Date: 2024-11-21 Page is: DBtxt003.php L0913-TVM-MMW-000009
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TrueValueMetrics ... Peter Burgess Manuscript
Making Management Work for Relief and Development |
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Chapter 9
Some Other Issues |
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Transparency and Accountability
Transparency I am not at all sure where transparency fits into the picture. Clearly, getting inappropriate behavior out in the open where it can be stopped is a valuable thing to do, but is the dialog about “transparency” actually doing this. Transparency is a relatively new term ... and is being used more and more because there have been systemic failure of organizational management in almost every sector ... government, big corporations, big NGOs as well as in small organizations. Mismanagement of funds, or worse outright stealing has become far too common, in large part because the underlying focus on good accounting and financial control is very weak. Transparency has no place in most relief and development sector organizations. Some information is made public, either through financial reports mandated by regulators or through a carefully edited process of public relations and press releases. A growing amount of process detail is being released by some organizations, but hardly anything about performance. Part of the reason for the lack of performance information is because this information is also missing from the internal information systems. I suppose it is better to talk about the need for “transparency” than to ignore it altogether ... but transparency is not a silver bullet that is going to solve very much. More than anything else, the transparency movement is putting better packaging round a fundamentally flawed system that lacks decent accounting and financial controls. Who is to blame? Not me! “It is not my responsibility” is a common refrain. But who is? It is very difficult to find people in the relief and development sector who are responsible and take responsibility. There are, it should be noted, some quite remarkable people in the system to whom this generalization does not apply ... but as a system, finding the focus of responsibility for anything important is not easy. A system without accountability The relief and development sector as a general rule avoids clear responsibility and accountability. There is very little systemic analysis that shows what results have been and calls to account the people that made the decisions and used the money. “Projects” funded by the World Bank could be a clear focal point for responsibility and accountability, but rarely is. It would be possible to keep track of decision making, and call to account the decision makers later on, but I have seen little evidence that this is part of the Bank's management culture. Rather my personal experience is that staff move on and their decisions stay in the old place. Media ... Telling a Story Story telling is not management information Story telling is part of a media environment that measures success in terms of audience that see the story ... which in turn, can be translated into advertising revenue. The role of management information is to help decision makers make good decisions ... and management information is doing its job when data are helping to improve performance. A story can be a great success for a media organization and create a big audience ... while management information is a great success when the results are improved. Media The media is a powerful component of society, and accordingly its control determines a lot about what the public learns. In “free” societies, the media is an independent part of the societal structure, and in many countries has constitutional protection. Who owns the media, and who controls the media are ongoing issues. How are standards maintained? What role does censorship have in maintaining standards or in controlling information? Should the media be profitable, or should it be merely excellent, and not part of the “for profit” economy. How does the media police itself? Does it police itself, or does it merely parrot material that ought to be filtered out? Where is investigative journalism? From time to time the media does amazing investigative work, but most of the time the reporting is ho-hum. Whenever I have dug into a story in some of the major newspapers I have been surprised at how little time it took to do the research, and I have been rather impressed by how much information was obtained in such a short time, and rather more understanding of why the analysis is often superficial and essentially wrong. From time to time newspapers like the New York Times do articles about Africa and other regions. They send a correspondent to the Africa, for example, and in a period of two weeks there are six or seven articles from as many countries. The writing is excellent, but the information does not have any depth. Interesting for a quick read, but not worthy of a “newspaper of record”. Spin A huge problem. The organizations of the relief and development sector have a lot of name recognition. The World Bank is well known and easily gets attention from the media. The same is true of the United Nations and its various agencies. They are an easy source of stories for the media, and these organizations make substantial use of press releases and press conferences to publicize their view of the issues. But what gets into the media is a limited subset of information. A lot more is needed and the analysis needs to be better. Why to people think that the UN is the “only game in town” when it comes to issues of relief and development and activities in the “south”? Some of the things that the UN does are absolutely fantastic. UN peace keepers, the soldiers of the UN, were deservedly honored with a Nobel Peace Prize, and lots of others put themselves in harms way to do the right thing. But too much of what the UN does is mediocre, or worse, and nobody seems to be paying attention. The UN has a Public Information activity that keeps the public information and tells all the good stories. But there is no mechanism for the UN to information the public in a manner that is not pure spin. Why should there be? There is no requirement for it, and who wants transparency anyway? Certainly not people inside the organization, and especially the top leadership. Media Technology The world is awash in information. Old print journalism was the standard methodology for centuries, and then challenged by radio and television broadcasting. In both areas the control of the story was very much centralized and the quality of the information controlled by an editorial function. But this is changing as all sorts of new electronic tools are becoming available to move information around the world. The potential for people to know more that is useful is better than any time in history, but at the same time it is just as likely that people are going to be fed information that does not help. The technology is now available so that anyone with an opinion is now able to address the public at a modest cost. This is an awesome idea, but not necessarily all good. How does anyone choose between competing opinions. Where is reliable useful information to be found? Somewhere there has to be the trusted source of information ... but who is going to provide that place? And how does that place earn its reputation and keep its reputation? What is going to be the information of record ... or is that idea long gone? The World Bank is one of the largest publishers in the world. They research, write and print a vast array of books and pamphlets that have to do with the relief and development sector. For the most part, they are not “easy read” books. Sadly, they have importance in the relief and development sector because they serve to promote the myth that the World Bank has deep intellectual stature. The World Bank started using Structural Adjustment Program (SAP) lending towards the end of the 1980s. They were soon characterized as a bad approach by civil society and advocates for developing countries, creating deterioration and not progress in economic performance. The World Bank published a book about Ghana, taking credit for SAP as the driver of Ghana's economic progress. Yes, SAP was introduced into Ghana. But was it SAP or was it non-SAP events that were driving the success. My assessment based on several visits to the country around this period was that a lot of history was, at long last, coming together to help Ghana. Better governance was a part, but this was President Rawlins in his third time round, more than it was SAP. It was the financial impact of retirement and repatriation of Ghanaians from career jobs in the UK and their retirement remittances. It was the availability of adequate electricity courtesy of major public investments ... the Volta River Project, three decades before. It was a big pool of well educated Ghanaians who were now middle aged, stable and experienced who had benefited from good public policy decades before. Put all of this into the mix and the World Bank's SAP can have a favorable outcome ... but the reason for the favorable outcome was ALL OF THIS, and not just the SAP. In fact, I will happily argue that SAP was more of a distraction than anything else. Oversight Absolutely Absent Internal oversight The relief and development sector which includes government units and parastatal organizations have very little meaningful internal oversight. In a broad manner, the legislative branch of government may have an oversight function over the operations of government, but the process is clumsy, at best, and is usually invoked a long time after the problem has done damage. Such oversight as there is seems to be too little and too late. There seems to be a lot of audit when a problem surfaces, rather than good accounting so that the problem never arises in the first place. There seems to be all sorts of transparency when the problem has hit the media, and then only in ways that do not expose much of the organizations functioning. I always smile when the US Government Accountability Office (GAO) is in the news. Quite often the press is reporting on a GAO report that has just been released and shows some substantial abuse of government resources. I smile because these reports usually come after the money has gone missing or been spent badly, and one has to ask who on earth is running the store. How can these vast amounts of money get spent badly or go missing unless the system is absolutely broken or the people are seriously corrupt or incompetent. And why is it that an internal oversight function did not pick up on these things during its routine work. Internal audit Many organizations have internal audit functions, but getting any information from these departments is difficult. It would be interesting to have the internal audit reports of UN agencies as part of the public record. There is, or used to be, an active internal audit function in UNDP, but I am fairly confident that unfavorable material is suppressed and never becomes widely known even inside the organization, let alone outside. People in the UN system seem to know a lot about things that are going on ... but there does not seem to be any way for these things to be stopped. Some of the abuse is minor, and perhaps not worth bothering about, but there is also systemic abuse that should be addressed. A lot of project money goes missing because of abuse. How much is difficult to tell. But in some cases the amounts are substantial ... in one case I know of, perhaps as much as $30 million. There are lots of cases of using UN duty free status to avoid a duty on totally unrelated UN work. I am sure that a lot of this is documented in the internal audit files ... but who will ever see them? Audit Audit does not substitute for good accounting and reporting. There are far too many people in the relief and development sector, and probably in the general public, who think that an audit assures good accounting, but it really does not. A routine audit along the lines of a company audit of the accounts simply helps to assure that the reports reflect what the accounts have recorded, and that there is a reasonable hope that this reflects reality. An audit will almost certainly fail to detect systemic fraud unless there is good accounting and internal control as well. When a special audit is called for, it usually means there are problems with the accounts and the management and control of assets, especially money. Audit is not a very useful management tool, unless it is used in conjunction with other management techniques. Sometime in early 2006 the government oversight community was very much visible. They had negotiated with Fannie Mae to pay $400 million to the government because of accounting errors made going back to 1998. There was a lot of patting on the back and self congratulation ... but surely something was very wrong here. The problem was being described as one of the worst accounting matters ever, going back almost 10 years. My simple question was “Where on earth were all the oversight agencies and regulators for years and years and years?”. Surely the system should find and correct problems, if not today, with a few weeks or months ... not almost a decade later. Monitoring and evaluation Monitoring and evaluation (M&E) is a routine in many parts of the relief and development sector. But it is not very powerful. It is usually done at the end of a project and is too late to have much of an impact on the project that has already been completed. Some value can be achieved by learning lessons from the M&E exercise, but many organizations have very limited “institutional memory” and the knowledge is unlikely to be used. M&E is very often a requirement of donors. It gives comfort, but does not seem to be an effective way of actually achieving better performance. Whistle blowers Whistle blowers have been an important source of oversight and transparency in government and the relief and development sector, but it is not the right way to get information about performance and behavior. Protecting whistle blowers is almost impossible, but making an organization responsive to the issues ought to be a “norm”, though presently it is the exception. There ought to be a strong system of oversight so that issue routinely come to light and can be addressed. Feedback and remedial action I spent my professional career doing financial and operations analysis. When I was doing this in the corporate world my work rapidly moved from study to review to decision ... and as a result my work had a tremendous value to the companies where I was working. The study and the review had costs, but the decision step resulted in profit improvement many multiples of the cost of my work. In the relief and development sector there is very little performance measurement. The example of the Global Fund shows some movement towards transparency, but not much in terms of managing performance and holding people accountable for the use of resources. The Global Fund for AIDS, Tuberculosis and Malaria (Global Fund) has a strong procedure to analyze and approve programs for funding (arguably too strong and rigid because it excludes interventions which might be substantially more cost effective) and it provides easily accessible information about all the disbursements it makes to the primary recipients. But after that it is difficult (or near impossible) to find out what happened to the funds, and certainly not easy to find out what the funds were used for. No matter how hard one tries to find it, there is no public information about what was achieved using Global Fund resources. But knowing about performance weakness is not enough. There needs to be remedial action based on performance information when performance is not as good as it ought to be. In the case of the shrimp project in Yemen, even though the best decision would have been to close the project and cut the losses, the people in control chose to keep the fund flow going as long as they could. I worked with a World Bank mission in Yemen (YAR) to help assess progress on a shrimp project based in Hodieda. Some years before the company I worked for as CFO had done a fisheries (shrimp) resource assessment for Yemen funded by FAO and had concluded that perhaps two shrimp trawlers could operate profitably. We had also concluded that it was not a shrimp fishery with enough potential for our company to consider investing. The accounting information about project performance made it clear that the project would never be able to justify itself ... and the mission team and technical staff of the World Bank and a co-financier (DANIDA) quickly made the decision that the project financing should be immediately terminated. Later, I learned that top management of the World Bank in Washington had reversed the decision. This was a putely political decision that had nothing to do with the mission's assessment of the technical performance of the project. This meant that the World Bank continued to fund a totally failing project. No wonder there is unrepayable debt! We know ... but what on earth to do? We know a lot about all sorts of bad things ... but there are no mechanisms to change anything. Where mechanisms exist, it is difficult to tell what is good and what is scam. They both look very much alike, and there is no trusted way of telling them apart. It is not a good picture. What do ordinary people do about Darfur, or the Lord's Resistance Army, or the chaos in Congo, or the despicable behavior of Mugabe in Zimbabwe? There is very little anyone can do as long as the relief and development sector stays the way it is. |
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