December, 9 2018 (Forbes)
Today is International Anti-Corruption Day, an annual commemoration of passage of the United Nations Convention Against Corruption fifteen years ago. In honor of the occasion, the Inter-American Development Bank (IADB) has published an important, practical and prescriptive report with recommendations for every sector of society from government to individuals on innovative and effective approaches to combatting corruption. While focused on Latin America, the report’s proposals, especially those on the application of new technology in the fight against corruption, are relevant around the world.
The report is the work of a eight governance and anti-corruption scholars and practitioners – among whom I was honored to serve — convened by Bank President Luis Alberto Moreno to address the region’s most pressing challenge: corruption. The crisis of corruption brings into stark relief the violation of the social contract. When citizens are expected to vote and pay taxes, yet their leaders do not govern in the public interest, democratic legitimacy declines. Pew Research reports that 73% of Latin Americans surveyed are dissatisfied with the way democracy is working in their country. By siphoning off wealth, corruption is also impoverishing the region’s economies. By contrast, writes the IADB, “when European and Asian countries improved their governance and anti-corruption policies halfway through the last century, it tripled their GDP per capita relative to most Latin American countries.”
Thus, the need and the urgency for the report’s myriad legal and policy recommendations and its strategies for using new technologies to spot and route fraud in government and in companies. The innovative recommendations about the use of new technologies, including big data, blockchain and collective intelligence, are drawn from an effort undertaken last year by the Governance Lab at New York University’s Tandon School of Engineering to crowdsource such solutions and advice on how to implement them from a hundred global experts.
For example, distributed ledger technologies, of which blockchain is a prime example, when properly designed and governed, can store user identity and transaction information securely and openly. That’s why jurisdictions from Jamaica to Ukraine are piloting the use of blockchain to make government records, especially contracting and procurement data, more transparent and less subject to tampering. Ironically, although the distributed ledger technology underlying blockchain may be a tool to fight corruption, cryptocurrency transactions rely on the same technology to facilitate illicit deals and money laundering.
This is why blockchain technology pilots are key but must be complemented with investment in strengthening the culture and capacity of public institutions, including training in the innovation skills needed to know how to how and why to adopt blockchain technology and how to govern its responsible use.