 I really appreciate everyone being here to having this conversation and the soft rollout of our report called Combating Corruption Strategies for Ending a Tax on Private Sector Led Growth. I want to first start by thanking our friends at CREATE, Leslie Benton and Pamela Passman. We're going to hear from Pamela in a little bit. We couldn't be doing this work if it hadn't been for our friends at CREATE in helping us shape this idea and as well as also providing the financial support to make this happen. So a special thank you to CREATE, and you'll hear about them and their thoughts about this issue in a few minutes. We've got a very, very interesting group of speakers, and I also want to also recognize some of the other contributors that are here as well as Sadiqa Hamid, who is the one of the principal author of the report along with Tiramayah Makdile, who was a contributing author. So thank you both for doing that. And it's really the result of a conversation we had last summer as well as a significant amount of work looking at trying to understand what the costs of, what are the stakes of corruption are. We were trying to get a handle on what the stakes are through looking at this issue of the costs of corruption. And we have a variety of estimates about the cost of corruption, especially in the emerging economies. The one number that often people cite is about 10 years old that Danny Kaufman and a number of other economists at the World Bank came up with, which was a trillion dollars, which was the headline grabbing number. And it does matter, but I do think that we've got some other numbers as well. In our report, we talk about the cost representing in private sector corruption alone in developing economies of about $500 billion, which is an incredible amount of money compared to multiples of all official development assistance. So this is just on corruption alone. It's multiples of all foreign aid. So it's a far more serious problem than I think the international development community has put its people time and money or effort on to. And I think there has been change and improvements over the last 20 years. I also credit Jim Wolfenson. There's a before and after the speech that Jim Wolfenson gave at the World Bank about corruption in the mid-90s. But there's also been significant other changes that we're going to hear about shortly. Let me just quickly introduce the speakers, and then I'm going to ask my friend Rod Hills to come up and make some introductory remarks. We have Rod Hills, who's the chairman and co-founder of the Hills program on governance who's going to be making opening remarks. And then we have a panel discussion that will include Mr. Rolf Alter, who is the director of public governance and territorial development director. That's a long title. It's a lot of things. Oh, a lot of things to cover at the OECD. He's flown in from Paris to be with us. We're particularly appreciative that Rolf Alter is with us today. We also have Mr. Michael Hirschman, who is the co-founder of Transparency International, but is also currently the president and CEO of the Fairfax Group. We have Mr. Michael Gadbaugh, who is a former vice president and senior counsel at General Electric, and he's also an adjunct professor and distinguished senior fellow at the Institute of International Economic Law, Georgetown Law Center. And then we have Ms. Pamela Passman, who is the president and CEO of the Center for Responsible Enterprise and Trade, also known as CREATE. Pamela had a past life as a corporate vice president and deputy general counsel at Microsoft, responsible for regulatory compliance, public policy, corporate citizenship, and corporate philanthropy. So I think we've got the right set of folks to have this conversation. So without further ado, I'm going to ask my friend Rod Hills to come up and make some introductory remarks. Rod, the floor is yours. Dan asked me to spend just a couple of minutes telling you what I might have learned about corruption over the 45 years that I've been dealing with business corruption by accident, mostly. A few years of the SEC back in the 1970s, when we were able to cause more than 400 American companies to admit they'd bribed a foreign official, we called it a questionable payment in those days. Many more years spent on 10 corporate train wrecks involving unimaginable kinds of corruption, but collectively they fraudulently reported more than $5 billion of income. In the last 10 years, working with the programs that we've established in seven countries around the world, including here at CSIS. Now, from that, you can pick a whole lot of stuff to talk about. But let me talk about payments to foreign officials to be more specific. What do we know from that? Well, we know that businesses all around the world are coerced into making the payment under the threat of some economic harm from a public official. Of the 400 cases we had back in the 70s, a lot of them, the major factor was extortion. We know that businesses are still cavalier about paying off governments to get something in return. They like to say, well, in that country, it's cultural. Well, the one thing we learned is that's kind of nonsense. What we do know is that whenever the laws of a country give unlimited discretion to a public official, there's likely to be corruption. And if that discretion is held, the corruption is just as likely to be in Washington, D.C. as it is in Mexico City. TACID has said centuries ago, the more laws, the more corrupt the state. I think it's fair to say that the current interest globally in business corruption stems from those years back in the SEC. The success we had then is based on two major factors that I'd like to dwell on for just these three minutes. First of all, the power to disclose. The SEC then was able to require internal controls that was likely to surface most payments. They required auditors to find any suspicious payment to take the attention of somebody independent of that suspicion. We call it forensic accounting now. And we were able to persuade the New York Stock Exchange to create outside audit committees so that the auditors would have an audience if they needed one. All right, what's up? I don't know, but you may just speak a little louder. Okay, sorry. Congress a couple of years later gave us the Federal Corrupt Practice Act. It's a good act. It's important and it's particularly important for what it's done for American business reputation. But what I'd like to convince you this morning is that it's the force of disclosure more than the fear of prosecution that's constrained bribery and extortion in the United States. In the emerging economies where law enforcement is uneven, the distinction is very important, the distinction between prosecution and disclosure. If the law is too tough, the party in power is much more likely to use it as a weapon against the power, not in power, than to use it as an agent of reform. In those countries, the emerging economies where law enforcement is uneven, the trick is to make disclosure more useful, more effective. And to do that, you have to have an empowered and a well-educated audit profession. And let me just add this one more point. Where you have anti-corruption laws, whatever they may be, whether it's a country that's developing or developed, you need a stated, firm, prosecutorial discretion policy. That's particularly true in countries where facilitating payments are illegal, as is urged by the OECD. The pressure on a company, especially a small company, that has to either lose valuable equipment or pay off an official is enormous. The incentive is to conceal, not disclose, the incentive is to find some method, usually by hiring consultants to make the payments. The point I'd like to make in very simple terms is that the public interest is in making payments public. And by making the public to stop future payments, disclosure is more important than the prosecution of every company that makes a questionable payment, particularly that is so of people who yield to extortion. Thank you, Dan. I look forward to the discussion. Thanks very much, Rod. I appreciate it very much. Ralph, you've flown all the way from Paris. You work for something called the OECD. A lot of people, I think, are familiar with what the OECD is, but I think it's clear that the OECD has an important role to play in this issue of fighting corruption, as well as working with governments. Talk a little bit about what the OECD is, and then talk a little bit about what your role is and what the OECD's role is in combatting corruption, please. No problem with that. Thank you very much for really having me here this morning. I have to say it's a great pleasure, especially since this is the first snow that I see this year. It's a great gift to see this coming in, and here it is, and you said that, no? It's at 10, and actually it starts at 10 or five, so it's pretty nice. Now let me just say that, yes, the OECD, I'd like to see and salute, especially Thamaaske, who was a former Deputy Secretary General in the OECD. It's an organization of 34 industrialized countries. Comes from the Marshall Plan, was actually there to reconstruct Europe after the Second World War, and when the task was done to a large extent, the countries then decided to say we would like to keep it. Coordination, making policies more transparent is a good thing to have, and that's when 61, it was created and set up in this very famous castle, it's called the Château de la Miette, where we are still today in a very posh environment in Paris. So it's a nice place to work, I can assure you. But it is also a very, very interesting place in the sense of what we're doing these days. 34 countries means we have grown by 10 from the times then, very selectively, and these days the most next to membership is Russia. And then we will go to Colombia and Latvia and Costa Rica. Countries that are today, we call them emerging countries, but they are very important partners to everybody who does business in the OECD, so it makes sense to have them a little bit closer to what we want to do, making really economies competitive and participate in globalization, and how we do this primarily by trying to identify what are good practices for policies, what are good practices for policies. We're not a bank, we have no money to spend with just brains and coordination with all the people that are interested to make policies happen. Corruption is in fact something that the OECD has been working on for a very, very long time and to continue where it was just finishing. We had a lot of emphasis put on criminalization. There is something which is called the OECD Convention on Anti-Bribery. It's the only legal instrument that makes countries that are members or have signed to live by rules that are verified, and it basically says do not bribe foreign officials. There's a little more to it, but that's the upshot of it. Has worked well, but it's not enough. And it's not enough because it's not just criminalization, as you said, I couldn't agree more. It's also making sure that it doesn't happen. So prevention is something that has to be organized all the time and made sure that we verify whether it works. Prevention. So we talk about both of those issues. And of course, if I look at the panel, and I'm very pleased that I am invited by then to join this very distinguished panel, I have to say, yes, Transparency International has been a formidable ally. You can also turn the other way around and say we have been teaming up very well with you, whichever way was a very good and is a very good way to work together. It is also true that the private sector is very close to us. In the OECD, you have something which is very unusual for international organizations of that nature, 61, when it was created, it had immediately a business and industry advisory council, BIAC, and a trade union advisory council. At the time, we didn't speak about civil society. But those two were there from the beginning. They always had something to say. They're always there to say, are these policies that we recommend macro, monetary, structural, fiscal, are these policies good? And that, I think, has still maintained its force. So let me say we have tried in the context of our fight against corruption to look at it from a purely economic point of view. Corruption means a distortion of market forces, whether it's private or whether it's private public or whether it's public. The moment where you introduce corruption, payments that are required to take other decisions and other investments and other trade decisions mean that market forces, the market, doesn't play its full role. So as an economic organization, as we are, OECD means organization for economic cooperation and development, we have this E because we're economists, not because we're ethical people. We're our ethical people ourselves, but it's not the rationale behind it. It's clearly demonstrating economic affairs. Second, we have seen that in the last five years, six years of the crisis, governments in particular have lost a lot of trust among citizens and the private sector. And if I say governments, I just mean governments of the day. I mean the institution of government. As much as markets, if you look around these days and you look at the financial sector, that's not an example of clean business behavior in many cases. Do you think that that produces public interest for everybody? Probably not. We've made some very nice calculations. Corruption is the first and the most important correlation factor to the loss of trust, corruption. So we need to have a clear idea about it. That has to change. My second point, corruption has many reasons. As you were just talking about it, there is competition, there is a question of so-called culture, there is all kinds of arguments. But it is also true that fighting corruption cannot be done with a single little measure. You don't go somewhere and turn the switch and say, well, now it's over. It will not. It will not. And therefore, the OECD believes in a very comprehensive approach to fighting corruption. It needs healthy systems. It needs strong enforcement. Yes, it needs criminalization, but only as a part of it, as you said. And certainly, it needs verification, evidence. Can we show something? I congratulate Dan and his team to a paper that tries to say, let's not forget the cost of corruption. What is it? What I'd like to add, then, it's the cost not just to the private sector, it's the cost to society. It's a loss of potential that you occur when you do that sort of wrong behavior, not being part of your policy response. And my third and last point is fundamentally about a few examples. And I just let me pick that because this is something that is very close to our recent work we did. It's corruption and procurement. Procurement is about 13%, 15% of GDP. 15% of GDP. That's not a small number in no country. Ranges, but it's important, 15%. It means the way you administer, manage that part of public expenditure has a big impact, not just on the value for money for government. It also means a lot of impact on the economics, on the private sector, who participates, what do you get for that, is their access, and so on. We've developed a set of what we call, you know, in the OECD language principles. It means basically some very good ideas about what you need to do and then comes a lot of things on good practices, how to do it in detail. The most important word there is transparency. There are many other things, but transparency, critical. And we're trying to say you start and look at procurement as a cycle. A cycle from a needs assessment to monitoring results. Most governments don't do it that way. They think it's an administrative task where you have to tick off. It's not the case, and we could definitely talk about this more if you wanted. The key issue is, though, that when you do this, it's not just a question of the federal government. By the way, we have looked, the U.S. government, Office of Management and Budget, two years ago, invited us to look at the procurement system. It's the largest procurement market in the world, after all. And we had some very interesting things to say about that. And it's good because it means transparency also in what happens in the United States is relevant for much of the rest of the world. So we're very pleased to have that cooperation with your colleagues here in OMB. But it's not just the federal government. In the United States, 65 percent, 65 or two-thirds, let's say, of public procurement takes place at lower levels of government. At lower levels of government, meaning states and municipalities. 65 percent is a lot of it. So we need to look at it not only in the sense of what happens in Washington, but also in all the capitals. Where does that leave us? I think we should be looking at it in a very comprehensive way. And the latest that we're doing is we're focusing a lot on lobbying. We're focusing a lot on political finance because all of that has a bearing on the way business is carried out when it comes to procurement. Let me just conclude by saying every piece of the work that concerns government policies we have looked at it quite seriously and I am sure that we could find many ways to do more work together. When it comes to the private sector, and here I am, we had something invented which is called the guidelines for multinational enterprises. It's a set of a code of conduct for good corporate citizenship. Very interesting to read, but I will read you only what this says here in terms of combating bribery, not offer promise or give undue pecunia or other advantage to public officials, develop adequate internal controls, ethics and compliance programs, discourage use of small facilitation payments, ensure properly documented diligence, transparency of activities in the fight against corruption, promote employee awareness and not make illegal contribution to candidates for public office. It's a good starting point. It's not the end of the story. Fighting corruption is a journey, is work in progress, but it's great investment of joint efforts to make progress there. Thank you very much. Thank you, Ralph. Thank you very, very much for helping frame those, frame the conversation around the panel. Michael, you started Transparency. You're one of the co-founders of Transparency International. You've had a career in enforcement. You've also been an advisor to companies. Talk about the conundrum of corruption and how we combat this. Well, first, let me... Yep. I'm on. You're on. Thank you. First, let me say I'm very pleased to be here on this distinguished panel, and I thank you, Dan. Thanks, CSIS, for the invitation this morning. I want to make four points in the short 10 minutes I have. First is that multinational corporations in the last 15 years have come a long way in improving their ethics and values. It's amazing how much change we have seen in the last 15, perhaps 20 years. And of course, it really doesn't matter where that started. I mean, it's clear in, I think, my mind that most of it emanated from the United States and the Western companies here, migrated to Europe, to Germany and UK and Italy and France. It's continuing its migration to Canada right now and other OECD member nations, whose enforcement of the OECD Convention has not always been thought of as being robust, to say the least. But I do want to make this point. Much of what has happened in corporate culture today has happened because of the regulatory environment and the law enforcement environment. I still find out there a lack of admission by corporate executives that countering bribery is the right thing to do. I still hear time and time again, we know we have to play by the rules. There's too much at stake here. Our reputation is at stake. We have tremendous liability, but I very seldom hear. It's also the right thing to do. It's the right thing to do because corruption undermines democracy, because corruption undermines trust in government, because corruption adds to poverty. So we have a lot of dinosaurs in the corporate world out there, thankfully not from GE. I've had a longstanding relationship with GE and they're a company beginning with Jack Welsh that took the position that we're not going to do this because we have to do it. We're going to do this because it's the right thing to do. And there are other companies that believe so, but far too few, too far and in between, we've got to convince these dinosaurs. I mean, I'll go out to Latin America and sit down with the director of business development for a multinational from Latin America and listen to him say, I'm abiding by the rules, but it's so stupid because this is the way business is done here. And if we can't do business following the rules of these high-risk countries, we're just not going to be able to do business here. We've got to turn that around. That's number one. There's a lack of even hedonists in the prosecution and enforcement environment today. Many companies have been prosecuted. Individuals have been prosecuted. There are more deferred prosecution agreements than I can shake a stick at. But there's woefully few prosecutions or enforcement actions against the government officials who receive the bribes. So everyone recognizes that this is a two-party crime that there is a giver and a receiver. But in the case of the Justice Department, they're all too willing to go after corporations as they should because the corporations deserve to be punished for their misconduct. But they won't even disclose who the bribe takers were in the recent settlement just a week or two ago without coer. If you read the settlement agreement, the Justice Department refused to disclose who the government officials in Bahrain were that took the bribes. So they're leaving in place bad players to extort money from the next corporation that comes by, whether that be a multinational, whether it be a domestic concern. And I can cite time after time after time with the public officials who were on the receiving end were not published. The Padma Bridge project in Bangladesh, where SNC Lavelin was accused and admitted to offering bribes under a World Bank contract and was debarred now by the World Bank for 10 years, the longest department in history. The minister in Bangladesh who was responsible for that conspiracy to solicit the bribes was protected by the Bangladeshi government. And when the World Bank said, we will no longer fund this billion dollar project unless you prosecute him, the Bangladeshi government's response was, we'll find the funding elsewhere. So until we can even the playing field, isn't that an interesting word? How often have you heard that word but in different contexts, Mike, right? Companies want to level the playing field by having all companies ascribe to the same code of conduct and the same rules. But now I'm talking about evening the playing field between companies and the recipients, the government officials who are extorting the monies from companies. My third point, and this is one that is not talked about often. Bribery is not good business for another reason. When I've worked for companies, I was the independent compliance advisor to Siemens. I'm currently to the board of directors doing this for SNC Lavelin. I've worked for GE. I've had a chance to look at the contracts that were won by bribery. And guess what? 90% of them were unprofitable. How can that be? Well, companies, obviously, that are paying a bribe of 10 million, 20 million, 50 million, 10%, 15%, 20% have to make up that money somehow. It often can't be made up by increasing the price of the original contract. They hope perhaps to make it up through add-ons. Often that doesn't happen. They hope to sometimes make it up by using perhaps substandard materials, cutting costs, but that's a dangerous game to play because it's not too infrequent when we see a building collapse in, for example, I hate to pick on Bangladesh or Pakistan or wherever it may be because of the use of substandard. So what I found generally speaking is that these contracts may have an impact on the revenue, but have no impact, have a negative impact on net profits. It's just bad business. And when you consider the risk they're taking to, quote, get the business, it's simply not worth it. My final point goes to the issue of collective action. There has been a great deal of talk about collective action over the course of the last 10 or 15 years. We have more collective action initiatives than I can count. We have the partnership against collective action. We have the Extractive Industry Transparency Initiative. We have the Global Compact. We have regional. We have local. We have so many collective actions going on. They all essentially follow the same process that is getting companies to ascribe to a standard of conduct. But in almost every case, they're voluntary. And those companies that are going into this, while it makes sense from a public relations standpoint, always wonder whether their co-signatories are really serious about adhering to good practices. And so until we reach the point where we can figure out how to have some sort of oversight in terms of collective action, it's going to be really difficult to know whether these companies who sign on are really complying with the rules that they've agreed to. I want to tell you about what's happening in Thailand as an example of a step in the right direction. By the way, before I do that, why is it that corporations fear having some sort of external oversight that will confirm or certify their programs? Well, they're worried in part because of legal reasons. And it's hard to find, frankly, an independent organization that's credible and is willing to certify also because of legal reasons. But the Center for International Private Enterprise started a program in Thailand just very recently with the Institute of Directors of Thailand. And this was a program of integrity pledge where multinationals and local Thai companies indeed once again came together to agree on a set of standards, codes of conduct, ethics programs. Typical collective action. They had two, three, four hundred companies sign up, both multinational and local. But they did something different. They said we will, if you're willing to take one extra step, we will potentially certify your program, the Institute of Directors. That extra step is if you will have your outside auditors do a compliance audit and we'll provide you with the terms and conditions, what they have to look at. And they'll come back to us and report to us whether your compliance program is indeed being implemented, we'll certify you. And it turns out that the corporations are much more relaxed about having their external auditors during the course of the annual audit. Simply add on another element that is the compliance audit element and come back and report their findings to an independent authority. And I'd like to see this movement grow more because it's not so much about the policies and procedures you have in writing. It's more about the implementation. And I thank you very much. Thanks very much, Mike. Mike Gadba, you were at GE and GE has a reputation for being a, has a sterling reputation of late of pushing back on corruption issues. I suspect there was a journey in getting there and I suspect you had something to do with that. Why don't you share a little bit about that as also and also share your thoughts about the broader challenges of corruption. Well, thank you, Dan, for hosting this meeting. Rod for your leadership on this issue. Dan and Pamela for a very interesting paper that I think together with this discussion will contribute importantly to developing the strategies to deal with this problem. I wonder in how many countries there are meetings like this focusing on the issue. And I think it's a tribute to the importance that we place on it in this country that we've got such a group like this. I thought in my time I would look at three questions. One, where do we stand in the fight against corruption? Two, what are the best strategies for fighting corruption? And three, how do we measure success in this fight? So where do we stand? I thought I'd start by asking how many people paid a bribe today? You know, just raise your hand today. How many people in the last week paid a bribe? How many people paid a bribe in their lives? How many people here in the room were actually asked to pay a bribe and refused to pay it? I would have thought in a country that ranks only 19th on the TI Perception Index, after countries like the UK, Germany, Australia, we might have found more evidence of corruption in our daily lives. In fact, I saw a recent survey that suggested that a lot of Americans think they pay bribes in the course of their daily lives, a significant percentage. As for myself, I paid my first bribe in 1977 as a young lawyer in the Treasury Department. Is this like a support group? This is like an intervention. I'm asking for an intervention. The 10th step, I don't know which step I'm in. 1977, it happened in the airport in Kinshasa, Zaire. It was a small price to pay to get on the plane to get out of that country. I felt powerless in the face of a demand from an official who was backed by a group of young men with Kalashnikovs. It was not illegal, actually, because the Foreign Corrupt Practices Act was just working its way towards enactment and included a provision that arguably covered this, the so-called facilitating payments provision. The experience gave me my first lesson in illicit payment practices. But today, I'd like to focus on the timeframe of the last 23 years because I joined General Electric in 1990 as a corporate officer, and one of my responsibilities was GE's compliance with the Foreign Corrupt Practices Act. It was part of a broader set of responsibilities that included international government relations and other compliance matters, but it proved to be one of the most challenging. So let me ask you, is there less corruption in the world now than there was in 1990? I'd be interested in a show of hands. How many people think there is less corruption now than there was back in 1990? At least one person, two people, a couple of people. So that's the question I asked myself. Since I've been at this problem for that many years, and do we have really much to show for it, one way to think about it is in terms of global GDP. Global GDP in 1990 was roughly $27 trillion. Last year, it was around $63 trillion. Adjust for inflation and more or less, you've got a global economy that is twice as large as it was in 1990. If that's true then, if we actually cut corruption in half since 1990, we would have roughly the same absolute amount of corruption today as we had then, but as a percentage of the total, it would be significantly less. Dan's paper suggests that it's worth about a trillion dollars a year. That would be about one and a half percent of global GDP, certainly a big number and worth going after. Recently, I picked up the Wall Street Journal, like Michael, and read the latest bribery case, and it sounded all too familiar. Big international company runs illegal payments through a foreign bank account using a foreign consultant and enriching a bunch of Middle East officials. Company ends up settling with the U.S. government for a fine of $384 million without admitting any wrongdoing and stressed that neither the Justice Department nor the SEC alleged or found that anyone in the company, quote, knowingly engaged in the conduct at issue. Wow, has anything really changed? The answer is yes, and later I want to use this case to make my point. But the question I think we're all asking ourselves is whether we've lost momentum behind the fight against corruption. If we have, then it's going to be much tougher to get that last trillion dollars that Dan's paper talks about. I think there's a case to be made that we have lost momentum, and I'd point to the following factors. One, the energy in the activist community has been dissipated by an all-encompassing notions of corruption, all things to all people, bribes to foreign officials, campaign financing reform, allegations that we have, a corrupt financial system. Secondly, there's been an erosion in the ability of the United States to assert the same leadership role in the international fight against corruption that was critical to getting the OECD anti-bribery convention. Thirdly, as has been mentioned already this morning, confidence in our public institutions are at an all-time low, and some of our most important international institutions from the World Bank to the United Nations have found themselves embroiled in corruption scandals that have compromised their credibility in the fight by raising questions about their priorities and their commitments. Then the financial crisis has raised profound questions about the nature of our regulatory systems in preventing systemic failure and economic decline and efforts to pursue accountability have run up against their own legal and political obstacles. And finally, the anti-corruption movement has itself become overly bureaucratized and functionalized in responding effectively to these challenges. Nevertheless, I think it would be a mistake to conclude that we have not made major progress. I think we can best appreciate our success by breaking down the incidence of corruption into three buckets. First, what I would call catastrophic corruption. Big bribes paid to government officials, typically by big companies, to make big deals go away that they would not have gone in the normal market conditions. This is the most damaging form of corruption, sometimes called grand corruption. Secondly, systemic corruption. This is corruption that insinuates itself into private and public sector institutions and regulatory systems and is characterized by uneconomic behavior that creates rent-sinking opportunities for private parties and public officials to extract value for personal enrichment in repudiation of the public interest. Systemic corruption is necessarily a broad concept that captures the failures of legitimacy, accountability, and effectiveness in our regulatory systems. And finally, petty corruption. This would include facilitating payments and is corruption that is of least consequence individually, but still imposes a collective cost on society and can reflect a general culture of tolerance that itself is often fed by the prevalence of the more damaging forms of corruption. My basic argument is that the major focus of the 1990s was on catastrophic corruption. And as a consequence of the efforts of a mass movement culminating in the OECD treaty, we now have the tools under domestic and international law to virtually eliminate the problem of catastrophic corruption, or as I will argue, to make it as rare as catastrophic airplane crashes, provided that we maintain our focus and use the tools that have been created. A much tougher problem is that of systemic corruption. And we are now heavily engaged in an international and national debate about systemic failure in the aftermath of the financial crisis. And we have yet to identify the gold standard of regulatory excellence that would assure the integrity of those systems. The challenge of regulatory excellence implicates how we make regulations, how we ensure accountability for their enforcement, and effectiveness at both the domestic and the international level. As for petty corruption, I would argue that it is largely a reflection of the culture that is created around integrity, itself a function of the public sense that anything goes when the elites and leadership of a society are on the take. To assess our progress on these fronts, I want to go back to my first days at GE, when I found myself responsible for GE compliance with the FCPA. As I surveyed the company, I found that most GE executives felt that competitor's use of bribery was a more significant barrier than any trade restriction that they faced around the world. So I, with others in the company, came up with a strategy. We would make integrity a competitive advantage and advocate an international agreement to ensure that our competitors were subject to the same standard. The problem was that when I presented the strategy to our CEO, I ran into a crossfire among some of our most senior leaders in the company. The charge against me was that I was a missionary, that I did not understand global business, and that I should stay away from exporting U.S. values and notions of compliance. For reasons that are chronicled in my boss Ben Heineman's book, High Performance with High Integrity, I was on the winning side of that battle, and GE, led by Jack Welch, went all in to create a culture of integrity and to lead in the global effort to adopt a criminal standard against foreign bribery. GE became one of the most admired companies in the world for its commitment to integrity by making it job one of each and every executive and each and every employee, and by putting in place a system to be sure compliance issues were brought to light and addressed. As a result, GE does enjoy a competitive advantage, as many GE executives will tell you, because people know that when they buy from GE, no bribe was paid. So this sounds all very self-congratulatory, but there is a way that you should think about it. GE maintains its commitment to integrity by using the same systematic approach and rigor that it uses to keep its aircraft engines in the air. Six Sigma quality standards apply to our compliance programs just as to its engineering and manufacturing systems. Now let's go back to the Alcoa case I mentioned at the outset. The interesting thing about the case is that the CEO of Alcoa is the same CEO who provided over over Siemens in the biggest bribery case in history. In fact, he lost his job at Siemens in large part because of the repercussions of that case, even though he was never directly implicated. What is important though is that when he came to Alcoa, he conducted an audit and discovered that a scheme to bribe Bahraini officials through offshore accounts was in place using the same kinds of subterfuges that were used by Siemens. Once uncovered, he stopped the practice and disclosed it to the Justice Department and the SEC. What makes this story compelling for me is that Kleinfeld uncovered something that had been going on for over a decade. According to the Justice Department in 1977, an in-house attorney was writing a memo to her supervisor saying, the contract looks odd. Are these factors okay from an antitrust and FCPA perspective? 1997. You may ask yourself, how could this practice have been overlooked by two very successful CEOs who preceded Klaus Kleinfeld? The key is that he knew what every CEO in the United States now knows or should know, namely that the potential for catastrophic consequences, if practices like this are allowed to persist in a culture of impunity, and he used all the tools in the modern compliance arsenal, audits, leadership, compliance training, surveys to identify the problems and to address them. So I would argue that we have seen some big changes since 1990, and one of the biggest is that we now have the tools to make catastrophic bribery as rare as catastrophic airplane crashes, but only if we apply the tools with the same rigor, focus on what went wrong, hold people accountable, and implement fixes to make sure that they never happen again. So with all due respect to those countries that rank above the U.S. in the TI Perception Index, I would argue that most of those tools are in U.S. law and often lacking in the laws of other countries. One, the U.S. has corporate criminal liability, the equivalence of the death penalty. While it is rare, rarely if ever used, it is nevertheless a powerful inducement for holding a CEO accountable for what happens on his watch. Germany and other countries do not believe in corporate criminal liability. The FCPA has a knowledge standard, new or should have known, that imputes knowledge up the chain of command by holding executives accountable for what they should have known and for creating a culture of impunity. Nobody told me is not a defense if you are found to create a culture that prevents people from throwing a red flag on the field. Tax evasion and the SEC books and records offenses are separate and distinct defenses in the U.S. In Germany, you lose your tax deduction for a bribe only and only if you are convicted of a bribe. U.S. law requires that companies seek benefits. Any company that seeks advocacy from the U.S. government or other benefits like export financing or OPIC support must commit themselves to maintaining and enforcing a company-wide, anti-bribery compliant system. Failure to maintain such a system is a contractual violation for which they can be held accountable. It is much easier to see if a company has a system to prevent bribery than to figure out if a bribe is paid in a particular transaction. It used to bother me that the U.S. ranked so low on the TI Perception Index, given that our laws are so much better than any other country. But I got over it when I realized that no international company can now escape the jurisdiction of the U.S. government in a globalized world, whether they are issuers on the stock exchange directly or through SDRs, selling or sourcing in the United States, or just using our banking system to root payments through our servers. So in one sense, it doesn't matter that other countries have less effective laws, but it would be much better from a global point of view if the other countries upgraded their laws to our standard. So what can companies do to deal with competitors who are bribing? The first line of defense is to keep your own house in order so that when you see foreign officials soliciting bribes, you can bring the practice to the attention of a senior officer in your competitor's company. Once an officer has knowledge, he or she is subject to U.S. law if they do not exercise due diligence in investigating and addressing the problem. Ultimately, they can face civil and criminal liability. If you're an activist, push for improving laws in every country along the lines, along these lines so that the OECD Convention is more effectively enforced around the world. The key is to bring together knowledge, responsibility, and authority, and force public and private institutions to put in place the integrity systems that empower each employee to bring integrity issues into the light. I think the OECD Convention was a watershed in raising the international standard against bribery. The challenge is how do we keep making progress? Now, Dan's paper talks about collective action, and Michael mentioned this as well because they're very popular. I just want to say I was skeptical about them for two reasons. One, they're not typically enforceable as the UN learned when they literally had to throw out as many as, I guess, 4,000 according to Dan's paper, companies in the Global Compact that were blatantly ignoring its commitments. I counseled against GE participation in compacts that companies I thought were not sufficiently committed to integrity, and I was proven right. Moreover, I never found a compact of companies willing to adopt a truly effective enforcement mechanism even when such a mechanism was proposed. Second, to the extent that meetings to discuss bribery compete for CEO attention. With the tougher problems of ensuring that they maintain high internal standards of their own compliance systems, there is a competition for the limited resource of CEO time. And you have to decide what is more important, whether public appearance in pursuit of a principle or the down and dirty job of maintaining integrity in their own commercial practices. The point is, if you bring CEOs together, make sure that it's worthwhile. Now, let me conclude by saying a word about systemic corruption because I think this is the compelling issue of our time and what contributes more than anything to a sense that corruption is still a major problem. Martin Wolf in a brilliant editorial in the FT highlighted the problems facing our regulatory regimes in the aftermath of the financial crisis. He cites the failure of the intellectual elites in these terms. Quote, an explicit deal exists between elites and the people. The former obtain the privileges of power and property. The latter, in return, obtain security and in modern times, a measure of prosperity. Wolf points to the collapse of the financial system and the economic stagnation that followed, what Larry Summers calls secular stagnation that is eluding the remedies of traditional economic policies. Accompanying this lack of growth is the growing problem of inequality that is being attributed to globalization and technological change. My point is to highlight the fact that the failures and policies of regulatory systems underlying globalization are feeding a public discontent that is often expressed in charges of corruption. The sense is highlighted in popular culture by movies like Too Big to Fail, House of Cards, and The Wolf of Wall Street. My message to the young people in this room is that a defining challenge of your generation is to find a way to reset our global regulatory order, to address the fault lines underlying our global economies, and restore the sense of integrity in our public and private institutions. The issue is joined, I think, in the debate over how we negotiated and authorized trade agreements, particularly those now being negotiated in the Pacific and across the Atlantic. These agreements hold out the promise of reigniting growth by addressing barriers and regulatory issues from currency manipulation to the protection of intellectual property and regulatory coherence. If we address things like transparency in public procurement and regulatory transparency, we have a chance to shore up the regulatory regimes that are so critical to eliminating opportunities for corruption and improving our economies. That is why I come out on the side of greater, not less, transparency in the negotiation of those agreements. A 21st century agreement should follow 21st century procedures because the issues are different from the old fights over tariffs and protectionist interests versus the common good. A new consensus needs to be forged to replace the fight over regulation versus deregulation with a genuine effort to find the sweet spot of regulatory excellence. Trade agreements can be a valuable tool, but only if transparency is not seen as the instrument of choice of those opposed to such agreements, but rather a tool for forging a new consensus and how to move forward in the broadest public interest. My message to the next generation is get in the game, hold feet to the fire on catastrophic corruption, tackle the problems of creating excellence in global regulatory regimes and set standards for behavior in both the private and public sector that will discredit petty corruption. Thank you. Wow. Thank you very much, Mike. I didn't need a cup of coffee after that. That is very bracing and definitely got my attention, I think, held the attention of this group. Thank you very, very much. Thank you, Mike. I think with those comments, I'm going to turn to Pamela Passman who runs Create and has helped us bring this conversation together and is thinking about how companies collectively can be working together and individually can be working together to combat corruption. I think the comments of the different panelists and the remarks of Rod Hills, I think, are, I'm sure, will inform your comments. So, Pamela, the floor is yours. Thank you, Dan, and thank you to you and your team, to Siddica and Jeremiah for the collaboration, the Center for Responsible Enterprise and Trade, Create.org. We're very pleased to partner with you on the report, so thank you. And also to my fellow panelists for participating today. I've had the pleasure to work with Mike over the last decade as we were counterparts at our two companies and in different form as well. As we heard today, and as you all appreciate, corruption poses significant legal, financial, and reputational risks for any company doing business today. Indeed, according to the 2013 State of Compliance Survey by PricewaterhouseCoopers, the top risks identified by company representatives were bribery, corruption, followed by intellectual property protection, and supply chain issues. Companies that have been caught in the net of corruption have paid millions in fines and other penalties. As we've heard, executives have faced jail time over the acts of their own employees and those of their business partners. And also, there's a trend toward individual prosecutions, at least here in the U.S., and that seems to be increasing. And as we've heard, once considered primarily a focus of the U.S. government and still significantly the focus of the U.S. government, we have seen the globalization of anti-corruption. And I will argue the emergence of a truly global legal regime, such that any entity operating internationally must place close attention not just to their home country laws and to the laws of the U.S. and the U.K., but also to the laws of every local market in which they operate. Today, countries as diverse as Vietnam, Ukraine, India, China, Russia, and of course the U.S. and the U.K. have remarkably similar anti-corruption laws on the books, pursuant to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption, or both in some cases. The OECD has been at the forefront of much of the work we have seen over the last several years. We've heard from many, including Congressman Zaratini, who served in the lower house of the Brazilian legislature, as the rapporteur for the new Brazilian Clean Company Law. This law will come in effect this month. When we met with Congressman Zaratini, he emphasized how important the work of the OECD Working Group on bribery had been to realizing domestic legal reform. And although enforcement is still inconsistent in many countries, we are starting to see some movement. And increasingly, countries are working together, sharing information and taking a coordinated approach to enforcement. The Siemens prosecution by both the U.S. and German authorities is one such example. In addition, the agendas of the OECD, APEC, and G20 include broad anti-corruption initiatives. Collectively, these efforts have led to a convergence of global anti-corruption norms towards prohibiting bribery, both public and private, in commercial business transactions, which means that for companies that ignore corruption, the risk is quite significant. There are fewer and fewer places to hide. Of course, this is happening at a time of unprecedented globalization of industries and markets. Slower growth in developed, mature markets is spurring expansion into markets with less mature legal regimes, with the attendant corruption risk. In reaction to both of these forces, legal reform and economic imperatives, companies operating globally are increasingly focused on being proactive in developing internal programs to prevent corruption. In regard to supply chain and business partners, some companies are extending their codes of conduct or specific supplier or vendor codes and in some instances training. However, these efforts are still limited in reach and not common even among multinationals. All of these efforts, both public and private, and even those that are fledgling, are crucial if we expect to have an impact on corruption. The private sector can play a more active role in driving responsible business practices and bridging regulatory gaps. Companies that develop an effective anti-corruption compliance program can avoid costly litigation, fines, penalties, and reputational harm while enhancing the position of the company as an ethical company, and as Mike says, it's the right thing to do. Supply chain companies and business partners can use a strong anti-corruption ethos to differentiate from competitors and position more strongly to business partners, potential employees, and customers. As we've heard about GE, it has a compliance program that really is recognized as one of the best in class. They make their compliance materials available to all employees through an interactive online portal that includes an e-book version of their code, online training, real life examples, and it very much is part of the culture of the company and the ethos of senior management. GE and other corporate leaders are also taking a lead and working through their supply chains to embed responsible business practices within those networks, helping to foster a culture of compliance that benefits everyone. For example, a new Microsoft program that went into effect this month requires partners to provide anti-corruption training to all employees who resell, distribute, or market Microsoft products or services. Microsoft will provide a training module if the partner does not have one. Cisco, too, works closely with its supply chain partners to communicate its code of conduct requirements, monitor compliance, improve partner performance, and build their capacity. Hewlett-Packard, IBM, and Floor also provide ethics and compliance training support to supply chain partners. Floor has also worked with the American Society of Civil Engineers on anti-corruption measures for the engineering and construction industries, including training videos and other tools to help highlight for companies and for universities for students, which dramatizes the significant effects of corruption. Finally, our organization, Create.org, is working with several private equity firms in Asia who are using our service to assess their portfolio company's capacity to prevent corruption and to help them improve where there are weaknesses in their systems. And while this level of engagement is not the norm, we expect to see more and more as companies realize the benefits they can reap in terms of reduced risks and costs, sustained economic growth, and competitive advantage. I launched the Center for Responsible Enterprise and Trade, Create.org, as a nonprofit organization in 2011, specifically to help companies scale their ability to address anti-corruption and a separate but interrelated issue, the theft of intellectual property within their own operations and within their supply chain. Our work is global with a particular emphasis on companies in emerging markets. We've had the opportunity to engage with companies across a range of industries and around the world, including companies in the U.S., Europe, China, Taiwan, Mexico, Brazil, Japan, India. We have heard repeatedly about the significance of and the challenge posed by these issues. We've also worked with the conference board to survey general councils, compliance officers, and supply chain managers of global companies. From this study, a few key findings and recommendations emerged. First, compliance program effectiveness is a challenge. Executives are not clear about the effectiveness of a compliance program until something goes wrong. 52% rate IP protection is very challenging, 42% rate anti-corruption is very challenging. Second and not unexpectedly, respondents noted that there are significant IP and corruption risks throughout their supply chains. More than 60% view emerging markets as the highest risk, yet only 36% rated their company compliance program as effective. Third, training is key to anti-corruption compliance and IP protection. For most companies, the focus today is on training their own employees rather than third parties. And finally, there is strong interest in an independent certification program, although there are issues in the implementation of something like that. Three things are most evident from our work with companies and from the conference board research. Companies need to do more to develop their internal capacity to manage corruption risk. Companies across industry sectors need to engage more effectively with their supply chains and business partners. And to do both, they need to be proactive and put systems in place before an issue arrives. So what are these systems? This is at the core of what we're doing at Create. We recognize that companies such as Microsoft, GE, Cisco, Floor, and many others have spent years developing robust management systems and best practices to prevent corruption and to appropriately manage and use intellectual property. So Create brought together these leading practices and identified specific business processes critical to preventing corruption and to protecting intellectual property. They include having appropriate policies and procedures in place and ensuring that your employees and your business partners are aware of these policies and procedures, having a compliance team in place supported by senior management to be accountable for these issues and to lead risk assessment and due diligence efforts and other activities, including training and monitoring and having systems in place to take corrective action when something goes wrong. Create has taken these leading practices and developed a three-step program called Create Leading Practices. Create leading practices for intellectual property protection and Create Leading Practices for Anti-Corruption. These include an initial assessment of practices and independent evaluation followed by an improvement process that includes guidance, e-learning, and other types of training. Companies can use the service themselves or they can ask their supply chain companies to do so. Many are doing both. How do companies view participation? We've already seen that many consider the service as a very valuable way to assess their capacity to prevent corruption and to appropriately manage and protect intellectual property and most importantly to know where to focus their time in resources in maturing their practices in maturing their internal management systems. They also view participation as a competitive differentiator. While each company's first priority is and should be to ensure that its own operations are free of corruption, companies have a shared interest in creating a culture of compliance throughout their global supply chains. By working together, we can level the playing field for all and help provide the necessary conditions for a fair and sustainable global business environment. Thank you. Thank you, Pamela. I heard a number of strains throughout this conversation. One is that we've made significant progress. I'm thinking back to the 1970s and thinking what a tremendous challenge this must have been looking at the mountain from down there at the time and if you look back from there and where we are today I think we've made tremendous, tremendous progress over the arc of the last 40 years and so the folks who must have taken this on at the time must have seen like this was a fool's errand given the systemic challenges and a very lonely fight. But I'd also just say several things that remain. The challenge of collective action, the uneven enforcement, the sustaining power of disclosure that Rod talked about and that was weaved throughout the conversation. The need for leadership at the highest levels on this as well as making holding cultures accountable. The realization of a shared interest among companies and within industries that that has helped shape the conversation as well as the possibility of it being a competitive differentiator as something that it's in a positive interest as opposed to just the stick, there's the carrot as well. The fact that globalization is forcing companies all over the world to participate in what was I think delicately described as less mature legal regimes as well as the various approaches that leading companies have taken to respond to all of this. I want to just take advantage of the panel before I open it up to give you all a chance and I'm going to ask you to just go down the row. You've heard from very thoughtful panelists. I want to give you the opportunity to respond to anything that you heard from each other and then we can open up and I'm going to start with you, Rolf, because I know I took a lot away from your other panelists. I'd let you have a chance to respond and then give each of the others a chance to respond to each other. Thank you very much, Dan. I think that most impressive seems to me that there is apparent agreement that leading by example remains somehow a very important factor for change. But I'd like to add that I remember this question of intellectually intellectual property rights very well when it was first introduced in China in the early days of discovering the market. It looked as it was something to protect the intellectual property rights of those in the West, if I may call it that way, the industrialized world. Rising development though meant that the Chinese among themselves became very aware of what it meant the Chinese competitors would also lose if they didn't make sure it works. Can we expect the same for corruption? I would say that the growing awareness, the growing participation of private sector, civil society, governments in the fight against corruption is in fact a very good sign for that. And I would perhaps be a little less pessimistic about the fact that there is something that might call a certain dilution. I think it's also a sign of being affected and being part of this fight against corruption that everybody would like to contribute to it. So I don't think we should make it just a question of the business sector. It is actually a question for the society in Topu and every effort there would help. Thank you. Mike. A couple of points. One I would like to address the issue that Mike Gadbar raised about the civil society movement against corruption kind of peaking, perhaps even waning. Every civil society movement goes through peaks and valleys. There's an era where there's a great concentration on human rights or human trafficking or environmental concerns or perhaps conflict country development and other issues. We've had some disappointments in recent years. The Arab Spring, which we hoped would bring about greater transparency and accountability, which we hope would bring about greater democratization in countries like Egypt and Tunisia and elsewhere, hasn't really materialized despite the fact these were homegrown civil society movements. But at the same time, one of the things that we're very at Transparency International, which by the way is celebrating its 20th year anniversary, or just celebrated its 20th year anniversary having been founded in 1993, one of the things that we're very optimistic about is the increasing use of social media to promote transparency and accountability, to fight corruption. We see the development of programs in countries like India where you can report online, report a bribe today. This has a potential for changing the entire future of how we deal with issues, particularly like petty corruption, and hopefully with issues like systematized corruption. Don't count the movement out, and I realize, Mike, you weren't saying that, but there are peaks and valleys, there are ebbs, and we get frustrated from time to time in the movement with indeed bureaucratization and dilution of effectiveness. That's number one. Number two, every company that's gotten in trouble in recent years, and there's been more than a few, has said the same thing. We intend on becoming a model for good governance. If you look around, and this includes the OECD, there are no less than 24 checklists or roadmaps or guides, if you will, to compliance and governance. All of them basically say the same thing. We all know what goes into a good compliance program these days. You've got to have a whistleblower hotline, you've got to have an anti-bribery policy, you've got to have online training, so on and so forth. There is no, this is not brain surgery here, it's common sense. I do believe that we kind of have plateaued somewhat on creativeness in coming up with new compliance and governance innovations that really will make a company looked upon as a model. A lot of this can be done in supply chain by going beyond requiring suppliers to simply have appropriate policies and procedures in place. A lot of it can be done, there's another household word that has developed over the course of the last 10 years, tone from the top. I mean who would, you know, this is a no-brainer. What corporate executive is not willing to get up today and say at every town hall meeting, at every press conference, at every telephone call with analysts, we are going to make sure that we are a model, that we have complete transparency accountability. It's a no-brainer, but it's not really tone from the top, it's actions from the top. It's not really what these executives are saying, but what they are doing. You'll read about executives abusing their own powers and authorities. You'll read about executives getting bonuses for leading their company's stock into a deep hole. I'll never forget that I was called in by a corporate executive, a fairly large company in the Midwest, and they were facing difficult financial times. He was looking to have to let go over 2,000 people in a town which really relied upon this company for its economic prosperity. He called me and he said what do I do? We're family here. How do I communicate this? How do I ease the transition? And so I began talking to him a little bit about communication, about out-placement, you know, the typical sort of services that you would ordinarily expect a company of that size to undertake. The phone rang and he picked it up and I got up to leave while he took this call and he motioned me down and he began negotiating a lease on a new Bentley. And I sat there saying to myself, wait a second, he's going to be driving around town in a new $300,000 automobile while he's putting people out on the street. That's what I mean by actions from the top. If you really expect to create an ethics of culture in your company, you darn well better be prepared to follow not only the written guidelines and rules, but a set of moral standards that make people look up to you. Three quick points. Focusing on what the companies are doing, what the mass movement is doing, and what governments can be doing. First, what strikes me is how much we are in agreement having come from different places on the spectrum. And what's interesting to me in the company focus is the shift from the transactional to the systemic. I think as Rod pointed out, the criminalization of bribery in the OECD treaty and in the FCPA is inevitably a transactional kind of focus. Who bribed whom at one given moment in time and a huge amount of resources are used to figure that out, hiring people like Michael and others to come in and do the forensic analysis. Whereas in fact, the real solution to the problem is systemic. And as Pamela said, there are a lot of great practices out there that can be put in place that are much easier to know whether they're in place than to know whether a particular bribe was paid at a particular moment in time. So I think the systemic focus to me is extremely important and is evidence of really the progress we're making shifting from saying it's an incidental problem here to saying we got to have a systemic approach. Second, mass movement. I love transparency international. I was involved in the formation of the U.S. transparency. Our people around the world helped to form transparency international around the world. But what I worried about is the problem that we have within a company where people say, ah, anti-corruption, that's the responsibility of our compliance officer. We got that handled. In the World Bank, we created an integrity unit and that's the unit. If you have a problem, then go to the integrity unit. And so TI, in a sense, was sort of, we'll take care of it. We got corruption. We know what we're doing. And what that did, I think, is take from what has to be a mass movement, what has to be each and everybody's responsibility in a company. It's not something you can delegate or functionalize. And so I think the challenge has been how do you focus a mass movement and get everybody in the game? And you think about it, what is TI? Can anybody tell us what TI is for today? Other than a perception index and a bribers index. We don't know what, there is not a focus of what the priority should be. And yet people say, well, it's being handled. And so I worry that part of this dissipation of the movement is that we don't have a focus. And why do I think that's important? Third point, because there are some great opportunities. Roth talked about the work on public procurement in the OECD and the transparency initiative. And I want to come back. In the Doha round, we had a procurement transparency agreement. And in the green room in Doha, led by, unfortunately, people like Pascal Lamy, it was dropped from the Doha round agenda. A simple agreement that would have said what Rod has pointed out, disclose, use the same spotlight that the WTO has used on tariffs. WTO, the GATT actually in 1947, just said publish your tariffs. And the pure publication of those tariffs actually created a political process that forced accountability and led people to say, let's get together and negotiate those down. Similarly, if people had to disclose all the procedures in their public procurement and be held accountable to those, and the result of individual procurements, you would have a political process that would be fed that would help us to deal with those. So I think there's an opportunity to focus attention. And I'd love to see TI come out and say, this year what we're going to go for is procurement, a procurement transparency agreement. And have them focus all of the attention of the, of all of us that want to see progress made on getting something specific and concrete done. Let me just jump in here and just a moment of self-promotion. We did a paper on how do we strengthen procurement systems in developing countries. Actually, GE helped fund it. So you can go take a look at that on our website. But also, we did a paper on how do we strengthen the trade, and it actually was a trinity of papers, trade investment and procurement strengthening them, and how do we link them around the conversation around development funded by GE. But thank you, Mike, for that. And Pamela, I'm sure you've got some thoughts listening to this conversation. Yes, and CREATE has also done a paper on government procurement and responsible business practices. We have a few copies outside, and it's also on our website. But this is a critical issue where governments can lead by example. And this issue of leading by example is just so critical to the movement. Dan started off this discussion by saying this is just such a huge, huge issue. And like intellectual property protection, anti-corruption, it's so critical that there be momentum. And for there to be momentum beginning in the 70s and today, we need more courageous companies and countries to lead by example. And as Mike said, as the Mike said, companies know what they have to do. It's pretty clear. There's been a lot of investment in this area. Just as companies have invested in quality management, in health and safety, and really made it integral to how the company, the whole company operates, we need companies to invest in anti-corruption efforts. And building these internal systems that you can really, you can check and you can verify whether or not they're working. What we have found in working with companies, a whole range of companies as I mentioned, it really is an issue of prioritization and a sense of urgency inside companies. And I think as we all appreciate running companies, in particular large multinational companies, it is challenging to deal, to prioritize and to have a sense of urgency when you're dealing in some cases with short-term issues and with crises. But being proactive, being preventative is key, I think, to addressing this significant issue and continuing this momentum started in the 70s. And now being embraced by countries and companies that we would never have thought 30-odd years ago would embrace it. Thank you. Let me open it up there. I know there's some very thoughtful people and I see my friend Thelma Aske and also looking at Michael Levitt. I'd also like to hear from this woman up here and my friend Tom Ward back there. We'll start with those four and if we can, we'll bunch them World Bank style and if we have time, I'd like to get those last two as well. I'm going to ask everybody to answer as many and I'm going to just go down the row and just be economical in your responses and we'll get a couple more comments in. So Thelma, you're first. If you're speaking to the microphone, identify yourself. I'm Thelma Aske, a senior advisor at CSIS. And I just want to make a couple comments and you don't have to respond, but maybe in a general sense respond as you're answering questions. I can remember when I led the Trade Subcommittee at the Ways and Means Committee and we went particularly to Asia. The first thing on the private sector's mind was not unfair trade practices, but was the Foreign Corrupt Practices Act. And at that time it was not let's see, you know, let's embrace foreign corrupt practices and try to spread it around the world. It was why are you putting this onerous thing on our backs when it's just a matter of doing business? So I do think there's been a lot of progress, particularly in the shift, but as you say it's still number one on the private sector's minds is corruption. I would hold up, I think, the example of the OECD and the solution process. And I think I would imply coming down a little bit to the practical side so that we don't have to spend a lot of time arguing over what kind of car the CEO bought, you know, and which is the point in which it's immoral or not immoral, or at what point is income inequality immoral or not immoral? Nobody seemed to address technology, in my view, enough. And I think application of technology removes that kind of morality discussion and puts it into a transparency discussion. If technology is applied effectively across the board in ways that are accepted internationally, things are revealed that prevent, I think, a lot of corruption. And I do think the OECD model is very helpful in that as you have people sitting around the table having to expose what they do in order to discuss what an international practice ought to be. Perhaps the OECD model of membership could be applied a little bit more in the case of these kind of international norms that people sign up to but don't comply with. And that is establish compliance before they're allowed to join. And that kind of balance, I think, may help. But I do think technology is very important in trying not to spend a lot of time discussing differences in morality, but in exposing and allowing transparency to kind of level the playing field and to find solutions in that way. I do think technology, certainly in the last 10 years, I think has become a force multiplier for this conversation around disclosure that Rod has started us off with. So thank you. We could have a whole conversation just on the power of technology in any corruption. So thanks, Delma. Michael, you can say you're a friend of mine and that's great in addition to that. Well, until I make these statements, I'm a friend of Dan's. Michael Levitt with CSIS and Babson College. First, I thought people would pick up on the admissions theme as somebody who both in business and in the NGO world has been involved with all three levels of bribery or corruption, both as with good guy companies and definitely not good guy companies. And as the CEO of an NGO that had payoff guns that they had by government, at least by government, I think the thing first my thought is nothing says we care about corruption in government like saying welcome Russia. I don't get that at all. I have to tell you because I've worked now in Russia for 30 years and it's not better. On the ground for most people and this is where I think things haven't gotten better is on the ground for people's daily lives in many countries around the world. We see no improvement at all and the fish stinks from the head. It's because it works its way down and it's day to day to day. How do I live my life on this? I'll be quick on the supply chain line. Try and build local supply chains. It's really hard when the big companies and major governments pay off on who gets local contracts. And so most local companies can't build themselves up because they're screwed by corruption involving lots of big companies. Does the CEO know? I don't know. But one last thing, we did a meeting involving CSIS a couple of years ago, a private meeting with CEOs, big, all men, big guys. What's it going to take to get you to do more work in emerging markets? In tough emerging markets. No, but these were all people who work in emerging markets. And everybody agreed. The first thing is get a waiver from the Foreign Corrupt Practices Act. Now, I can read that. It's wonderful because the Foreign Corrupt Practices Act involves them. It scares them, does it? Do they honor it? Sure, because they're afraid of it. If you want everybody to get involved, you can't have a death penalty if you don't use the death penalty. If you don't want to use it, get rid of it. So, one, I can read this really brilliantly. Foreign Corrupt Practices works because they're afraid of it. But they all wanted a waiver from it because they really didn't care. They can get their work done if they can get around it. And that ultimately affects the countries in which they work. Every one of them, the people on the ground, the attitude is if we can get away with it, we'll keep doing it. And I don't even want to say morally this was reprehensible because I happen to agree ultimately you get screwed in business if you build on it. But again, this affects people's daily lives around the world. And that hasn't changed very much. Are we still friends? I called you. I knew what you were going to say. I encourage it. Diana, Lady Dugan. And I have to confess I've paid my dues in government, including chairing OECD delegations and dealing with a number of things. So it's particularly nice to see Mike Gadbaugh. But I'm also a long-term senior advisor at CSIS. But what I would like to and I confess this is a suggestion, not a question. In one of my lives, I have become a documentary film producer. And one of the films that I'm an executive producer on as we speak is a film called The Square. And it is about Terere Square. And it's actually just now out on Netflix. And we've just been nominated for the Oscar for Best Documentary. But you should clap because, among other things, and I'm not doing a commercial for it, but the first version of the film that was done, finished last year, won the audience award at Sundance. And the audience award for a film about Terere Square was a real surprise. And Jahan didn't need us to tell her she had to go back to Cairo. So they left their awards behind, went back to Cairo, and did a whole re-edit and basically almost a new film that, again, they even had to take the final cut in their laps on the plane to Toronto. And it also won the audience award. And I say this not out of pride, but out of optimism. And one of the things about the second, if you can imagine, the second version of the film, you know, it's an ongoing nightmare. And how do you end it? And the film follows people who were involved into Terere Square, including a Muslim Brotherhood person, young idealists, and there were young, old, literate, illiterate, elite, and street people, all involved in it. And at the end of the film, we had a lot of debate of how are you going to end this that is not ending? And you made the comment about Arab Spring not being what we had hoped it would become. But I wanted to share with you how we ended the film. And the end of the film says, we want to be a people. We should go out and still see it though, right? Pardon? This isn't a spoiler. This isn't a spoiler. This is a documentary. But we want to be a people of conscience. And as we speak, and the terms, and I recommend it to all of you who care about democracy not as it's been trivialized, but justice and dignity and conscience and these people of all ages. And the other thing is when it came out on Netflix, and you can see it at the West End Theater if there are any tickets left, just briefly. But it's now come out on Netflix, and over the weekend, it went viral in Cairo. And there are people in coffee shops, living rooms, street corners who are looking at this on computers. And they are searching, and you know they just had their constitutional thing. But I would hope that one of the things that you all would do is, and forgive me, I think this title is just what's wrong with how you deal with corruption. Corruption is not a tax on industry. What you need to do, and we all need to do, is to go to the bottom as well as the top and say, corruption creates poverty. And I think that this, and it can create, and it's so important for people to understand that they have a stake in corruption. And I applaud everything that you all are doing. But please, please, start building on the anger and the outrage that people are feeling about corruption, but they don't know it's corruption. They think it's just power. So this was a suggestion, not a question. But any comments would be very much appreciated. Thank you. Tom Ward, if you can pass that back. Thomas Ward, thank you very much to the panel. Dan, you're very aware of this stuff I've been doing on anti-corruption. And I thank you guys for taking the credit because I don't want to sound the wrong way on this, but I'm looking at what came out this week with the movie producer who's produced all the violent films and now trying to say he's going to go after the NRA. And if we're not careful, are we doing the same thing? That we're saying one thing, but we've been doing the same thing ourselves. How do we not be hypocritical ourselves? And I look at it from a couple different perspectives. You look at the big talk of PPPs. PPPs are going to be the engine potentially private sector and taxing of PPPs and the private sector is critical. However, like it was just at the World Bank this last week, there was a good discussion on PPPs. This is even the government officials stating this themselves saying, hey, PPPs are only going to be working if there is a true partnership and both sides are held accountable. However, the politicians are never held accountable. And if that's not equally accountable, just like the one person mentioned here, how many times has there been the companies have been hit but not the actual government officials have been hit mutually? Take that forward. You look at right now, we just had a meeting last week with here at CSIS about the 17th repunishment of IDA. I asked myself and as an economist who did projects, who did economic analysis and costing the projects, but we never even put in there any comment about the cost of corruption in those projects. And realistically, are they having a rate of return if there's 25% corruption in these countries? When we're looking at trying to get a 10, 15% rate of return on these projects, if 25% is going off the top, take it one more question a little step further. You got CFPA. There's 110 current cases on the books right now in play. And if you look at Stanley Morgan, the others, not one of them have been held accountable to anything. As the culture changed in the bureaucracy of becoming, instead of serve and protect the people to let's collect and control the people, is that really going to fix the problem? You look at the issue with Iran right now, same thing. Is Iran just opening up to sanctions, which is the control mechanism just for the money? I have more, but we can talk more and Dan's got a lot more. Thank you, Tom. Okay. So just go down the row. I just would say corruption takes two to tango everywhere. So it's never just one that you can hit hard. I think you will have to be, as you said, systemic about it. That's the first thing. The second is, I think we should never give up on evidence. Evidence is something extremely powerful. It takes a little bit longer, but it works. And as you said, Telma technology makes evidence accessible to a lot of people. They use it. They understand. They do something with it as you have seen in the fantastic example of the Arab Spring. And by the way, if you look at how the Tunisians do, I think you could make a nice film about how to do it. One guy died in the beginning and one in those three years where they had to finalize their constitution. So let's be evidence-based there as well. Public-private partnerships is part of this procurement saga. And it's probably one of the most important issues today. I would entirely agree with you, sir. But it's not necessarily the starting point that governments are corrupt per se. I think we should start with it takes two to tangle. Let's make sure the transparency in these transactions is established on both sides. And I personally think an institution like the World Bank would be very well placed to introduce that degree of transparency in assisting parties where they are not of equal, let's say, capacity. I finished by referring to a very nice example that we did recently in Mexico where we looked at procurement in health systems. Procurement in health systems. 120 million people. Changes in transparency and procurement have a fantastic impact. Actually, we documented the economic advantage of going through transparent procurement processes. There was no resistance to it anymore possible because you had to admit that it made so much economic sense to do it. I believe, really, that we should stick to evidence in the fight against corruption. Michael, what do you say to folks, companies say, oh, boy, if someone would just let me off the hook on this FCPA thing, I could work more, invest more in Afghanistan. What's your answer to that? Getting off the hook of the FCPA thing? Well, it's more than that. Now it's UK bribery act. Pamela said a variety of laws and rules and regulations in every country that prohibits some sort of bribery. But that leads me to a question, and that is, maybe it's time that we considered changing the definition of corruption. For years now, we've dealt with essentially the same definition, the abuse of power for personal gain. Bribes, the collapse of the financial system or the almost collapse of the financial system was, in large part, not because of bribes, but certainly because of corrupt activities, because of abuse of power. The political financing system that we have in the United States today is often termed as corrupt, but there's no law, definable law, that would allow for someone to be convicted for simply taking a contribution from special interests. I think it's time to take, the world has changed a great deal through globalization, yet the definition of corruption has stayed the same over all these years. And in part, I think it's a cultural change that we're looking for. As a note of optimism, I speak a lot to university students. We just finished giving a speech up at Columbia University in their master's program in business. I notice a real change, and this is not only here domestically, but I speak to students all around the world. I really notice a big change, whereas 20 years ago, the students would be asking or thinking, you know, where do I go after this to make as much money as I can to exceed the lifestyle that my parents before me have had? And now they're asking a different question. How can we give back? How can we be assured that when we go into the workforce, we're working for an ethical company? And how can we go beyond just conforming to the appropriate rules and regulations? How can we contribute to the greater debate on issues related to transparency and accountability on issues related to corruption? So I have great hope that with the new generation, whether that generation be here or be in India, where we see a sea change, an actual political party whose platform is anti-corruption coming into being, I really see that corruption will never be eliminated, but certainly will be brought under control because of cultural change. And from a more practical standpoint, because it's getting a lot harder to hide the proceeds of corrupt acts. Mike? Actually, I'd like to let Pamela go first, because I'm uncomfortable for her to be at the end here, and if there's time available. Okay. Okay. Pamela. Always looking out for me, Mike. Thank you. Now, I just want to reinforce this importance of a sense of urgency. This issue of corruption has been around for centuries, but when we think about globalization and the convergence of markets and the challenges with economic development and poverty, when we think about future generations as they enter the workforce, we need to view this as an issue of key priority and really have a sense of urgency, whether we're in government, we're in the private sector, we're in civil society, or we're a young person at a university. Okay. Mike, you're going to have the last word. Okay. Well, I just want to say I am very encouraged and I embrace really virtually everything that I heard. It has both positive and negative effects on me kind of emotionally. On the negative side, it doesn't help me in my struggle to know what should I do myself? Should I, you know, struggle away in my own little sphere? Should I join some bigger movement, which I think is kind of a big theme of today's discussion? We're happy to have you at TI, Mike. But you, but you complicate that. The positive thing is that is just knowing that there is so much energy and enthusiasm out there with really terrifically creative people of goodwill that are tackling this problem. So from that point of view, I thank you for organizing this. I'm lying because I want to give Ralph the last word as someone who gets the award for flying the longest distance he flew in from Paris for this. So, Ralph, why don't you, if you have any parting thoughts, I'll give you 30 seconds to share them. As an economist, you can probably make sure that, in fact, corruption would be best served by strong competition. I have to say that would be my summary here. Strong competition makes a lot of a difference in the market, please. Thank you. Okay, folks, please join me in closing the panel. Thank you very much.