PREVENTING POLICY CAPTURE

OECD RECOMMENDATION ON PUBLIC INTEGRITY

Yukihiko Hamada
Public Sector Integrity Division
OECD

10 October 2017
 How much is a political connection worth?

Fisman, R. (2001), “Estimating the value of political connections”, American

Economic Review Vol. 91(4), 1095-1102
 Evidence from around the world

• Italy: firms with political connections result in 5.7% more

revenues on average. The benefit is even more significant (up
to 22%) in regions characterised by high public-expenditure
and corruption levels (Cingano and Pinotti, 2013).

• United States: Financial industry spending on lobbying was

positively associated with the probability of a legislator
changing positions in favour of deregulation between 1996 and
2006 (Deniz and Mishra, 2014).

• Denmark: A company’s profitability can rise significantly if a

family member is related to a local politician. (Amore and
Bennedsen, 2013).
 What is policy capture?

• Capture is the result or the process by which public

decisions over laws, regulations or policies are
consistently or repeatedly directed away from the public
interest and towards the interests of a narrow interest
group or person

• Capture escapes clear-cut legal definitions, and happens

in the grey areas between ethics and laws.

• Undue influence can even be achieved without directly

involving (and without the knowledge of) public
decision-makers, by manipulating information or by
establishing close social or emotional ties with them
 The more transparent policy decision-
making, the higher the trust in politicians
Transparency of 7

government R² = 0.7759
policymaking 6
LUX
NZL
FIN
CHE
JPN NOR
GBR SWE
NLD
IRL CAN
ESTCHL
5 AUT ISL DEU

LVA TUR USA DNK

AUS
SVN BEL
ISR
SVKMEX FRA
PRT
4 CZE ESP POL
HUN
GRC
KOR

3
ITA

0
0 1 2 3 4 5 6 7

Public trust in politicians

Source: World Economic Forum; Executive Opinion Survey 2014-2015

 A new strategic approach to integrity

• Moving from distinct frameworks to a

coherent integrity system

• Advocating a whole-of-government and

whole-of-society approach

• Recognising integrity as a cornerstone of

good governance and lever for trust
Recommendation on Public Integrity:
coherent strategy and practice
Public Integrity System

• Leadership by example
• High standards of conduct
• Developing a strategic
approach for the public
sector
• Promoting multi-level co-
operation
Culture of Public Integrity

• Engaging with the private

sector, civil society and
individuals
• Supporting an open
organisational culture
• Promoting whistleblower
protection
 The number of countries with WBP
law is increasing
14 SVK
13

12
AUS
11 BEL
HUN
10 IRE

9 KOR

8 NLD

7
JPN
6

5
CAN
NZL
4
UK
3
ISR
2 USA

0
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Challenges in providing protection to
reporting persons
– Definition of protected persons (consultants,
contractors, trainees, temporary employees,
former employees, potential employees,
volunteers?);
– Subject matter of reports (general wrongdoing
vs corruption);
– Definition of discriminatory or retaliatory
action;
– Internal vs external reporting;
– Incentives for whistle-blowers and penalties for
retaliators
 Increasing certainty about protection:
Defining what is reportable misconduct

• Clarifying the definition of “complaint”, such as for

“whistleblowing” and “serious anti-social activity”
 Types of reprisals that require WBP

100%

80%
% of surveyed OECD Countries

60%

40%

20%

0%
Dismissal, Transfer, or Change in duties Decrease of Pay, Imposing medical
suspension or reassignment benefits, awards, testing or
demotion education or examination
training
Effective Accountability

• Transparency in lobbying
• Transparency in the
financing of political parties
and election campaigns
• Managing conflict of interest
• Asset disclosure
• Internal control and risk
management
• Support evidence base with
SAIs and oversight bodies
 Principles for Transparency and Integrity in
Lobbying
• Since 2010, the number of countries that have regulated
lobbying practices have almost doubled
 Lobbying registers

Note: For Italy, the responses refer to the system put in place by the Ministry of Agriculture. For Germany, the response refers to
the public list of associations representing interests vis-à-vis the Bundestag or the Federal Government that is kept by the
President of the German Federal Parliament (Bundestag).
 Types of information that stakeholders
believed should be made publicly available
Generally no restrictions are in place (e.g. a "cooling-
off" period) to restrict legislators from engaging in
lobbying activities after they leave Parliament

100%
90%
80% 74%
70%
60%
50%
40%
30%
20% 16%
10% 5% 5%
0%
Yes, there are Yes, there are Yes, there are No, there are no
restrictions but they restrictions and they restrictions but they restrictions
are too restrictive are sufficiently are not sufficiently
restrictive restrictive

Source: OECD 2013 Survey on Lobbying for legislators

 The way forward

• Compliance and enforcement are still a challenge

• Limited measurement of effectiveness of exiting

measures
Identify relevant data, benchmarks, and indicators
in relation to financing democracy
• The broader integrity framework remains vital
Establish a whole-of-government/whole-of-society
integrity system
 Thank you for your attention
For more information on OECD experience on public integrity

www.oecd.org/gov/ethics