Welcome Remarks at the International Anticorruption Day Celebration - Takehiko Nakao | Asian Development Bank

Welcome Remarks at the International Anticorruption Day Celebration - Takehiko Nakao

Speech | 8 December 2017

Welcome Remarks by ADB President Takehiko Nakao at the International Anticorruption Day Celebration, 8 December 2017, ADB Headquarters, Manila, Philippines

Introduction

Distinguished guests, colleagues both here at ADB Headquarters and in our resident missions, ladies and gentlemen: Good afternoon and welcome to this year’s celebration of International Anticorruption Day.

ADB continues to lead the way in Asia and the Pacific in supporting global efforts to tackle corruption, money laundering, and tax evasion. It is estimated that globally anywhere from $800 billion to $2 trillion is lost every year due to these illicit activities. These are funds that could instead be used by developing countries to achieve their Sustainable Development Goal (SDG) commitments.

Corruption, money laundering, and tax evasion damage economic development as well as fairness among people. But, in addition, there is growing consensus that these activities are threats to the basic fabric of society, including safety and security, and to political stability. Safety, security, and political stability are essential conditions for ADB and other  partners to effectively implement projects and programs for development.

We are privileged to have with us today two renowned anticorruption champions, Dr. Nikos Passas and Mr. Sayed Ikram Afzali, to deliver keynote addresses on this topic. Thank you for coming all the way to Manila.

Corruption – A threat to safety and security

Ladies and gentlemen, according to the Organisation for Economic Co-operation and Development (OECD) and the International Criminal Police Organization (INTERPOL), corruption breeds organized crime and terrorism. Corrupt individuals and terrorists take advantage of grey areas and gaps in legal and financial systems. These grey areas and gaps provide avenues for money laundering, tax evasion, and illicit financial flows, and allow criminals and terrorist organizations the means to operate.

The United Nations Security Council in several of its resolutions has recognized that terrorist groups function like international criminal syndicates in terms of generating funds and using money laundering. Corruption, money laundering, and tax evasion cut across borders and affect even the most developed countries. However, they are most harmful to developing countries and are particularly devastating for states considered fragile and conflict-affected, several of which are in Asia and the Pacific.

If corruption, money laundering, and tax evasion are allowed to take root, there is no question that we will live in a world that is less safe and secure.

"ADB continues to lead the way in Asia and the Pacific in supporting global efforts to tackle corruption, money laundering, and tax evasion."

ADB’s commitment and role

How is ADB supporting its developing member countries (DMCs) to address the threat of corruption, money laundering, and tax evasion?

First, ADB has adhered to zero-tolerance policies to prevent corrupt activities from negatively impacting the delivery of our projects and programs in our DMCs. More recently, in 2015, in our sovereign operations, we introduced new rules to ensure that integrity due diligence is conducted on all private sector participants such as contractors and commercial co-financiers. In the same year, in our nonsovereign operations, we revised the rules to tighten controls to combat corruption, money laundering, and terrorist financing. I ask all ADB staff to continue to rigorously and seriously apply these important rules.

Second, fighting corruption, money laundering, tax evasion, and terrorist financing cannot be achieved by any single institution. It requires all countries to cooperate to close the loopholes and grey areas where illicit activities can thrive and proliferate. With this understanding, ADB works closely with other international organizations on these issues. Besides being an observer of the Financial Action Task Force, ADB is an observer of the Asia/Pacific Group on Money Laundering (APG) and the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG). ADB also actively supports the Global Forum on Transparency and Exchange of Information for Tax Purposes and helps our DMCs join this forum and benefit from the automatic exchange of tax information between countries.

Third, to further assist our DMCs in tax transparency and integrity, ADB’s Board of Directors approved in 2016 an update to our Anticorruption Policy. The Policy expands ADB’s mandate to include the prevention of cross-border tax evasion (in addition to anticorruption and money laundering). Based on this updated policy, we are increasing our technical assistance to DMCs for tax transparency and integrity. For example, this week we approved a $2 million regional technical assistance grant that will enhance the capacity of DMCs to meet international standards for tax transparency, counter tax evasion, and protect themselves against aggressive forms of tax planning. This technical assistance will be delivered in partnership with the OECD, the International Monetary Fund, and the Pacific Financial Technical Assistance Centre, among others.

Fourth, we have started new initiatives for mobilizing more resources for capacity building efforts by our DMCs. In July this year, ADB established the Domestic Resource Mobilization Trust Fund. The Trust Fund will support DMCs in closing tax loopholes in their financial sectors, enhancing tax compliance, and developing transparent and efficient tax administration. The Trust Fund is currently supported by the Government of Japan. We are encouraging other bilateral and multilateral partners to contribute to this Trust Fund.

Fifth, ADB is now considering a new long-term Strategy 2030, which will strengthen our support in the areas of corruption, money laundering, and tax evasion. The main focus of this new strategy is to support DMCs in achieving the SDGs. As you know, the SDGs are about poverty reduction, health, education, gender, and the environment. But the SDGs also include strengthening governance. Goal 16 of the SDGs calls for the promotion of peaceful and inclusive societies, which is necessary for sustainable development. Goal 17 is about helping developing countries strengthen domestic resource mobilization. ADB will increase support in all of these areas.

"We have a professional obligation to fight corruption, money laundering, and other illicit activities. This fight is necessary to advance economic development in the Asia and Pacific region and to promote social equity. "

Conclusion

Ladies and gentlemen, we have a professional obligation to fight corruption, money laundering, and other illicit activities. This fight is necessary to advance economic development in the Asia and Pacific region and to promote social equity. But it is also essential for our even more basic needs, that is security and safety.

I ask all ADB staff to be champions in this fight. In particular, I strongly urge Vice Presidents, Director Generals, and Country Directors to be wholeheartedly and proactively engaged in it. Action by each of us and by all of us to combat corruption, money laundering, and other illicit activities is what our anticorruption campaign, iACT, stands for.

Thank you.