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May I persuade you to be honest?

Among the time-honored traditions of Brazil’s Carnival has been the red carpet treatment private companies have given to government VIPs. Airline tickets, hotels, lavish meals and luxury seats for the famous Carnival parades have long been a reward for holding high government office.

But the party is over. Last year, Brazil’s Public Ethics Commission ruled that government officials could no longer accept such gifts from private firms that have interests in government policies and procurement. In the eyes of the commission, such perks create a potential conflict of interest.

The ruling created quite a stir. “The officials had already been invited, and then they were disinvited,” recalled Commission President João Geraldo Piquet Carneiro at a seminar held at IDB headquarters in March. A lot of very powerful people were very unhappy. But the general public was delighted: A newspaper survey found that the commission’s move received a 98 percent approval rating.

“Brazilians love Carnival,” said Piquet, “but they don’t like seeing their public officials getting special treatment.”

The commission’s rulings do not usually get so much attention. But in the brief period since it was created in 1999, the commission has already produced a change of official culture in the highest echelons of Brazil’s civil service. It has also attracted international attention for its unorthodox approach to combating one of the most pervasive threats to efficient and equitable government in Latin American and the Caribbean.

The Brazilian initiative has also won the backing of the IDB, whose Board of Executive Directors next month will consider a $6 million loan to strengthen the commission, extend its code of conduct to all 193 federal executive agencies, and study the feasibility of replicating this approach in other countries (see link at right to read a profile of the project). “This will be the first IDB innovation loan to support ethics in the public sector,” says Betty Rice, IDB team leader for the project.

From rules to action. The creation of the Public Ethics Commission followed a series of governmental reform efforts dating back to 1935, according to Piquet. “A country as big and complex as Brazil cannot have a government that is inefficient,” he said. Despite numerous setbacks, including the period during which Brazil was ruled by military dictatorships, Piquet believes that considerable progress has been made in increasing efficiency and stamping out corruption. He cites the contributions of such solid institutions as the National Economic Development Bank and Banco do Brasil as evidence.

Reform efforts went into high gear following the impeachment for corruption of President Fernando Collor de Mello in 1992, said Piquet. At that point, public concern with government moved beyond issues of efficiency to focus more on corruption and ethical standards.

But problems persisted. Despite many new rules and the creation of new anti-corruption agencies and committees, there was still no effective mechanism for informing public officials about their responsibilities and translating the rules into results.

Taking a different tack, the administration of Fernando Henrique Cardoso decided to de-emphasize rules and harsh penalties. Instead, the goal of the new Public Ethics Commission would be to create a climate where ethical behavior was recognized as the norm. The IDB participated from the beginning, hiring consultants to study models from other countries, among them the United States and Australia, and providing advice on the use of polling to generate public interest and support.

Top officials targeted. The commission started out by restricting its purview to the top echelons of the Brazilian bureaucracy, some 700 senior officials in all. The argument for this approach was that it would have been unrealistic and ultimately self-defeating to attempt to affect the behavior of all of the country’s 500,000 civil servants.

After Cardoso approved a new code of ethics in August 2000, the six commission members (none of whom receive a salary) began contacting each of the 700 officials to explain the code of conduct and the requirements for voluntary compliance. The officials were told that, although the commission has no enforcement powers, they would have to adhere to the code if they wish to remain in government.

In each interview, the officials were required to present a detailed picture of their financial situations. “In the beginning, this was a very delicate mission,” said Piquet. “Reactions were very strong. Some of the officials are people of great wealth, and were very afraid to make disclosures, even on a confidential basis.”

At first, the officials also didn’t like hearing that they had to forgo certain kinds of investments, particularly speculative holdings in areas sensitive to government policy. But the talks took on a friendlier tone as the officials began to understand that the commission’s job is to help solve problems, not just say no. For example, if an official already has sensitive investments, the commission can work out an arrangement where he can keep his holdings and still comply with the code. The commission can even come to an official’s defense when false accusations are made against him.

Even the lack of enforcement power has an advantage. When an ethical breech does occur, officials from the commission simply meet with the public official in question and urge him or her to take the necessary corrective measures. This often results in a quicker resolution to the problem than the traditional approach of disciplinary and court proceedings, which can drag on for years.

Elections and procurement. Brazil’s current presidential campaign has proven itself a fertile arena for refining ethical standards. Based on the general provisions of the code ethics, the commission drew up detailed standards to guide civil servants’ participation in the electoral process. For example, a public official can engage in partisan politics, but he cannot use public resources or attend a political event under the pretext of conducting official business. Nor can he use official transportation to reach a political event, or engage in the managerial aspects of the campaign, such as handling money.

The largest ongoing ethical concern relates to the government procurement process. “The government carries out huge acquisitions,” says Piquet, “and the ethical problems can be truly impressive.”

The commission’s strategy in procurement is to identify “moments of potential corruption,” and to eliminate them. For example, acquisition projects are reviewed as they progress, and payments are made accordingly. Every time progress is evaluated, a potential “moment“ for corruption exists, according to Piquet. So the commission is trying to ensure that several people from different agencies are involved in these assessments, instead of just one.

Although the results of the commission’s work are difficult to measure, Piquet has seen a noticeable change in the willingness of senior civil servants to confront ethical problems and the creation of a culture of prevention that is helping to reduce corruption. However, he doesn’t take these accomplishments for granted. A great deal of the commission’s success has been due to strong political backing from the current administration, and the future will depend on the support it receives from the new government after the elections later this year.

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