governments are stepping up efforts to fight corruption and IT is a key
tool. But there are limits to what technology can do, reports Jonathan
It is one of the rare issues
uniting politicians, the private sector and organizations with a cause. All
are unanimous in their agreement that corruption exacerbates poverty,
stifles investment and prevents many economies from reaching their
potential, and that unfortunately it is a problem rooted more deeply in Asia
than other parts of the world.
IT seems destined to prove one
of the key tactical tools in the battle against graft. Recent years have
seen a surge in the deployment of solutions aimed specifically at improving
transparency and governance, mainly in the public sector. Donors such as the
United States Agency for International Development (USAID) have made
technology a central pillar of their corruption-fighting programmes.
A bright light
IT attacks fraud "by
shining a bright light upon institutional processes", providing a clear
view of transactions, improving public access to information, and promoting
accountability through the strengthening of the links among geographically
disparate systems, USAID notes in a recent report.
The Asian Development Bank (ADB)
agrees, commenting in another study that a region-wide e-government rollout
could take a bite out of the black market by "improving the enforcement
of rules, lessening the discretion of officials, and increasing
transparency." There are certainly a number of success stories that
seem to endorse these beliefs.
Authorities in the South Korean
capital Seoul have tackled procurement and permit-related vice through the
implementation of an online service that allows citizens and companies to
monitor the status of applications or appeals in real time.
Hong Kong's powerful Independent
Commission Against Corruption has taken its fight to the streets and
boardrooms by introducing a web-based advisory service for companies wanting
to draw up anti-corruption policies or seminars.
In the Philippines, a US-backed
"Transparent Accountable Governance" project created an extensive
web portal that unites corruption-fighting data with surveys and case
updates, and is widely credited with raising public awareness of
But tougher tests of the
potential contributions of IT in stamping out suspect practices are emerging
through the region's revenue departments. Asia was the only region in a
recent Transparency International survey where taxation was cited among the
most graft-ridden sectors, with the public registering a "significant
level of concern" about the integrity of tax authorities.
The threat of tax-related fraud
comes from both officials and taxpayers seeking to reduce their obligation
and is particularly acute as it reduces the flow of revenue to state
coffers, hampering the government's ability to fund future transparency
initiatives. Thailand's National Counter Corruption Commission estimates
corruption shaves US$25 million from the state budget each year, while
according to the United Nations Development Program in the Philippines, the
figure is US$1.8 billion.
In Indonesia, where a 2004 audit
of government agencies unearthed fraudulent transactions worth over US$18
billion, tax authorities are breaking out the big guns. The country's Tax
Directorate has embarked on a modernization drive that has had an impact on
every corner of the organization, linking distant offices, automating
procedures and moving interaction with taxpayers online. The shift has
required massive infrastructure investments, including a new data centre,
storage area networks and disaster recovery facilities. But officials at the
directorate believe they have no alternative. "We have more than 300
district offices and contribute more than 73 per cent of the state
budget," says Rafianto Moesharsono, head of support and database
division, Tax Directorate of Indonesia. "The only solution to our
problems is complete integration and the unification of information on
taxpayers through the development of the IT system."
One of the most important
elements of the new administration system is workflow technology, which
Rafianto says enables the department to better track the activities of its
officers and enables the automatic generation and storage of penalty and
incident reports. The end goal of the process is to eliminate opportunities
for fraud and to build the amount of data available to taxpayers. Already
implemented in major centres like Jakarta and Batam, the workflow techniques
will be rolled out to district tax offices nation-wide by 2008, Rafianto
"Our compliance is very low
compared to Singapore and Malaysia, and we're struggling to raise
taxpayers," he explains. "We're creating a net that can catch
fish. Eventually it'll be the system controlling people and not people
controlling themselves. People tend to be subjective."
A single window
Since 2003, Rafianto has focused
on a mobility strategy designed to cement ties between the directorate's
central office in Jakarta and employees throughout the archipelago. It is
equipping tax officers in remote locations with PDAs and recently
purchased a data centre application acceleration solution from vendor
Juniper Networks that bolsters the speed and security with which information
on taxpayers is retrieved from the field.
Consistent communication and
reporting between auditors and the head office makes it more difficult for
taxpayers to "approach" officers with illicit officers, Rafianto
says. In addition, mobility has smoothed the audit process considerably and
created a single window of information for the directorate's field
"Auditors have to access
the activity of a company throughout Indonesia. Before we had this system,
they had to order the hard copy of forms from perhaps 30 district offices,
which could take months," Rafianto explains. "Now this data can be
obtained almost instantly." The implementation of cutting-edge
solutions has also forced the directorate to confront new challenges,
including techno phobic attitudes among some older workers, creaking telecom
infrastructure, and security and access concerns.
"We have problems with
authority and access management," Rafianto admits. "Tax data is
very sensitive in Indonesia, and if information about one important person
goes public, who knows what could happen. That's why security is our
foremost concern. With ease of access to information come risks."
But he says the directorate has
clearly seen collection rise since it launched its modernization programme,
and technology will remain central to the agency's struggle. He says:
"The less that taxpayers meet tax officers, the better, as there's no
friction and no self-interest ... that's the goal. The other point is to
treat taxpayers fairly. There's a system, not people, that will decide how
much tax you have to pay."
The cultural factor
Throwing IT at the fraud and
loss problem seems to have worked at Thailand's Revenue Department. Thanks
partially to rapid uptake of an online tax filing system, the department has
exceeded its targets in recent years. Technology has also helped the Bureau
of Inland Revenue of the Philippines to reverse the plunging collection
figures seen in the late 1990s through an overhaul of its data warehouse
administration and analytics functions.
"With IT, the situation in
the Philippines is improving," says Richard Mills, a Manila-based
outsourcing expert and director of recruitment consultancy Chalre
Associates. "It makes a tremendous difference in areas like
procurement, where there's
now an information trail and the government is forced to put the terms of
Technology "has become a
trendy thing for officials in the region," Mills adds. "It pushes
the (good governance) process forward and when agencies resist IT enablement
people ask why."
But for all the indications IT
could be transparency's best friend, new software and servers alone can't
clean out the dark corners of an
enterprise or government. In fact, according to an ADB report, technology
can sometimes facilitate bad behaviour. While the "computerisation"
of an organisation can convince some staff members to cease questionable
behaviour, it can create "new sources of corrupt income" for IT
professionals clued-in enough to manipulate the new systems.
"In a sense, [IT] permits
an inter-generational shift in corruption and rent seeking," the report
says. More important than any technological investment is broader and deeper
reform that opens new lines of dialogue between citizens, businesses, and
government officials, promotes clear rules and procedures across the board,
and addresses the poverty endemic to some countries in the region, the ADB
Mills supports this view, noting
any final victory against corruption will be won on the cultural as opposed
to the technological front. He says: "There needs to be a fear factor,
a realisation that if someone is caught [for corruption] they'll be
punished. In emerging countries, the perception is still that people can be
caught but the charges never seem to stick ... the real action needs to come
from the legal and enforcement side."
Scandals in Singapore
* China Aviation Oil: The
Singapore-listed jet fuel trader accumulated debts totalling US$550 million
and was on the brink of bankruptcy following a financial scandal,
Singapore's biggest in a decade, involving former chief executive Chen
Jiulin making false and misleading financial statements. The losses were
concealed from regulators and shareholders until late 2004 when CAO sought
court protection from creditors.
* National Kidney Foundation:
Lack of governance at Singapore's largest charitable organisation led to a
misappropriation of funds by former chief executive TT Durai. Donations,
which could have gone towards treating patients, were instead used to fund
Durai's personal expenses and bonuses. Durai is facing a series of
corruption charges filed by the reformed NKF board.
* CrimsonLogic: Velusamy
Mathivanan, former chief executive of the government-linked company,
together with several managers, has been charged in court for bribing the
former IT head of Carrefour in exchange for recommending that the
supermarket award an IT project to CrimsonLogic.
* Citiraya Industries: Several
employees of the electronics waste recycler were jailed over a US$50 million
corruption scandal that involved accepting bribes, falsifying accounts and
selling rejected computer chips on the international black market.
* Amtek Engineering,
Asiatravel.com Holdings: Lee Ah Bee, founder and former executive chairman
of Singapore-listed Amtek Engineering, and Joanna Yeo, former executive
director of Asiatravel.com Holdings, were both found guilty of insider
trading in 2005.
Jonathan Hopfner is a
contributing writer for MIS Asia.
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