Архив за етикет: anti corruption

Money for Medals: Inside the Performance-Driven Funding of U.S. Olympic Teams

Every year, the United States Olympic Committee gives out about $50 million to more than 40 national sport federations to help athletes in their medal quests. The distribution has become highly tactical: Under a pay-for-performance model championed by new Chief Executive Officer Scott Blackmun, the national sport-governing bodies have to make their case for funding based on how the money will turn medal hopefuls into medalists=

By David Ingold and Eben Novy-Williams, Bloomberg
August 5, 2016
Bloomberg News looked at the past 17 years of USOC tax filings to shed light on the direct link between the funding and winning at the Games.

Teams that medal the most get a lot of money

The five sports that have won the most medals since 2004 – swimming, track & field, ski & snowboard, gymnastics and speed skating – have also received the most money from the USOC, some $248 million in all when adjusted for inflation. Whether money begets medals or the other way around, the relationship is strong.

High-profile sports with few medal opportunities also get big dollars

With tons of events, track and field and swimming have many more opportunities to medal, making them a relatively cost-effective investment for the USOC. But team sports such as ice hockey, soccer, and basketball also get a lot of money, often more heavily weighted toward the women’s teams. Giving travel stipends to an NHL player on the Olympic team doesn’t change the team’s medal chances, though it may for the women. Even though they count only for a pair of medal opportunities apiece, it’s expensive to run a high-profile, 20-person-roster sport – and these are sports that draw a lot of American eyeballs.

The USOC increases its investment in proven winners

Last year gymnastics, shooting, and bobsled all received more than double the funding they got in 1999, a growth that’s come in step with better performance.

When a sport struggles, it gets less

Synchronized swimming, weightlifting, and canoe/kayak haven’t won a single medal in the last two Olympic cycles, and the USOC has been shrinking its support commensurately. Synchronized swimming’s 2015 funding was its lowest in at least 17 years. Hope for the sport rests with Anita Alvarez and Mariya Korleva, though they’re longshots in the duet against the Russians and the Chinese; the US didn’t qualify in the team competition.

Some sports may need to prove themselves in Rio to keep the funding flowing

After winning medals in the last three Olympics, American sailors and equestrians failed to reach the podium in London. Both sports are expensive to sponsor – boats and horses cost a lot more than skis and table tennis paddles – and the U.S. has a long history of success in both, which argues for continued funding. But the USOC decreased its allocations to these sports last year and could do so again, depending what happens in Rio.

The USOC has seemingly lost interest in other sports

The USOC says that in some sports, the country’s medal chances are nonexistent, and if giving money won’t help, the funding goes elsewhere. For example, a U.S. handball team hasn’t qualified for the Olympics since the 1996 games in Atlanta, when the U.S. received automatic entries as the host nation. Handball gets some money for organizational development and administration, but nothing for training or competition.

Sometimes, it takes only one prodigy to turn the tap back on

The U.S. hasn’t won a medal in the Modern Pentathlon (fencing, swimming, show jumping, shooting, running) since Emily deRiel won silver in 2000. But now it has a contender in 24-year-old Margaux Isaksen, who finished fourth at the London games. Funding for the sport has been rising right along with Isaksen’s star, up to $589,000 this year, more than double what the NGB received in 2009. Insiders refer to this as the „Margaux Isaksen Effect.”

The USOC uses money to seed future Olympic sports

The USOC funds more than just Olympic sports. It gives money to some sports to represent the U.S. in the Pan-Am Games. It also ramps up funding for new Olympic sports such as rugby — which returns to the Games this year for the first time since 1924. What’s next? Softball and karate, for example, which still get some funding, were among the sports added for the 2020 Games in Tokyo.

Olympic sports, dollar for dollar

If history is any guide, track & field will yield the highest medal return on the USOC’s investment in Rio.

There’s No Rule Book for Eradicating Corruption

U.K. Prime Minister David Cameron’s anti-corruption summit coincided with the release of an International Monetary Fund staff paper that explains why corruption is bad for economies and suggests ways to eradicate it. But neither these recommendations nor those expressed at the forum will do much to fix the developing world’s problems. That would require much more than better anti-graft laws and dogged enforcement.

At the forum, much was made of international efforts to recover stolen wealth, and of transparency in general. Cameron hopes to erase London’s reputation as a haven for corrupt fortunes. He wants all foreign companies that own real estate in the U.K.  to declare their assets in a public register. I doubt that’ll be very useful: In most cases, such declarations won’t contain anything but a list of London properties, and the names of beneficiary owners either won’t mean anything to anyone or will belong to people with legitimate businesses.

Asset recovery is tricky: For starters, the owners must be sentenced by a court of law. In corrupt countries, however, courts are among the most rotten institutions. The European Union has been forced to remove associates of former Ukrainian President Viktor Yanukovych from its sanctions lists after the Ukrainian justice system failed to nab them.

The IMF’s „mitigating strategies“ for corruption also center on transparency, enhancing the rule of law, building institutions and trying patiently to change social norms in corrupt societies. These are all well-known recommendations that some of the most corrupt regimes in the world have mockingly applied. Russia has a transparent, electronic government procurement system that would be the envy of many a country if the „right“ companies weren’t winning all the tenders, anyway. Ukraine has not one but three bodies charged with fighting graft – the National Anti-Corruption bureau, the National Agency for Corruption Prevention and the Specialized Anti-Corruption Prosecutor’s Office, but it’s still so corrupt that the IMF is withholding the latest tranche of its bailout package.

Kakha Bendukidze, whose reforms took the nation of Georgia from the 124th place in Transparency International’s corruption perceptions index in 2003 to 50th place today, recalled in an interview with Ukrainian journalist Vladimir Fedorin that he once attended a RAND Corporation-organized U.S.-Russian business forum, attended by Donald Rumsfeld and Paul O’Neil, both of whom had leading roles in George W. Bush’s administration.

„Once a Russian participant was complaining about corruption. So Rumsfeld said to that: ‘I think there’s a simple way to combat corruption – you need to pass a law to ban corruption.’ All the Russian participants were rolling around laughing, and the Americans were nodding their heads earnestly: ‘Yes, yes.'“

It may not have happened quite like that, but Bendukidze, known for his sharp wit, seized on an important issue: Western experts stress the institutional, legal and enforcement side, as if unaware that laws can be ignored, institutions subverted and enforcers can become the problem rather than the solution.

Bendukidze’s own solution was not of the kind recommended at international conferences or in IMF papers. „Liberalization and deregulation helped destroy corruption, and the destruction of corruption, in turn, helped liberalization and deregulation,“ was how he described the process.

Bendukidze, who paid out millions of dollars in bribes while building a huge fortune in Russia, knew all the common schemes and many of the players when President Mikheil Saakashvili of Georgia appointed him minister for economic reform in 2004. Saakashvili had the biggest grafters jailed without much due process and forced others to hand most of their fortunes to the state. The process wasn’t grounded in legality by Western standards but, coupled with Bendukidze’s reductionist approach to government, it worked remarkably well.

Bendukidze’s theory was that to remove corruption, a government had to get rid of departments that it knew it could do without and reduce contact between citizens and government to a minimum. Thus, he closed down Georgia’s antitrust committee, which, he said, was doing little except taking bribes, and disbanded the notoriously venal traffic police. No one missed either, and monopolization or traffic chaos did not ensue. Georgian culture changed quickly, and the country didn’t slip in the Transparency rankings even after Bendukidze and Saakashvili were driven out of office. Georgia is now the cleanest country in the former Soviet bloc, but no other nation – including post-revolutionary Ukraine – has had the courage to adopt this draconian approach.

The economist Hernando De Soto regarded excessive bureaucracy as the root cause of corruption in the developing world. In post-Soviet states, some of the world’s most corrupt, the bureaucracy is mostly inherited from a time when cheating the state was a national pastime. It has been strengthened and streamlined to keep out the unconnected. So in these countries, corruption is both a traditional part of the social fabric and a mainstay of the regime. The only way to beat it is to take the reins out of the bureaucrats’ hands, depriving them of any opportunity to collect a rent.

The IMF paper contains exactly three paragraphs about eliminating excessive regulation, but one of these stresses the importance of technology (electronic procurement again), and another warns that deregulation can „pose its own risks, particularly where the institutional framework is underdeveloped.“ These risks, according to the paper, are associated with the monopolies created by the fast post-Soviet privatization. The oligarchs who put together these conglomerates are pretty good at government capture. Bendukidze’s approach to them was „play by the new rules or rot in jail,“ but that can’t be part of any „institutional framework.“

Eradicating corruption in countries where it is the way of life can’t be achieved by following a rule book. Bendukidze’s method probably isn’t the only possible one, but no useful recipe can be based solely on recommendations from law-abiding, orderly Western societies: Post-Communist states, and probably many in Africa and Asia, have deep traditions of subverting and mocking the systems and institutions of power.

According to the IMF, corruption costs the world $1.5 trillion to $2 trillion a year, or 2 percent of global economic output, mainly by undermining incentives for taxpayers to share their incomes with governments, increasing costs and undermining the quality of public spending, and stifling private investment and productivity. The losses mostly occur in the countries that can least afford them. The West cannot do much to help, either in terms of enforcement or by offering advice. It’s up to each corrupt nation to rip up its bureaucracy and chase away its architects.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Ukraine’s Unyielding Corruption

The Ukrainian Parliament finally voted to oust Ukraine’s odious prosecutor general, Viktor Shokin, on Tuesday.

The United States and European countries that have provided aid to Ukraine had long pressed for his dismissal; in his year in office,

Mr. Shokin became a symbol of Ukraine’s deeply ingrained culture of corruption, failing to prosecute a single member of the deposed Yanukovych regime or of the current government while blocking the efforts of reform-minded deputies.

Alas, nothing is likely to change unless President Petro Poroshenko and Parliament agree to install some real corruption fighters and approve serious judicial reform.

Corruption has been pervasive in Ukraine since independence, fed by close-knit ties between politicians and oligarchs and a weak justice system. The protests in 2014 that led to the removal of President Viktor Yanukovych were largely fueled by popular fury at his monumental corruption and abuse of power. Yet his overthrow has yet to show results.

In a speech in Odessa last September, the United States ambassador, Geoffrey Pyatt, said corruption was as dangerous for Ukraine as was the Russian support for a military insurgency in eastern Ukraine. And on a visit last December,

Vice President Joseph Biden Jr. said corruption was eating Ukraine “like a cancer.” Among the examples Mr. Pyatt cited was the seizure in Britain of $23 million in illicit assets from the former Ukrainian ecology minister, Mykola Zlochevsky;

Mr. Shokin’s office, however, declared that there was no case against the minister, and the money was released.


Ukrainians protested government corruption in Kiev on Monday. Credit Sergei Supinsky/Agence France-Presse — Getty Images

In his last hours in office, Mr. Shokin dismissed the deputy prosecutor general, David Sakvarelidze, a former prosecutor in Georgia brought in by President Poroshenko to fight corruption. And before that, Mr. Shokin had systematically cleansed his office of reform-minded prosecutors.

The acting prosecutor general now is Yuriy Sevruk, a crony who can be trusted to continue Mr. Shokin’s practices.

Mr. Poroshenko, himself a product of the old system, has had his hands full with the Moscow-backed separatists in the east and unceasing political turmoil in Kiev, where Prime Minister Arseniy Yatsenyuk’s government is hanging by a thread.

In these circumstances, Mr. Poroshenko seems to have accepted continuing corruption as the price to pay for a modicum of maneuvering room. But the president, the prime minister and the Parliament must be made to understand that the International Monetary Fund and donor nations, including the United States, cannot continue to shovel money into a corrupt swamp unless the government starts shaping the democratic rule that Ukrainians demanded in their protests.

Mr. Poroshenko cannot simply allow one of Mr. Shokin’s cronies to slide into the ousted official’s tainted seat. He should immediately reinstate Mr. Sakvarelidze and begin a broad public discussion on the choice for the next prosecutor general, making clear that his mandate will be a thorough reform, and that the government will be fully behind it.