Financial Crime World

Bribery and Corruption in Finance: A Mixed Bag for Vanuatu’s Reputation

Vanuatu, a Pacific Island nation known for its idyllic beaches and coral reefs, has made significant strides in addressing corruption over the past two decades. However, recent developments suggest that despite progress, the country still faces numerous challenges.

A Troubled Past

In the 1990s, Vanuatu was embroiled in a major money laundering scandal involving USD1.1 million earmarked for cyclone relief. The then Prime Minister’s personal offshore account allegedly received the funds, sparking widespread outrage and damaging the country’s reputation.

Progress and Prosecutions

Fast forward to 2006, when Vanuatu signed a five-year development assistance package worth USD66 million under the US government’s Millennium Challenge Corporation. A decade later, in 2015, 14 Members of Parliament (around 30% of the country’s parliament) were successfully prosecuted for corruption. This was seen as a significant step forward in addressing political corruption.

International Indicators

International indicators and national surveys suggest that Vanuatu has maintained its good governance credentials to some extent. The country’s score on Transparency International’s Corruption Perceptions Index has improved from 43 out of 100 in 2017 to 48 out of 100 in 2022, ranking slightly better than Fiji (53/100) but worse than Solomon Islands (42/100) and Papua New Guinea (30/100).

Recent Findings

A recent Global Corruption Barometer conducted in Vanuatu found that:

  • 65% of respondents believed the government was doing a good job fighting corruption, above the average for 10 relatively large Pacific Island countries.
  • 12.5% of respondents replied affirmatively when asked if they had paid a bribe for a public service over the past year.

Challenges Remain

Despite progress, significant challenges remain:

  • The Right to Information Unit, which sits within the Prime Minister’s office, is currently without a commissioner, rendering it ineffective in holding the government accountable.
  • The Financial Intelligence Unit (FIU), responsible for monitoring the country’s “golden passport” scheme, lacks the capacity to check the bona fides of many applicants.

International Concerns

The FIU’s inability to verify applicants has raised concerns among donors, including the European Union (EU), which has threatened to suspend visa-free travel for Vanuatu citizens. The EU has given Vanuatu more time to address the issue before deciding on whether to revoke this arrangement.

A Promised New Anti-Corruption Agency

A promised new anti-corruption agency is yet to begin operations, despite being allocated 16 million vatu in the 2022 budget. If the government fails to address these issues, it risks losing international support and funding.

Conclusion

In conclusion, while Vanuatu has made progress in addressing corruption, significant challenges remain. The government must act swiftly to overcome these hurdles to maintain its reputation as a country committed to good governance and transparency.