Davos optimism downplays corruption, other risks

DAVOS, Switzerland — The political, business and academic elites at the World Economic Forum expressed renewed optimism at the global economy, with more liquidity, more unity in Europe and the fiscal cliff scaled by U.S. politicians. But other risks — especially that of not doing enough to combat persistent corruption — are emerging as new threats to a fragile global economy beset by challenges.

“In my view, the mood actually bordered onto complacency,” said Axel Weber, chairman of UBS AG, Switzerland’s biggest bank, which he acknowledged has a poor image due to a series of big corruption scandals.

“I think the mood has been `good’ — too good to be true — and therefore I think some expectation management really clearly is in order at the closing session here.”

And while there was talk of restoring trust, there was less discussion of how to tackle the corruption that is undermining it.

The corruption that afflicts governments, businesses and organizations deserves more attention, says Huguette Labelle, chair of Transparency International.

“Corruption is a major issue. It feeds poverty, it seeds violence, it seeds illicit trade in drugs, in arms,” she told the forum. “If you don’t build transparency and a prevention of corruption right at the onset, once it comes into the fold and gets infiltrated, it becomes extremely difficult.”

Part of the problem is that what’s seen as corruption varies across nations and cultures and many international agencies and organizations lack the built-in accountability mechanisms that corporations have, said Joe Echevarria, CEO of the big audit firm Deloitte LLP.

“I think corruption doesn’t enter into the mindset here, outside of the fact that it takes a hit on trust,” he said in an Associated Press interview.

“There’s no hue and cry for transparency,” he added, referring to some of the non-business entities that handle billions of dollars. “No one’s out there actively looking.”

There was, however, some evidence of a hue and cry among demonstrators outside the perimeter of police and security guards. There, advocacy groups demanded that Swiss-based multinational corporations pay more attention to “corporate justice,” ethics and their impacts on developing countries.

“Why is it so difficult to have binding rules asking for more transparency?” asked Daniele Gosteli Hauser of Amnesty International in Switzerland.

At a private dinner about anti-malaria initiatives and other global public health programs, Columbia University economist and U.N. special adviser Jeffrey Sachs told participants that fighting corruption is essential.

“You can’t have transparency without accountability,” Sachs told the dinner co-hosted by the Roll Back Malaria Partnership and the Center for Global Health & Diplomacy. “It takes an effort, but it is core to the discipline of public health.”

Across the street, the Global Fund to Fight AIDS, Tuberculosis and Malaria was celebrating Germany’s decision to reinstate its donation of (euro) 200 million ($270 million) a year through 2016, a change from the country’s stance in 2011 when it held back some of its contributions to the $24 billion fund due to concerns about losses to corruption.

David Seaton, CEO of the Fluor Corp., says he sometimes wonders whether the anti-corruption task force he co-chairs for the Group of 20, the world’s largest economies, has done anything more than pay lip service to a difficult, frustrating and often confounding problem.

“We are confronted by a scourge that presents a substantial roadblock to global growth and robs economies of resources that should be utilized to improve the quality of life,” he wrote in a Davos forum blog posted Saturday.

“This is one of those challenges where failure is not an option.”