One vision

10 January 2014

Transparency International (TI) is a global movement sharing one vision: a world in which government, business, civil society and the daily lives of people are free of corruption. Founded in 1993, TI consists of more than 100 national chapters worldwide and an international secretariat in Berlin and works with partners in government, business and civil society to put effective measures in place to tackle corruption.

TI has been active in the water sector since 2005, when it was invited to give a keynote speech at a session at the World Water Week in Stockholm entitled 'Can We Meet International Water Targets without Targeting Corruption '. In 2006, along with the International Water and Sanitation Centre of The Hague, the Swedish Water House, the Stockholm International Water Institute and the Water and Sanitation Programme of the World Bank, TI was a founding member of the Water Integrity Network (WIN). The WIN promotes integrity in the water sector (including water supply and sanitation, water resources management, hydropower and irrigation subsectors) by focusing on transparency, accountability and participation. The International Hydropower Association (IHA) is a corporate member of the WIN.

In 2008, TI and the WIN collaborated in the publication of the Global Corruption Report: Corruption in the Water Sector, which provided a diagnosis of the corruption risks in the water sector as well as strategies and tools for addressing these risks. The report focused on the four water subsectors mentioned above (including hydropower). In June 2008, the IHA participated in the launch of this report in New York and Washington DC, along with representatives of the International Financing Agencies, TI, the United Nations Development Programme (UNDP) and the WIN. In the same year, TI was invited to join the Hydro Sustainability Assessment Forum (HSAF), a multi-stakeholder approach to updating the Hydro Sustainability Assessment Protocol which was originally developed by IHA.

TI defines corruption as the abuse of entrusted power for private gain. Corruption includes: bribery, embezzlement, fraud, money laundering, diversion of property, as well as abuse of authority including nepotism and favouritism.

This work of TI, the WIN and other organisations show that the hydropower sector (and the water sector more generally) has a considerable propensity for corruption. Hydropower projects almost invariably involve awarding large contracts to civil works contractors and bias in project selection, lack of transparent competition in tendering and procurement decisions and fraudulent decisions can also be problematical. In addition, hydropower projects, almost invariably involve power utilities (either as developers and/or offtakers), which are also a lowly ranked sector in terms of corruption.

According to TI's Bribe Payer's Index (2011), which ranks the perceived likelihood of companies from the 28 largest economies to pay bribes abroad, Russian and Chinese companies head the list - and also have considerable overseas business in hydropower.

Promoting integrity among developers within the hydropower industry is an important step for the industry to 'clean up its act' and promote sustainable development, which is of considerable interest for all stakeholders and particularly civil society organisations (CSOs). Promoting integrity is also a major step in reducing the perception of risk in hydropower development and thereby making it a more attractive sector for investment or investment guarantees by developers and financiers (including bilateral donors, international financing agencies and commercial and development banks) as well as export credit agencies.

There are various kinds of tools available to address corruption issues in hydropower development. These include:

• Corruption risk assessments (CRAs) - these identify where there are corruption 'hot spots' in a project. A CRA should be comprehensive covering all layers of a multilevel governance system (macro, sectoral, regulation, institutional, project); all actors (including the public sector, the private sector and CSOs); and all stages of the project cycle (planning, preparation, implementation and operation).
• Integrity Pacts (IPs) provide for independent, third party monitoring of all stages of procurement. IPs enable detection of 'red flags', thereby facilitating corrective actions.
• Freedom of information/right to information laws can facilitate transparency and accountability in procurement, including greater involvement by civil society.
• Promoting integrity in public sector power utilities focusing on codes of conduct (including conflict of interest, abuse of position, and acceptance of gifts); personnel policy (including open and transparent hiring and promotion, and restrictions on using information after leaving employment); and declaration of assets by senior management.
• Business Principles for Countering Bribery (BPCB). This is TI's anti-bribery programme for the private sector. Based on a commitment to a 'no bribes' policy, the BPCB focuses on programme content (including human resource policies), training, communications and sanctions as well as programme implementation, monitoring and evaluation and applying lessons learned. A number of international corporate reporting initiatives (such as the UN Global Compact and World Economic Forum, and the Partnering Against Corruption Initiative) are using the BCPB as the standard for one of the criteria they use to evaluate company performance.
• Governance Improvement Plans (GIPs), which are action plans aimed at addressing risks identified in CRAs

Another useful tool is the IHA's Hydro Sustainability Assessment Protocol. Through the involvement of TI, the Protocol focuses on anticorruption topics such as communications and consultation, governance and procurement. Scoring and guidance in these topics takes into account TI's experience in developing and implementing inter alia the tools described above.

The Protocol provides for assessing project identification, called the 'Early Stage'. This stage focuses on topics such as:

• Demonstrated Need.
• Options Assessment.
• Policies and Plans.
• Political Risks.
• Institutional Capacity.
• Technical Issues and Risks.
• Environmental Issues and Risks.
• Economic and Financial Issues and Risks.

The publication of the World Commission on Dams (WCD) report in 2000 was a wakeup call for the hydropower industry to take a more active role in promoting sustainable hydropower. The launch of the Protocol in 2011, under the leadership of the hydro industry, is becoming more widely recognised as a major tool to achieve this goal.

As of this writing, the Protocol has been applied at the project preparation, implementation and operation stages in Australia, Europe and North and South America. There is considerable interest in China in using the Protocol, both in-country and overseas. However, much remains to be done, particularly in Africa. Here, there is a need for considerable capacity development to facilitate meaningful multi-stakeholder dialogue - one of the recognised benefits of the Protocol.

Donal O'Leary is a Sr. Advisor at Transparency International in Berlin, Germany. He joined Transparency International (TI) in July 2005 as a volunteer Senior Advisor, focusing on water sector issues. He is a founding member of the Water Integrity Network (WIN) Association and while at TI has worked on multi-stakeholder anticorruption initiatives ranging from analysing governance issues in large water supply and hydropower infrastructure in Africa, to addressing corruption in municipal water systems in Central America. O'Leary represented TI on the IHA's Hydro Sustainability Assessment Forum and is now a member of the Governance Committee, which is overseeing the implementation of the Hydro Sustainability Assessment Protocol.
Prior to joining TI in 2005, Donal worked with the World Bank for more than two decades on water and energy infrastructure projects in Africa and South Asia, including the preparation, implementation and upgrading of hydroelectric and water supply projects in many countries. Under the World Bank Staff Exchange Programme, O'Leary represented Siemens in the Industry Group associated with the World Commission on Dams (WCD). He also participated in the Dams and Development Project, a follow-up activity to the WCD.


Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.