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Business

UN's new anti-corruption academy aims spotlight at financial crime

The United Nations has launched what is being called the first anti-corruption academy, aimed at turning out a new generation of top-of-the-line corruption fighters. New types of financial crimes will be investigated.

Handing off a 500 euro note

Graft costs the world economy 1.5 trillion euros a year

Calling it a "milestone" in the fight against corruption worldwide, UN Secretary-General Ban Ki-moon opened what is being billed as the world's first anti-corruption academy late last week, promising that it will train a new generation of law enforcers and focus on new types of graft, especially in the financial and business arenas.

The new International Anti-Corruption Academy (IACA), which is backed by the UN Office on Drugs and Crime, the Austrian government and the European Anti-Fraud Office, will be based near Vienna and will bring together leading players from the worlds of finance, business and politics to study the causes of and new cures for organized crime and fraud.

"Traditional methods are proving no match for new types of corruption, especially financial crimes," said Ban, who added that current training programs lack specialization and the academy will bring its students new tools to tackle "technical corruption to the fullest possible extent."

Those students will be judges, investigators and police officers from around the world. Some courses have already begun and a full academic program will kick off in 2011.

Ban Ki-moon

Ban Ki-moon says intolerance of corruption is growing

"The academy certain won't make any claims of training super-men," said Martin Kreutner, who chair's the institution's steering committee. "Rather the academy will close the gaps which exist between those involved in the practice on one side and the theorists and scientists on the other."

Financial corruption

The World Bank estimates the cost of corruption to the world economy to be some $2 trillion (1.5 trillion euros). Contrary to much popular belief, corruption is not limited to developing countries.

While the most obvious examples of briefcases full of money tend to go to bureaucrats or authoritarian leaders, corruption in industrialized democracies is somewhat more sophisticated.

One often neglected dimension of corruption is "state capture," or just "capture." This happens when powerful companies or individuals bend the regulatory, policy and legal institutions of the nation - developed or developing - for their private benefit. This is typically done through high-level bribery, lobbying or influence peddling.

In more developed countries, subtler forms of capture and "legal corruption" exist. Perhaps it is the expectation of a future job for a regulator in a lobbying firm, or a campaign contribution with strings attached. It could be nepotism or overly aggressive lobbying. In many countries this may be legal, even if it is unethical.

In the United States, the country's two largest mortgage finance lenders, Freddie Mac and Fannie Mae, spent millions of dollars lobbying legislators in exchange for, among other things, lax capital reserve rules.

Transparency International logo

Transparency International says corruption was largely behind the financial crisis

Indeed, bribery and corruption within the financial system were partly to blame for the global economic crisis, according to a report from anti-corruption group Transparency International (TI).

Corruption and lack of corporate integrity was a basic underlying cause of the global financial crisis," the report said.

The TI report cited a survey of executives from OECD countries that found almost one-half had secured business in non-OECD countries through personal relationships. The report also highlighted the potential negative effects of business lobbying, in particular the 16,500 lobbyists working in Brussels to influence decisions at the EU level.

Corrosive effect

Besides contributing to the global economic meltdown, corruption also has a corrosive effect on societies with can even begin undermining a country's political foundation.

"People no longer believe that there is equality, that the law applies to everyone," said Wolfgang Hetzer, head of the European Anti-Fraud Office. "They think it doesn't mean anything to go out and vote in elections because there are other means to get into certain positions and stay there."

Those at the academy will be trained in implementing the UN's Convention Against Corruption, the world's first legally binding international anti-corruption instrument. Its signatories are required to put in place a whole array of anti-graft measures such as law enforcement, recovery of assets and cross-border cooperation.

Author: Kerry Skyring, Kyle James
Editor: Sam Edmonds

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