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Comments: Theory and practice

Considerable criticism has been directed at Norwegian authorities on development aid the past few years, due to their involvement with Norwegian business. The question that many people have raised is who is supposed to benefit from this aid, poor countries or Norwegian share holders. Led by the Minister of International Development and Human Rights, Hilde Frafjord Johnson, the recently stepped down government addressed the issue. An attempt was made to direct the aid focus away from business interests. At the same time, a non-acceptance principle in terms of corruption was introduced. Whether it is called bribes, financial incentives, or return commission, corruption is a widely used instrument in a number of countries where Norwegian aid funds are supporting Norwegian business involvement.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Considerable criticism has been directed at Norwegian authorities on development aid the past few years, due to their involvement with Norwegian business. The question that many people have raised is who is supposed to benefit from this aid, poor countries or Norwegian share holders. Led by the Minister of International Development and Human Rights, Hilde Frafjord Johnson, the recently stepped down government addressed the issue. An attempt was made to direct the aid focus away from business interests. At the same time, a non-acceptance principle in terms of corruption was introduced. Whether it is called bribes, financial incentives, or return commission, corruption is a widely used instrument in a number of countries where Norwegian aid funds are supporting Norwegian business involvement.

Comments by Morten Rønning
Norwatch

The aim of Norwegian authorities has been to be the leader of the game. At the same time, to what degree this is the right game to play has avoided discussion. The question is whether it is possible to launch projects, where the financial stakes are high, in countries such as China, Indonesia and others, without some of the money disappearing along the way.

During NorWatch' December visit to Bangladesh, there was no attempt to cover up the fact that businesses had to face a considerable amount of bureaucratic obstacles. Whether it is customs clearance papers or applications related to the setting up of the business, all documents are subject to a cumbersome journey through the bureaucracy. It is not surprising then, that officials at the bottom end of the hierarchy make use of the opportunity to add to their pay check by offering to speed up the casework. This is the situation in a number of countries across the world. The question is whether this practice is compatible with the non-acceptance principle in terms of corruption that is promoted by Norwegian authorities.

The Scancem management in Bangladesh told NorWatch openly that they, too, considered it necessary to resort to bribes to speed up the process:

- One must use bribes in this bureaucracy, in order to move the papers from one desk to the other. Otherwise, said general manager of Scancem Bangladesh Martin Schjoldberg to NorWatch 05.12.99, the process will move too slowly ahead.

Petter Wiik, the Scancem dock manager in Chittagong, has 6 years of experience from the Scancem operation in Nigeria. In terms of corruption, he strongly emphasised, Bangladesh is considerably worse than Nigeria.

Back home the issue was pursued with Norad and Norfund. In theory, the non-acceptance principle is adhered by both institutions. However, after having talked to several people who are familiar with the project, we were left with a feeling that there is a considerable gap between theory and practice. The matter was followed up in a letter to the former Minister of International Development and Human Rights, Hilde Frafjord Johnson. In the letter we asked for a more detailed clarification of the situation.

In February the former Secretary of State, Leiv Lunde, replied that all governmental parties in the case are bound by the non-acceptance principle in terms of corruption. Furthermore, he stated that any form of corruption would be considered a breach of this principle. At the same time, the ministry demanded a briefing from Norad and Norfund on the matter.

Managing director of Norfund, Per Egil Lindøe, replied to the Ministry of Foreign Affairs. He claimed that, in thinking it was referred to corruption, NorWatch had misinterpreted the Scancem representative in Bangladesh. Still, the insinuations made by NorWatch, that the Norfund involvement represents a gap between theory and practice, have largely been confirmed by other involved parties. Furthermore, Lindøe stated that Norfund does not intend to engage in countries where actuating business requires corrupt practices.

In their reply to the Ministry of Foreign Affairs, Norad refers to a letter from Scancem International where it is maintained that bribes have not been part of the activities in Bangladesh. Still, would it be reasonable of Norad to expect a different answer, when they use the company itself as their only source of reference?

NorWatch contacted Martin Schjoldberg of Scancem Bangladesh in March this year. When attempting to pursue the statements made in December regarding the use of bribes, it turns out the story has changed:

- Fortunately, it might be said, our integrity and strength have allowed us to progress at the necessary pace without the use of so-called "financial incentives". However, in a country where high-ranking officials earn a monthly salary of perhaps USD 120, many will obviously opt to make their contributions.

So why this sudden change of mind, subsequent to our contact with the company's Norwegian lenders and investors? NorWatch has every reason to believe that Scancem Bangladesh is paying lesser sums in order to direct papers through the bureaucracy. If this is indeed the case, it would hardly be surprising. From our point of view, the problem constitutes the lack of openness regarding these questions. A number of Norfund and Norad representatives, we have reason to believe, are familiar with these activities. Our understanding is that they are attempting to conceal facts. Furthermore, it is an attempt to create an illusion at home, that these activities adhere to rules whose implementation in fact is impossible. A debate regarding business related aid is, in NorWatch' opinion, of no benefit when based on lies and misinformation.

Norwatch Newsletter 4/00

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