, significant progress is doubtful
rogrammes and initiatives. Conclusions This chapter has examined recent progress of Cambodia, Laos, Thailand and Viet Nam to set up effective institutions to fight corruption, drawing on governance assessments recently carried out by the Asian development bank. These countries make up part of the greater Mekong sub-region, and it is an important regional grouping roughly lying between two huge countries — India and China — and bridging their cultures also. We find corruption hinders economic development and poverty reduction in all four countries. Earlier, economic reforms involved dismantling controls where the political decision was difficult, but implementation was straightforward. By contrast now, some of the structural reforms needed to combat corruption are less controversial in principle, but are complex to implement. Some, for instance, require new institutions, which necessitates agreement about appropriate models and the translation of agreed principles into appropriate legislation. ch10.pmd 266 10/25/02, 5:22 PMC o m b a t i n g C o r r u p t i o n i n S o u t h e a s t A s i a 267 All four countries have taken steps to combat corruption, with Thailand the furthest advanced; yet concrete results are hard to obtain. Anti-corruption efforts in these four countries reveal similarities but a striking range of variation, making them an interesting site for comparative analysis of the causes and consequences of different approaches. For example, the recent legacy of civil conflict adds a particular challenge to Cambodia. In addition to national efforts to combat corruption, regional efforts can provide knowledge and support for the national champions, and will help to measure relative progress
Asia RSS Feed July 23, 2011 Former South Vietnam Leader Nguyen Cao Ky Dies VOA News
Photo: AP/Richard Vogel, File In this Jan. 23, 2004 file photo, former South Vietnamese premier Nguyen Cao Ky, talks during an interview in Hanoi, Vietnam. Nguyen Cao Ky, the flamboyant former air force general who ruled South Vietnam with an iron fist for two years during the Vietnam War, died Saturday, July 23, 2011.Nguyen Cao Ky, the former leader of South Vietnam, has died. He was 81 years old.
His family said Ky died Saturday at a hospital in Malaysia where he was being treated for respiratory complications.
Ky served as commander of the air force and as prime minister of U.S. backed South Vietnam during the Vietnam War in the mid-1960s.
He also served as vice president under General Nguyen Van Thieu. When Thieu's government in Saigon fell to North Vietnamese troops in 1975, Ky fled the country piloting a helicopter to a U.S. Navy ship.
He and his family eventually settled in the United States.
In 2004, Ky made headlines when he visited Vietnam, dropping his staunchly anti-communist rhetoric.
Ky is survived by six children and 14 grandchildren. A date for his funeral has not been announced.
