OECD 2016 Recommendation of the Council for Development Cooperation Actors on Managing the Risk of Corruption

Norway is committed to the OECD 2016 Recommendation of the Council for Development Cooperation Actors on Managing the Risk of Corruption.

Completion Status:
Partially fulfilled

Commitment filtering:

Specific:yes

This commitment can be considered specific because it refers to a concrete initiative (the OECD 2016 Recommendation of the Council for Development Cooperation Actors on Managing the Risk of Corruption). It could have been more specific regarding what Norway’s commitment to this initiative implies.

Measurable:yes

As it is formulated, the commitment is measurable in terms of assessing whether Norway implemented all the OECD 2016 recommendations.



Last updated: 30 August 2022
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Evaluation:

The OECD 2016 Recommendation of the Council for Development Cooperation Actors on Managing the Risk of Corruption includes several measures to manage and respond to risks and incidents of corruption in development co-operation.[1] Each has its own specificities for how it should be implemented, the monitoring of which is beyond the scope of this exercise. Therefore our monitoring considers each aspect in its general sense and its implementation status in Norway:

Code of conduct or equivalent
One of the principles central to Norway’s Ministry of Foreign Affairs (MFA) is zero tolerance of financial irregularities and other misuse of ministry funds. Examples of financial irregularities include corruption, embezzlement, misuse of funds, fraud, theft, accounting violations, favouritism or nepotism, or other abuse of position involving public funds. The zero tolerance policy is explained in the document Zero tolerance of financial irregularities in practice.[2] This principle must be observed by all employees in the Foreign Service, suppliers of goods and services, and organisations and others that manage ministry funds.[3] In addition, there are the Guidelines for dealing with suspected financial irregularities in the Foreign Service.[4] Norad requires its grant recipients to adhere to its ethical guidelines in carrying out their activities, including the obligation to combat corruption and other misuse of aid funds.[5]

Ethics or anti-corruption assistance and advisory services
No evidence was found for assistance or advisory services provided by Norad or Norway’s Ministry of Foreign Affairs on ethics or anti-corruption. Norway’s anti-corruption work in ODA is more focused on enforcing, warning and investigation, than advising.

Training and awareness raising on anti-corruption

There is mandatory training in grant management and the zero tolerance policy. In addition, between 2010 and 2019, Norad and the Ministry of Foreign Affairs turned to the U4 Anti-Corruption Resource Centre to develop guidelines for staff and to hold training workshops at embassies.[6]

High level of auditing and internal investigation

Norad has an Internal Audit and Investigations Unit that provides risk-based and objective confirmations, advice and insight, and deals with cases of suspected financial irregularities.[7] The unit reports to the Ministry of Foreign Affairs. The ministry also has a Foreign Service Control Unit, created in 2007, which leads on cases breaching Foreign Service rules and those of financial irregularities, and oversees cases breaching rules in subordinate agencies. The unit’s responsibilities include following up reports of deviations from grant agreements and other matters relating to financial irregularities in the Foreign Service.

Active and systematic assessment and management of corruption risks

In response to Norway’s zero tolerance to corruption, the Foreign Service Control Unit was also created to ensure that appropriate procedures, systems and routines are established and followed for all funds under the Ministry of Foreign Affairs.[8] The unit is the focal point for cases of misuse of funds and reports to the Secretary General. In addition, and on request from the ministry, Norad conducts grant management reviews of selected embassies, which include results and risk management. These focus on compliance with rules and procedures, as well as on the quality of the assessments made by the embassies.[9]

Measures to prevent and detect corruption enshrined in Overseas Development Assistance (ODA) contracts

There have been efforts to address the zero tolerance policy in contractual agreements and in the strengthening of processes. Yet, according to Norad’s evaluation of anti-corruption efforts, the new contractual provisions have not led to changes in practice.[10] However, those efforts seem to be more about contractual agreements on the requirements with which delivery partners must comply, rather than putting in place measures enshrined in ODA contracts to prevent and detect corruption.

Reporting and whistleblowing mechanisms

Norad has a whistleblowing channel through which Internal Audit and Investigations manages cases related to suspicion of financial irregularities within Norad’s grant management and alerts of harassment by Norad’s partners.[11] Norad’s Internal Audit and Investigations can be reached by email or through an online form, with the option to remain anonymous in both cases. In January 2022, development  of a new external notification channel began, operated by Ernst & Young AS, following EU regulations. Once in force, this external channel could be used for referrals or suspicion of fraud and other irregularities.[12] In addition, the Ministry of Foreign Affairs has its own whistleblowing mechanism for reporting unethical behaviour and financial irregularities related to its grants.[13]

Sanctioning regime

In cases of misused funds, the Ministry of Foreign Affairs has the power to suspend payment of all or part of the grant, terminate the agreement, and claim repayment of all or part of the grant.[14] As a rule, misused funds must be repaid. Part of the sanctioning regime applied by the ministry is to report the case to the police if it is likely that a criminal offence has been committed. The ministry points out that the type or severity of the sanction should be proportional to the irregularity and the evidence found for the case. It also emphasizes that the purpose of the response should not be to punish the recipient. Another possible response is to make a claim for compensation after a proper assessment of the situation.

Joint responses to corruption

The document Zero tolerance and financial irregularities in practice includes a section on cooperation with other donors in cases where Norway is not the only funding donor.[15] As a first step, the rule is to inform all donors when financial irregularities are suspected, as well as to encourage other donors to share information. If several donors are affected by the misuse of funds, the approach is to try to find a common and coordinated response without compromising Norway’s zero tolerance of financial irregularities.

Take into consideration the risks posed by the environment of operation

No evidence was found on this issue.

 

Challenges to effective commitment implementation
The main challenge to the effective implementation of this commitment is that there is no strategy or concrete activity plan to implement the OECD 2016 recommendation on managing the risk of corruption.

 

Opportunities to accelerate commitment implementation
Norway’s extensive experience as an international player supporting development, conflict resolution and peace processes in several countries gives it rich knowledge to draw from in the design of feasible, realistic and tailored anti-corruption support.

 

Recommendations
  • Establish mechanisms to detect and prevent loopholes in ODA contracts that might lead to abuse and corrupt practices.
  • Promote learning and advisory initiatives to support developing countries in empowering themselves to create effective strategies and policies to combat corruption.
  • Consider the reality and characteristics of the context in which developing countries try to combat corruption, to ensure effective and feasible anti-corruption support.

[1] Organisation for Economic Co-operation and Development (OECD), Recommendation of the Council for Development Co-operation Actors on Managing the Risk of Corruption, https://www.oecd.org/corruption/anti-bribery/Recommendation-Development-Cooperation-Corruption.pdf

[2] Norwegian Ministry of Foreign Affairs, Zero tolerance and financial irregularities in practice, https://www.regjeringen.no/en/dep/ud/about_mfa/zero_tolerance/id2623676/

[3] Norwegian Ministry of Foreign Affairs, Report on cases of financial irregularities in 2020, https://www.regjeringen.no/en/dokumenter/irregularities_2020/id2835788/

[4] Norwegian Ministry of Foreign Affairs, Guidelines for dealing with suspected financial irregularities in the Foreign Service, https://www.regjeringen.no/en/dep/ud/about_mfa/dealing_irregularities/id2638099/

[5] Norwegian Agency for Development Cooperation (Norad), Ethical guidelines – Guide for Norad’s grant recipients, https://www.norad.no/globalassets/filer-2015/sivsa/ethical-guidelines—guide-for-norads-grant-recipients.pdf?id=22093

[6] Norwegian Agency for Development Cooperation (Norad), Evaluation of Norway’s Anti-corruption Efforts as Part of its Development Policy and Assistance, https://www.norad.no/globalassets/publikasjoner/publikasjoner-2020/evaluering/report-5-2020-evaluation-of-norway-anti-corruption-efforts-as-part-of-its-development-policy-and-assistance-main-report.pdf

[7] Norwegian Agency for Development Cooperation (Norad), Internal Audit and Investigations, https://www.norad.no/en/about-norad/employees/internal-audit-and-investigations/

[8] Organisation for Economic Co-operation and Development (OECD), OECD DAC Peer Review of Norway 2019, https://www.oecd.org/dac/peer-reviews/Norway%202019%20Memorandum.pdf

[9] OECD DAC Peer Review of Norway 2019.

[10] Norwegian Agency for Development Cooperation (Norad), Evaluation of Norway’s Anti-corruption Efforts as Part of its Development Policy and Assistance, https://www.norad.no/globalassets/publikasjoner/publikasjoner-2020/evaluering/report-5-2020-evaluation-of-norway-anti-corruption-efforts-as-part-of-its-development-policy-and-assistance-main-report.pdf

[11] Norwegian Agency for Development Cooperation (Norad), Norad’s Whistleblowing channel, https://www.norad.no/en/front/about-norad/whistleblowing/

[12] Ibid.

[13] Norwegian Ministry of Foreign Affairs, Whistleblowing in the Foreign Service, https://www.regjeringen.no/en/topics/foreign-affairs/international-law/mfa_whistleblowing/id495009/

[14] Norwegian Ministry of Foreign Affairs, Zero tolerance and financial irregularities in practice, https://www.regjeringen.no/en/dep/ud/about_mfa/zero_tolerance/id2623676/

[15] Ibid.

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