Fighting corruption through partnership: the Uruguayan experienceBy Verónica Gómez, Head of Audit of Processes, Uruguayan Customs Administration
In 2008, a huge corruption scandal involving officials from the public sector and representatives from the private sector shook Uruguay’s foreign trade community, as well as its international trading partners: 11 Customs officials working at Carrasco International Airport and 25 Customs brokers were found guilty of receiving and paying backhanders.
This event marked a watershed for the Uruguayan Customs Administration (DNA), publicly and starkly displaying its weaknesses as an institution. It dealt a heavy blow to the DNA’s public credibility, forcing it to take a hard look at itself, and prompting Customs brokers and the private sector in general to accept their share of responsibility for the situation, which ultimately led to the implementation of a future solution.
Following the scandal, Uruguay Customs embarked on a modernization project with integrity constituting one of the key cornerstones of its reform policy. In December 2010, the DNA commissioned a survey to capture and analyse the level of satisfaction of traders and DNA officials, as well as the perception of the wider public, about how the organization was being managed. The objective was to establish baseline levels of satisfaction, and to provide a snapshot which could be used as a starting point for assessing how Customs’ modernization project was progressing.
The first survey confirmed something which had already been suspected, namely that the institution had low trust and approval ratings from both traders and citizens, and that there was a particular lack of trust regarding its integrity. So, it became clear that enhancing the integrity of Uruguay Customs would require a thorough review and expansion of the traditional model of control. As a result thereof, the Customs administration had to address three main areas:
- Decide whether the exercise of its traditional powers of internal and external control could be complemented and expanded by other working methods;
- Innovate in terms of the tools used to foster integrity and promote a change of culture;
- Step out beyond the organization itself to create partnerships with the private sector, other State bodies and with civil society.
Two key decisions were taken: first, to draw up a work programme containing specific objectives; and second, to include an item on ‘Integrity and Transparency’ in the Customs Strategic Plan, thereby formalizing the DNA’s willingness to shape, implement and measure results in this domain. Thus, the topic of integrity was integrated into the DNA’s agenda and into its modernization project, with terms such as ‘integrity’ and ‘corruption’ becoming part of the language of the organization.
Within the strategic planning process that started in 2010, the ‘Belief System of the Customs Administration’ was established. Since its first version, the problem of corruption has been established as a strategic objective: ‘As Customs officials, we are proud of being civil servants that are professional and efficient in fulfilling our tasks, honest, and will not tolerate corruption.’
Although this process was not easy for Uruguay Customs, taking both effort and a lot of perseverance, nowadays, the word ‘ethics,’ ‘corruption’ and ‘integrity’ can be heard across the organization. In addition, the topic is referred to almost naturally today in presentations, during training events, and in exchanges between internal and external players.
Three years of intensive work resulted in the formation of a comprehensive anti-corruption programme and, at the end of 2013, all the various integrity initiatives were brought together under a special project.
Although the whole Customs administration is now committed to fighting corruption, the units that are most closely linked to this matter are: Internal Audit; Audit of Processes; Inquiries and Administrative Investigation; and the Customs Response and Intelligence Group. However, it is planned to change the structure and organization chart of the administration with a view to creating a consultancy department to be known as ‘Transparency and the Fight against Corruption,’ which will report directly to the Director General of Customs, and will be in charge of such matters.
Following WCO guidance and recommendations laid out in the ‘Declaration of the Customs Co-operation Council concerning Good Governance and Integrity in Customs’ (Revised Arusha Declaration) and in the ‘WCO Integrity Development Guide,’ Uruguay Customs developed a Code of Conduct, and courses on integrity in the civil service and on the benefits of anti-corruption practices were provided to all staff.
Last but not least, Customs reached out to the private sector, signing Memoranda of Understanding (MOUs) on Integrity and Transparency with its key stakeholders. This is one of the milestones of the steps taken by the DNA and the one which will be considered in detail in the rest of this article.
MOUs with the private sector
Reaching out to the private sector involved Customs ushering in a new era of interaction, which required conditions to be met and a common understanding to be shared among all the DNA’s stakeholders:
- The existence of a good relationship and positive dialogue between Customs and the private sector;
- The recognition that public-private collaboration is fundamental to any improvement;
- The acknowledgement that facilitation is also one of Customs’ priorities as a concomitant to control;
- The certainty that facilitation measures can only work if integrity and transparency levels are high;
- A private sector that was mature enough to accept its share of responsibility for the problem;
- A private sector which, in the midst of a period of increased Customs operations, backed business expansion and improved efficiency in all areas;
- A Customs administration that was prepared to publicly accept its organizational shortcomings and have the will to spearhead an agenda to change the situation.
In practical terms, this involved drafting a standard letter which was sent by the National Director of Customs to each association, inviting them to join the project and sign an MOU on Integrity and Transparency. A meeting was later arranged with the management team of an association, during which a senior Customs representative was tasked with personally explaining the project’s objectives, enabling any queries to be resolved on the spot.
It is important to highlight that, when promoting such MOUs, Customs was particularly careful to inform traders that subscribing to the agreement was completely voluntary, and that any agreement made was there to be kept.
However, the following must be borne in mind if a proposal of this type is to succeed: the trust and credibility of the person heading the Customs organization; the trust and credibility of the person heading an association; and the trust and credibility of the department in charge of the project.
To date, 11 associations have signed MOUs. The first one to do so was the Association of Customs Brokers. It was followed by the Chamber of Logistics, the Navigation Centre, the Association of Express Delivery Service Companies, the Association of Cargo Agents, the Chamber of Free Trade Zones, the Uruguay Chamber of International Road Transport, the Uruguayan Exporters Union, the Uruguay National Chamber of Commerce and Services, the Chamber of Duty Free Owners, and the Rice Mills Union.
Within the DNA, the Audit of Processes Unit, the Internal Audit Unit and the Customs Response and Intelligence Group (GRIA) are working collaboratively, and have the autonomy to investigate and identify acts of corruption. However, the responsibility for spearheading the delivery of the MOU project was given to the Audit of Processes Unit, which is responsible, inter alia, for monitoring the MOUs and for ensuring that existing rules are enforced by all employees, whether they are from Customs or a private entity.
In practical terms, monitoring the MOUs consists mainly of organizing and coordinating the meetings in which action plans are agreed, and then controlling the fulfilment of each of these plans.
Whoever is in charge of managing the project must have direct powers of control. Such power ensures prompt and timely intervention in the event of disclosures or alleged irregularities. Furthermore, it is advisable that the project manager also has a direct line of communication with senior management. This lends weight to decisions, and guarantees the necessary discretion and confidentiality.
All MOUs share the same features in terms of structure and content. They open with a paragraph relating to the contracting parties, which is followed by a section listing facts and statements that the parties recognize as true. The aim is for the parties to start from a realistic position and to admit their share of responsibility for the problem.
In the final part, the parties commit themselves, expressly stating what their immediate obligations will be and setting deadlines for each commitment. Although the commitments may vary from one agreement to the other, they essentially contain the following obligations:
- The DNA must draft its Code of Conduct;
- The DNA must, as part of its restructuring project, ensure that specific powers on integrity and institutional transparency are put in place;
- The private sector entity must commit to drafting or reviewing its own Code of Ethics within a specific period;
- A Joint Committee, consisting of two representatives from each institution, must be set-up and tasked with drawing up an action plan, also within a specific period;
- The Joint Committee must prepare a report, either twice a year or annually, to evaluate the implementation of the MOU.
Some features of MOU implementation
Once the MOU is signed, a Joint Committee is established, as agreed, and draws up an action plan with a view to meeting the objectives set out in the agreement. It is essential that those appointed to serve on the Committee – whether from Customs or an association – have a specific profile (a clean record) and qualities (discretion), and that they are exemplary in terms of integrity and transparency.
Milestones related to the integrity project, including information on the MOUs, are widely disseminated – appearing on Uruguay Customs’ website and regularly communicated to media representatives.
Results of the MOU project
Here are just some of the results of this initiative that have been realized thus far:
- The MOU signatories have been approved, updated or are currently working on their Codes of Ethics;
- Customs has approved its Code of Conduct;
- Criminal complaints presented by the DNA involving operators, and by operators involving the DNA, have been exchanged;
- Topics to be addressed with the private sector were identified, and the DNA and each association have agreed to work on one of the specific topics together;
- In 2013, the cycle of conferences on ‘Getting to know the traders’ was carried out, aimed at giving associations the opportunity to share their perspectives on, and experience with, the MOUs before an audience of Customs officials;
- Joint work with the ‘Project of Procedure for Receiving Criminal Complaints’ is being carried out;
- Training on ethics has been provided, both onsite and online;
- The subject of ethics has been included in the ‘Customs control course,’ given throughout the country;
- Customs and the Association of Customs Brokers carried out a joint Workshop on Ethics and the Fight against Corruption, aimed at students of the Professional Training Institute of Foreign Trade and Customs (CEA);
- Customs officials have been given guided tours by foreign trade operators;
- An annual activity plan is developed together with MOU signatories;
- A survey aimed at ascertaining which activities were vulnerable to corruption has been carried out, and an action plan has been designed to minimize them;
- Information requests presented by operators have been responded to, within the framework of the MOUs;
- Representatives from Customs and members of the associations have been invited to give talks and presentations in various national and international forums on their experience with the MOUs.
The main points that Customs has learned thus far are as follows:
- Mutual trust is the bedrock of the project’s success, but this trust is constantly put to the test, and maintaining it partly involves respecting confidentiality and being effective when it comes to taking action;
- Much of the project’s credibility depends on providing a timely and fitting response, on confidentiality, and on tangible results, once the first disclosures are made;
- Initially, many Customs employees failed to believe in the project, and managers in signatory associations experienced the same feedback from their staff;
- The subject of integrity is taboo in some organizations and Customs is no exception, so managers and officials spearheading the change need to demonstrate a great deal of tenacity in taking the project forward;
- Those involved in a project of this kind must be prepared to be the butt of constant criticism and to be scrutinized in the smallest detail;
- In some associations, fear of reprisals means that there is an underlying resistance to making disclosures which identify officials;
- For various reasons, some associations resist the drawing up of a Code of Ethics;
- Continuity and stability in the hierarchy are essential for instilling the necessary trust, so public and private representatives should remain in place at least until the project has been consolidated – the fact that the DNA Director has stayed in the position since 2010 has been very beneficial to the project.
Needed improvements and actions
In looking at the project, Uruguay Customs has identified the following improvements and actions that need to be undertaken:
- Strive to win more support for the project from Customs officials and traders;
- Work towards a situation where the associations make disclosures involving their members;
- Set achievable objectives in the action plans and quantify results to provide a more effective steer for the action plans;
- Push harder to meet the deadlines set;
- Greater accountability in cases of non-compliance by the parties;
- Ensure that 100% of the associations have a Code of Ethics;
- Raise awareness among officials and traders on the opportunities offered by the MOU project;
Regarding the concepts of ethics, transparency and the fight against corruption, the public and private sectors have a shared responsibility. In most cases, two parties are necessary for corruption to exist. The ethical action of civil servants must be accompanied by ethical action from all of society, and specifically on Customs matters, by all foreign trade operators.
In order to work jointly, the DNA went about signing MOUs with the private sector. The main objective of these agreements is to establish, in a coordinated manner, a system aimed at attacking all conduct that does not follow current regulations, or which could indicate that an act of corruption may have been committed, while making the biggest effort to combat such conduct, both in the public and private sphere.
In this article, the stages completed in reaching the conclusion of MOUs have been mentioned as well as the details of the agreements, and specific activities carried out within their framework. The DNA must continue working actively and make the best use of the MOU tool. In addition, both the public and private sectors must continue to report alleged acts of corruption, accepting only as business partners those that respect ethical principles.
According to the survey results, the Customs Modernization Project as a whole, the actions taken on integrity, and the operations conducted by the GRIA – which led to 315 people being convicted, of which 135 were given no prison sentence and 180 imprisoned – have helped to improve the perception which traders and the general public have about the Customs administration.
Having embarked on a path of transformation, Uruguay Customs has changed completely. More importantly, when it comes to radically improving integrity, Customs has realized that a continued effort is vital.