Corruption saps the economy, US official tells CNA

Corruption saps the economy, undermines opportunities from people trying to engage in legitimate business, undermines public services and kills international investments, Richard Nephew, Coordinator on Global Anti-Corruption at the US State Department told CNA.

Nephew has been appointed to the post by Secretary of State Antony Blinken in July 2022, a move highlighting the role of international cooperation in the fight against corruption. In this context, Nephew visited Cyprus to exchange views with the Cypriot authorities over combating corruption.

“I think that we got a good strong partnership, a good strong relationship and I think there are a lot of things we can build on,” Nephew said in an interview with CNA.

Asked how could the US assist Cyprus in improving its performance in fighting corruption, the US official said he sees “a lot of the effort that is being made to fight corruption.”

“I know it’s a high priority of the President and we’ve certainly heard that and seen that, there is a lot of work going into it, new institutions being developed,” he said.

But he noted that “the fundamental issue is no country on earth, is doing as much as it can do and probably should do to fight corruption, including the US.”

“So a lot of what we are trying to do internationally is to build up international institutions and the rules and good practices that every country should take and try and find the bad guys and try and finding the holes and try to close them,” he said, outlining the devastating effect corruption could pose on an economy.

Corruption, the US technocrat noted, “saps the economy, it undermines opportunity it takes away from people who are trying to engage on legitimate business, it undermines public services, it kills international investment.”

As international investments are considered vital to any outward-looking economies, Nephew said international companies don’t want to invest in places that are considered to be corrupt.

Noting that in the past companies were prepared to "wink and nod at certain things in order to get their job done and perhaps they continue to do so in some places," Nephew pointed out that "now the major most effective, most reliable companies - the kind of companies that countries want to have invest in their economies - don’t want to do that anymore, because they fear the risk, they fear the consequences.”

Information-sharing communication, know your vulnerabilities

Responding to a question on what he would advise the authorities to do to improve their anti-corruption and sanctions implementation framework, Nephew highlighted two issues, information-sharing with all stakeholders, both from the public and the private sector, and identifying the vulnerabilities in the system.

“The most important thing is information sharing, making sure all the different agencies, all the different government departments all the different communities, all know about sanctions implementation and especially the private sector and making that communication,” he said.

Second is having a very clear picture of what are your vulnerabilities “especially because there are always going to be bad actors who will try and exploit any cracks any seems they potentially see.”

“So being rigorous and identifying what your risks are and being able to respond to them, and close those risks,” he said.

Noting again that in Cyprus “a lot of work that has gone into developing and improving the systems,” Mr Nephew added that, as with any other country, there’s probably a lot of work to be done too.

He highlighted they encourage digitisation and e-government tools as it improves the efficiency of enforcement, improves the efficiency of rules, whether there are sanctions rules and not just due diligence rules that are part of fighting corruption systems.

“Information sharing, capacity building, learning, knowledge trying to expand the capacity of people who are in charge of enforcement as international financial systems are always changing and some of the techniques of doing those transactions are changing too”, he said.

Moreover, Nephew pointed out that the public should be aware of the steps that are being taking so that they can be an important part of the process. “Civil society organisations in particular are those we are always looking to for support because they can provide a good check against both government, the private and other actors on what they are trying to do,” he said.

Furthermore, responding to a question of sanctions, Nephew who has extensive experience on sanctions implementation from previous postings, pointed out that sanctions' enforcement some times is thought of as punishment.

“This is not what sanctions' enforcement is about. Sanctions' enforcement is about risk mitigation, is about closing vulnerabilities is about making sure that the bad guys aren’t able to exploit your system,” he said, noting that the cost of risk is often greater than sanctions themselves.

“When it comes of the international financial system, in my opinion, and I think in the opinion of a lot of compliance experts, sanctions are ought to be seen as positive part of the system, they intended to protect financial systems rather than be seeing as punitive,” he concluded.

(Source: CNA)