Thank you, Jozsef and Transparency International, for inviting me to speak at this important event. I commend you and your colleagues on your tireless work to promote transparency, accountability, and good governance. Your efforts make a difference in Hungary and around the world.
It was on this day in 2003, in Merida, Mexico, that the ground-breaking United Nations Convention Against Corruption was opened for signature. Today, all across the world, civil society organizations, governments, and ordinary citizens are discussing ways to reduce corruption, punish criminals, and develop stronger, more transparent institutions. The United States is proud to be a partner in this global fight against corruption. Today, I am delighted to be able to contribute to this discussion.
Corruption remains a particularly deep-rooted problem around the world. We are all harmed by its effects. We still struggle with corruption in the United States, and it is recognized that corruption is a major challenge in Hungary and the region as well. The negative effects of corruption manifest themselves in many ways. Corruption drains resources away from the public budget; corruption weakens the rule of law and the confidence of citizens in their governments; and corruption impairs the ability of governments to protect themselves from unwanted influence and impedes them in their ability to fight organized crime and terrorism. Corruption can threaten the stability of entire regions. President Obama has referred to corruption as the single greatest barrier to prosperity, and a profound violation of human rights.
These are not just abstract concepts. We are able to quantify the damage wrought by public corruption. The European Commission estimates that corruption costs the EU economy over 47 trillion forints a year, more than one percent of the EU gross domestic product. The World Economic Forum estimates that corruption adds up to 10% to the cost of doing business worldwide, a cost that impacts economic growth and efficiency. Here in Hungary, Transparency International has found and stated that corruption affects a high percentage of EU-funded development projects, which we know greatly reduces the positive impact these investments could have on the economy and society.
Countries are more likely to prosper when governments are accountable to their people. So we are engaged in a global effort to combat corruption. In the United States, strong anti-corruption laws force American companies to play by the rules or risk costly sanctions wherever they do business, even beyond our borders. We now require any oil, gas, and mining company that raises capital in the United States to disclose all payments made to foreign governments.
These strict rules sometimes make American businesses less competitive abroad, but that has been a sacrifice we have been willing to make.
In cases of corruption, not only do companies lose out, but so do consumers. Consumers pay more for goods when the cost of bribes is factored in, receive substandard products when the contractor spent overhead on kickbacks instead of on workmanship, and face reduced choice when competition is unfair.
Favoritism and nepotism is a serious problem in many regions of the world and a factor that harms growth and investment. The World Economic Forum Global Competitiveness Survey shows that in Hungary, businesses identify favoritism and diversion of public funds as major concerns. America’s commercial relationship with Hungary is healthy and bilateral trade is on the rise, but I’m told by some American business executives that perceptions of corruption in Hungary impact the investment climate and directly affect American businesses, and as a result, our trade. When public procurement decisions are made on the basis of favoritism instead of on the basis of merit, our companies will often just stay home. American businesses should not be asked to compete in a public tender against a company owned by the relatives of decision-makers. That is why this practice is banned in many countries.
Corruption is also a national security issue. Corruption not only hurts economic growth, it alienates and angers citizens, which can cause them to lose faith in the state, or worse. Citizens feel betrayed by public corruption. Their taxes are being used to line the pockets of public servants, elected officials, and their family members instead of toward providing the services and security that citizens both pay for and require.
The danger of corruption is perhaps most acute in the efforts to fight crime. Drug cartels and terrorists rely on corruption and bribes to convince police officers to turn the other way at checkpoints, and convince customs officials to permit suspect cargo—and even people—to cross borders. Within the last few weeks, Hungarian police arrested 15 border guards suspected of taking bribes at a checkpoint on the Ukrainian border. I strongly applaud Minister of Interior Pinter’s commitment to expel corruption from Hungary and heartily agree with his statement that, “corruption is like a cancer, it spreads in an organism and destroys it.”
In commemoration of International Anti-Corruption Day, I call on all our partners and friends to raise awareness of the dangers of corruption and to help build a more open and transparent government and society.
There are many actions we can take to combat entrenched corruption. To start, we need to train our police on how to detect and combat corruption. In Hungary, one of the great success stories of our bilateral relationship is the International Law Enforcement Academy – ILEA. ILEA is an institution established by the United States and Hungarian governments in 1995 that trains over 1,200 law enforcement officials every year. ILEA offers courses that demonstrate how the corruption of public officials enables criminal activity and that teach how to root out corruption.
The Hungarian Tax Authority recently demonstrated that with the introduction of online cash registers, tax collection can be automated and made more transparent, reducing the opportunity for corrupt officials to steal from businesses and individuals. Law-abiding Hungarian and international businesses would welcome the implementation of this technology.
Administrations, too, can increase transparency by allowing citizens open access to information that affects their lives, and that enables them to make informed and educated decisions about policies made in their name. For example, the United States applauds the recent Capital Court of Appeals decision requiring the release of documentation regarding the Paks contracts.
Rules that protect whistleblowers from harassment and prosecution can encourage individuals who witness fraud and corruption to report it.
Perhaps most importantly, prosecutors can be empowered to investigate and prosecute officials suspected of crimes of corruption. In Romania, an empowered and independent National Anti-Corruption Directorate has overturned the impunity of the powerful elite by investigating and prosecuting mayors, members of Parliament, ex-ministers, and even a prime minister.
Many believe that it is impossible to eliminate a problem as deeply rooted as corruption. In truth, it requires an engaged and vigilant electorate. It requires investigative journalists. It requires civil society organizations galvanizing people to demand more from their elected officials, and to push elected officials to conduct the affairs of the people transparently. It requires a commitment by the people to hold our governments accountable.
Working together, we improve the integrity of our markets, strengthen our government institutions, and increase opportunity and prosperity for all our citizens. Thank you.