Topic Guide: Interest and Asset Disclosure

Recognising the potential of asset disclosure systems, the 2003 UNCAC agreement stipulated that all signatories should establish mechanisms to compel public officials to report "to appropriate authorities…their outside activities, employment, investments, assets and substantial gifts of benefits".  

Despite this, there are, as yet, no specific international standards detailing how disclosure regimes are best designed, implemented and monitored. Indeed, while a recent study by the World Bank illustrated that 78 per cent of the surveyed countries had some kind of financial disclosure arrangement, it also revealed the wide range of approaches.[1]  

The literature on income and asset declaration reflects this variety, and stresses the need for context-specific declaration regimes which carefully consider who should declare what to whom and when.[2] Over the last decade, however, an emerging consensus has identified several "core principles" for the establishment of effective asset declaration mechanisms.[3] The principles focus on the following areas:  

• The corruption issue disclosure is intended to address. Thought needs to be given to the kind of behaviours disclosure regulations are supposed to tackle, as well as the institutional and political background. To address undue influence, regulations focusing on helping officials and monitoring bodies to identify and manage potential conflicts of interest can prevent officials partaking in decisions in which they have a personal stake. Disclosure regimes which facilitate the monitoring and investigation of unusual fluctuations in wealth can help uncover illicit enrichment activities.[4] The best disclosure regimes include provisions for both strands.[5] 

• Scope and coverage of the disclosure requirement. An overly ambitious scope of disclosure systems can reduce the efficacy of and political support for anti-corruption bodies. Countries need to ensure that anti-corruption zeal does not outstrip institutional capacity when judging who will be required to declare and how declarations will be managed and monitored. In Kenya, for instance, following a highly publicised corruption scandal, all 675,000 civil servants were required to disclose income and assets. The lack of oversight capacity meant that this actually weakened the country's ability to detect illicit enrichment by overburdening the system.[6] Policy decisions about scope and coverage need, therefore, to be connected to the corruption issue the disclosure system is supposed to tackle.

• Coverage of disclosure systems. Generally, it is good practice to start at the top and ensure compliance before expanding coverage to progressively include more officials as political will and resources develop.[7] Most disclosure regimes include the top tiers of the executive, legislative, judiciary and civil service as these positions enjoy high discretionary powers when allocating public money. An alternative approach is to require officials in high-risk postings, such as procurement, tax and customs officers, to disclose their income and assets regardless of seniority.[8] There is an ongoing discussion about whether the members of an official's household should also be included in disclosure regimes, but most experts concur that a family's financial affairs are so closely entwined that any separation is artificial and excluding them from disclosure makes evading detection relatively straightforward.[9]

• Types of information to be included. Disclosure declarations should include both assets (homes, valuables, financial portfolios and liabilities) and other sources of employment (directorships and consultancies, for example). They should also cover gifts and sponsorship deals above an appropriate threshold as well as potential conflicts of interest (unpaid advisory roles, participation in NGOs, membership of trade unions or business organisations). In order to not overwhelm capacity at an early stage of reform, disclosure could be sequenced so that officials are first required to declare income and assets, and obligations to also declare business activities and pre-employment activities can be gradually introduced. While some disclosure regimes permit disclosure to be made within ranges of value, ideally financial disclosure records exact monetary value of all listed items.[10]

• Frequency of filing. Disclosure systems either require declaration on entering and leaving office, when there is a significant change in an official's net worth, or periodically. Annual declarations are the most effective, as they familiarise all officials with the system and allow for accurate comparisons over time in office.

• Monitoring submission compliance. While some countries establish a single, specialised agency to receive and review all financial disclosure declarations, in other countries, public organisations have assigned responsibility to civil service commissions or even in-house units.[11] The legislature and judiciary often have their own disclosure arrangements to safeguard their political independence from external influence. Ideally, income and assets should be declared to an independent and well-resourced public body which is able to competently monitor and enforce compliance with submission requirements.

• Verification of content. As well as enforcing compliance with submission, for an income and asset declaration system to be effective, the content of the declarations needs to be verified. Entities tasked with scrutinising declarations must therefore be empowered to request/access relevant information from other government agencies. There are a number of ways to verify a declaration: by cross-referencing declarations against public or private sector records (property, vehicle and tax registries), against previous disclosures by the same official or against the official’s lifestyle. Rather than seeking to verify each and every submission, random sampling and risk-based selection of financial disclosure declarations can exert less administrative strain.[12] 

• Enforcement and sanctioning. An income and asset declaration regime as described above is well placed to provide a realistic chance of detection and work as a deterrent. But for the system to be truly effective, it must establish a credible threat of punitive sanctions for corrupt officials. These can range from fines, suspension and dismissal to imprisonment. Reputational sanctions, such as publishing the names of those officials who fail to comply, can also be effective.[13] It is crucial that late submission, non-submission and misreporting of assets be made a criminal offence and adequately sanctioned, otherwise, corrupt officials will be free to massage disclosed information and the system will be shown to be toothless. Indeed, it often proves easier to convict a corrupt official for inaccurate reporting rather than corruption itself.[14] Finally, political support for the neutrality of the relevant anti-corruption agency is essential for the enforcement of sanctions to ensure that it does not become a party-political instrument.

• Public availability of information. Financial disclosure can either be made publically available or privately to an anti-corruption body, supreme auditor or other government entity. A recent World Bank survey found that legal requirements to make data publicly available were in place in only 43 per cent of countries sampled.[15] In states with high levels of violence, public disclosure of officials' wealth is less common as legislators fear this would make wealthier public officials the target of criminal activity. Nonetheless, with the rise of right to information legislation and the open data movement, making asset declarations public is becoming increasingly common. Public access to officials' financial disclosure declarations can be a valuable addition to institutional verification mechanisms by helping to flag up potential discrepancies for investigation. It also reinforces the message that officials are subject to public accountability, and that their actions should be taken in the public interest. Experience has shown that where asset declarations are logically archived, searchable and publically available, disclosure regimes are generally more effective.[16] Publishing statistics on compliance rates, investigation and enforcement outcomes can also help convince the public of the sincerity of anti-corruption efforts and exert pressure on officials to behave with probity. Nonetheless, public scrutiny cannot be a substitute for official vigilance; verification, especially of possible conflicts of interest, is a skilled task requiring thorough legal knowledge.[17]