Role of the Judiciary in Controlling Corruption: Selected Questions and Data for discussion at Sessi

1
At the Comprehensive Legal and Judicial Developmen
t Conference
Handout for Interactive Session V
Conditions for the Judiciary to
Curb Corruption? Tuesday, June 6th Marriott
Hotel Salon 4 145 - 345 pm

• Interactive Panelists
• Hon. Gherardo Colombo, Judge, Italy
• Hon. Paul Magnuson, Chief Judge, District of
  Miinnesota
• Luis Moreno Ocampo, Chair, Transparency
  International, Latin America
• Hon. Maher Abdel Wahed, Prosecutor General, Arab
  Republic of Egypt
• Daniel Kaufmann, Senior Manager, World Bank
  Institute
• Moderator Maria Gonzalez de Asis, World Bank
  Institute
• Option Finder Interactive Survey will take
  place at the outset of session at 145pm

The attached handout was prepared at wbi with
ti-lac contribution to generate participatory
discussion during the session. The data in the
attached is to illustrate. Their margins of
error do not warrant fine ranking comparisons
between countries. The original sources for this
data are varied and external, and do not reflect
official endorsement by the World Bank or its
Executive Directors, or necessarily signify
endorsement by all session panelists. For
further details, visit website at
http//worldbank.org/wbi/governance
2
Role of the Judiciary in Controlling Corruption
Selected Questions and Data for discussion at
Session V

• Interactive and Participatory Panel Session
• At the outset of the participatory session
  An Instant Option Finder
  Survey on the Role of the Judiciary in
  Anti-Corruption
• Key Questions
• 1. Mechanisms to address corruption within
  the Judiciary (countries where it is a serious
  problem)?
• 2. How can the Judiciary contribute to an
  Anti-Corruption (and Governance-improvement)
  program?

3
Some Issues arising from Empirical Evidence

• Enormous Variation in Quality/Implementation of
  Rule of Law and of Judiciary/Courts Worldwide
• Effective Rule of Law institutions are essential
  for controlling corruption, but
• What to do when such Rule of Law institutions are
  afflicted by corruption?
• Where systemic corruption in state institutions,
  the Judiciary is often very vulnerable as well
  (data says)
• Surveys suggest high correlation between
  judiciary and bureaucratic bribery

Cont. next slide
4
Slide cont.

• Promoting Civil Liberties and participation
  vital?
• Judiciary Independence as key?.
• ...But perhaps insufficient? political
  independence vs. independence from Corporate
  Elite interests -- Business can also
  capture judicial/legal system?
• Do Transnational corporations and FDI have
  corporate responsibility for integrity in this
  area?
• On the high Social Costs of a dysfunctional
  (and/or dishonest) legal and judiciary system?
• Need for Comprehensive Approach to Institutional
  and Political Reform? How can donors support?

5
Application of Rule of Law Varies by Region
(based on aggregation of surveys/polls 1997-99)
High
Index
of Rule
of Law
Appli-
cation
Low
Index
OECD
East
Middle
South
Eastern
Latin
Sub-
Former
Asia
East
Asia
Europe
America
Saharan
Soviet
Africa
Union
Note Regional Averages shown for discussion
purposes, and hide large intra-regional variation
in each case. Thin vertical line reflects
estimated margin of error. Source Kaufmann,
Kraay and Zoido-Lobaton (1999). "Aggregating
Governance Indicators" and "Governance Matters"
PWRP 2195 and 2196. http//www.worldbank.org/wbi/
governance
6
Quality of Courts Varies Enormously Within Each
Region (Corporate Sector View in Transition
Countries Four Dimensions Larger area within
red Diamond means Better)
Kazakhstan
Russia
Ukraine
A
1
A
A
1
1
0
B
D
0
B
D
0
B
D
C
C
C
Hungary
"Nirvana"
Estonia
A
A Uncorrupt
A
1
1
1
D Enforces
B Fair
Decisions
0
0
B
D
0
B
D
C
C Reliable
C
Quality Dimensions Measured A - Uncorrupt
B - Fair C - Reliable D - Enforces
Decisions
Source Hellmann, Jones, Kaufmann and Schankerman
(2000). "Measuring Governance, Corruption, and
State Capture" Policy Research Working Paper
2312, The World Bank, Washington, D.C. and BEEPS
Survey (1999). http//www.worldbank.org/wbi/govern
ance Note Four-pronged diamond on a scale of
0-1, where 1 indicates 100 of firms respondents
giving highest rating in relevant court
decisions. The last panel, hypothetical
"Nirvana", represents an ideal benchmark, where
100 of firms would give perfect scores on all
four dimensions.
7
Control of Corruption and Effective Application
of Rule of Law are Highly Correlated
Low
corruption
DNK
FIN
NZL
SWE
CHE
CAN
NLD
SGP
ISL
CYP
GBR
NOR
LUX
DEU
AUS
IRL
AUT
USA
HKG
FRA
ISR
PRT
ESP
QAT
CHL
SVN
GRC
FJI
ITA
JPN
BEL
MYS
KWT
TWN
HUN
EST
CRI
ROM
BWA
TTO
BHS
MLT
POL
OMN
URY
CZE
NAM
WBG
MUS
ZAF
CUB
Control of Corruption
LSO
KOR
JOR
MAR
BRA
LTU
SVK
TUN
SWZ
BRN
GMB
GUY
SLE
SUR
ARE
CIV
JAM
LKA
MNG
THA
GNB
MWI
PER
BHR
PHL
SEN
TGO
EGY
LVA
ARG
MEX
BGD
CHN
GHA
IND
ZWE
VNM
TUR
BIH
SLV
BFA
MDA
LBN
BOL
ETH
HRV
PAN
RUS
UGA
MDG
MLI
COL
MKD
HTI
PRK
MOZ
BGR
SAU
TCD
COG
RWA
ZMB
KEN
BLR
VEN
GEO
KGZ
PAK
BEN
DOM
SYR
ARM
IDN
ECU
GTM
NIC
GIN
IRN
PNG
YEM
AGO
KAZ
DZA
LBY
UKR
TZA
HND
NGA
PRY
UZB
ALB
AZE
YUG
GAB
SDN
LBR
SOM
CMR
MMR
IRQ
TKM
TJK
r .86
ZAR
NER
High
corruption
Effective Application of Rule of Law
Poor
Good
8
But Overall Corruption and Judiciary Bribery
are also related
High
2.5
Finland
Denmark
Switzerland
Sweden
New Zealand
2
Netherlands
Canada
Singapore
Iceland
United Kingdom
Norway
Germany
Luxembourg
Australia
Ireland
1.5
Austria
United States
Hong Kong
Portugal
Israel
France
Spain
Overall Control of Corruption (kkz97-99)
Chile
1
Greece
Italy
Japan
Taiwan
Belgium
Malaysia
Hungary
0.5
Poland
Czech Republic
South Africa
Korea, South
Jordan
Brazil
Slovak Republic
0
Peru
Thailand
Argentina
Philippines
Egypt
Mexico
India
China
Zimbabwe
Vietnam
Turkey
Colombia
-0.5
Russia
Low
Venezuela
Pakistan
Indonesia
r 0.90
Ukraine
-1
2
3
4
5
6
7
8
High
Low
Lack of Bribery in the Judiciary (gcs98)
Illustrative, sample include only 59 countries.
Subject to margin of erro.
9
Corruption/Absence of Rule of Law Civil
Liberties
High
Corruption and Absence of Rule of Law
Low
Not Free
Partly Free
Free
Civil Liberties
Based on averages of data from 160 countries.
10
Judiciary Independence Can Help Control Corruption
Good
CHE
NOR
Control of Corruption
THA
MEX
Poor
2
3
4
5
6
7
Low
High
Judiciary Independence
11

• But Political Independence for the Judiciary is
  not enough?
• Business can also Capture the Judiciary/Legal
  System
• (Selected country cases Azerbaijan/Russia vs.
  Estonia/Hungary )

12

• Transnational Corporate Responsibility Matters
  as Well

of firms that 'Purchase' Legislation and
Decrees
in Transition Economies
12
10
8
firms 'purchase' legislative
6
4
2
Domestic
With
Investor
FDI
Note For transition economies, average of 20
countries. Source Hellman, Jones and Kaufmann,
2000 (www.worldbank.org/wbi/governance)
13
Social Cost Corporate Capture of Legal System
Undermines Property Rights
80
firms
60
report
Secure
Property
40
Rights
20
Low Capture Countries
High Capture Countries
Firms Not purchasing legislation
Firms Purchasing legislation
Note For transition economies, average of 20
countries. Source Hellman, Jones and Kaufmann,
2000 (www.worldbank.org/wbi/governance)