Web of friends at heart of power

By IAN JOHNSTON (01/07/2005)

KIRSTY Wark has intimate links with Scottish Labour and many of its senior supporters.
She was a close family friend of the late first minister Donald Dewar and even shared a garden with him when they were neighbours. It was Mr Dewar who appointed her to the panel to choose the design of the Scottish Parliament. She was impressed by Enric Miralles - the eventual winner - and they were said to have become close friends.

Amid mounting claims of "cronyism", it was Ms Wark’s television company, Wark Clements - set up in 1990 with her husband Alan Clements - which was chosen to make a documentary about the building of Holyrood. There was outrage when Ms Wark and the BBC refused to hand over all the film shot during the making of the documentary, called The Gathering Place, to the Fraser inquiry into the handling of the construction. The counsel to the inquiry, John Campbell, QC, who questioned her, was a friend - she had been a bridesmaid at his wedding. Despite this, however, Mr Campbell made his displeasure at her refusal to hand over the tapes abundantly clear.

Ms Wark was backed up by her colleague, then controller of BBC Scotland, John McCormick, who insisted handing over the tapes would clash with the BBC’s policies. Mr McCormick has since left the BBC and recently took up a post as chairman of the Scottish Qualifications Authority, an appointment made by the Executive.

Another friend of Ms Wark, James Boyle, is currently chairman of the Scottish Executive’s cultural commission. He previously worked at the BBC and was also on the board of Wark Clements, when he was paid £21,000 as a consultant, according to company documents from April 2003. He also previously chaired the Scottish Arts Council, which includes Glasgow City Council Lord Provost Elizabeth Cameron on its board.

Jack McConnell’s wife Bridget is Glasgow City Council’s director of cultural and leisure services. She is also a member of the Heritage Lottery Fund (HLF) board in Scotland, chairwoman of Vocal, the influential local government cultural body, a fellow of the Royal Society of Arts and a member of the board of the Royal Scottish Academy of Music and Drama.

She appeared to have a very public falling out with Mr Boyle after commission "sources" said she and council officials should stop interfering in cultural issues. However, Mrs McConnell and Mr Boyle are still thought to be friends and were seen together at a one-man-show by former No 10 spin doctor Alistair Campbell in Glasgow last year.

Another Mr Boyle, John, the former Motherwell FC chairman and millionaire businessman, is another close friend of Ms Wark and Mr Clements, with strong links to the Labour Party. He has a house on Majorca not far from Ms Wark’s holiday home.

Mr Boyle, who is currently in Australia, bought a £1 million share in Wark Clements and was on the board of the company in April 2003, according to the latest accounts filed with Companies House. He has made substantial donations to the Labour Party, including one of £20,000 in 1999. Mr Boyle is close to millionaire businessman Willie Haughey, the boss of City Refrigeration Holidays, who is chairman of Scottish Enterprise Glasgow and a major donor to Labour. In 2003, the former Celtic director gave £330,000 to the party.

He sits on the board of Scottish Enterprise Glasgow with Ms Wark’s husband.

The influence of Wark Clements increased when the firm merged with Muriel Gray’s Ideal World Productions, its leading rival in Scotland, to become IWC Media.

Anti-Corruption Conventions and Initiatives

OECD - Against Bribery of Foreign Public Officials in International Business Transactions
UNCAC - United Nations Convention Against Corruption
World Bank - Public List of Debarred Companies
Private initiatives - Business and NGOs Initiatives

Economic Development Before the Law

By Johannes Jütting and Denis Drechsler, published in Proyect Syndicate 2007

One of the most pervasive and apparently self-evident assumptions of development economics is that sustainable investment and growth requires the rule of law. Without impersonal, general norms and their enforcement by independent judicial authorities, according to this view, little development, if any, is possible, because the risks facing both labor and capital – including corruption, arbitrariness, and rigid traditions – will be too high. But is this conventional wisdom always right?
Consider an admittedly limited but nonetheless revealing counter-example: South Africa’s booming mini-bus taxi industry. The mini-bus taxis developed in response to severe shortcomings in the country’s public transport system, one characterized by high prices, low-quality service, and a chaotic operating network, but they operate entirely outside of formal laws and regulations. What makes the industry work is a commonly agreed informal business “culture” that is flexible, innovative, and keeps operating costs down.
The results are undeniable: at peak times, mini-bus taxis hold 65% of the entire commuter market. The mini-bus taxi industry thus illustrates the importance of informal conventions. Local culture and traditions not only matter, but they are decisive in shaping the behavior of people – all the more so in developing countries, particularly those that are labeled failed or fragile states, where the courts don’t work and regulations, assuming they exist, thus are inadequately enforced. But malfunctioning formal institutions do not mean that there are no functioning structures at all.
In these societies, the social order is predominantly shaped by informal agreements rather than formal laws and regulations. As the South African example shows, such agreements can even promote a country’s development. In many developing countries, village associations that are solely based on trust and peer pressure provide access to credit and insurance, guarantee help in times of distress, and facilitate the construction of public roads and sewage systems. The community-based health insurance schemes that are prospering all over Africa are a good example of this.
Even so, while informal institutions can improve people’s lives, they can also be detrimental to development. The very resources that form the basis of informal security systems – solidarity, social capital, and collective action, for example, can have perverse effects. For example, forced solidarity will oblige any hard-working farmer in Benin who has accumulated some wealth over the years to share the fruit of his labor with his enlarged family, including distant relatives.
In economic terms, the “informal institution of sharing” may become a disincentive to invest and thus result in opportunistic behavior, because there is no obligation to reciprocate. For all of their success, South Africa’s mini-taxis could not escape high accident rates, violent incidents over un-commissioned routes and fare levels, and tax evasion, which imposed high costs on society, prompting the government to regulate the service.
Moreover, some informal institutions based on longstanding cultural traditions lead to discrimination and violation of human rights, while undermining the authority of formal institutions like the judiciary, police, or military. In these cases, women are often the victims. They might be excluded from participation in informal networks, or have limited influence in appropriating the accrued benefits of collective action. The reported abuse of micro-credits to pay dowries is one alarming example. Likewise, the tradition of female circumcision is still a common practice in African countries such as Guinea, Sudan, Mali, Somalia, and Eritrea, where more than 85 % of young women suffer from it.
Abolishing such customs is a moral obligation, but in other instances, the international community often needs to decide which institutions to change and how. Indeed, one of the most difficult tasks for policymakers is to identify correctly those institutions that are conducive to development and those that may be harmful. Even then, successfully changing institutions is easier said than done, as they are rooted in deeply enshrined norms and values.
Neither the “romantic preservationist” nor the “bulldozing modernizer” approach promises an adequate solution. Institutional reform is a delicate affair that needs to be done with caution and sometimes against the conventional reform dogma. In some cases, good intentions may even aggravate the status quo. For example, trying to eliminate corruption in environments with strong patronage-based power and redistribution mechanisms while failing to address the root problems can do more harm than good, and might lead to violent conflicts over new resources.
Reforms need to acknowledge the mindsets of people and the incentive structures that govern their behavior. Thus, those who benefit from reforms may champion the process, but losers must be adequately compensated in order to prevent them from resisting the transformation. Without building public support and providing proper enforcement mechanisms, changing laws alone is bound to be ineffective. Sometimes it might even pose high costs for the alleged beneficiaries.
Given the complexity of institutional reform, striving for what appears to be optimal might not always be the best approach. Reforms must be adapted to the specific context of each country, and be applied within the boundaries of what is possible. Institutional change requires a long, tedious, and modest implementation of multiple small steps, in which the correct sequencing of reform is crucial. To obtain sustainable results, policymakers need to accept that sometimes “good enough is enough.”