Corruption
The word corrupt (Middle English, from Latin corrupts, past participle of corrupted, to destroy : com-, intensive pref. and rump-ere, to break) when used as an adjective literally means "utterly broken". In modern English usage the words corruption and corrupt have many meanings:
- Political corruption: the abuse of public power, office, or resources by government officials or employees for personal gain, e.g. by extortion, soliciting or offering bribes.
- Police corruption
- Corporate corruption: corporate criminality and the abuse of power by corporation officials, either internally or externally.
- Putrefaction: the natural process of decomposition in the human and animal body following death.
- Data corruption: an unintended change to data in storage or in transit.
- Linguistic corruption: the change in meaning to a language or a text introduced by cumulative errors in transcription as changes in the language speakers' comprehension.
- Bribery in politics, business, or sport (including match fixing).
- Rule of law Governmental corruption of judiciary includes governmental spending on the courts, which is completely financially controlled by the executive in many transitional and developing countries. This undermines the principle of checks and balances and creates a critical financial dependence on the judiciary. It covers latent governmental spending on the judiciary in the form of privileges – cars, country houses,expenses. Such a system is completely outside the realm of transparency and creates a precedent for the corruption of the judiciary by executive authorities.
Institutions dealing with political corruption
- Transparency International
- Global Witness
- Group of States Against Corruption (French: Groupe d'Etats contre la Corruption), a body established under the Council of Europe to monitor the implementation of instruments adopted by member states to combat political corruption.
- Independent Commission Against Corruption
- Anti-Corruption Trust of Southern Africa (ACT-Southern Africa)
Entertainment with corruption themes
- Metroid Prime 3: Corruption, a Wii game.
- Corrupt (film), a 1981 film starring Harvey Keitel and John Lydon.
- Corrupt (1999 film), a 1999 film starring Ice-T and Silkk The Shocker.
- Corrupt (Angel), an unproduced teleplay written for the television program Angel.
- Kurupt, a rapper
- Corruption (video game), a 1988 computer game by Magnetic Scrolls.
- Corrupted, a Japanese doom-metal band.
- Fable Series, for the Xbox 360
- Chaorruption, a form of corruption caused by Drakath and his 13 Lords of Chaos in Artix Entertainment's MMORPG, AdventureQuest Worlds.
Definition
The word corrupt (Middle English, from Latin corruptus, past participle of corrumpere, to destroy :com-,intensive pref. and rumpere, to break) when used as an adjective literally means "utterly broken".In modern English usage the words corruption and corrupt have many meanings.
Defining corruption in practice
Corruption can be defined as the misuse of public office for private gain. This involves putting personal interests above those of the people and ideals he or she is pledged to serve. It comes in many forms, is often subjective and can range in severity. Corruption can involve promises, threats or both.
Corruption can involve misuse of policy instruments- tariffs and credit, irrigation systems and housing policies, the enforcement of laws and rules regarding public safety, the observance of contracts and the replacement of loans- or simple procedures. It can occur in both the public and private sector, often occurring simultaneously . According to the World Bank; “corruption is not a one-dimensional problem, but encompasses a range of interactions within the state and between the state and the society, each with its own dynamic.”
The Independent Commission Against Corruption in NSW gives a good definition of corruption in government administration. In summary, corrupt conduct involves the lack of honesty in the official dealings of any public official, directly or indirectly, with any other group or body, either public or private and whether it is for the benefit of the individual involved, or some other party. Official misconduct would include behaviour such as bribery, blackmail, fraud, theft, embezzlement and perverting the course of justice.
The area of work involving Government Planning Departments where very large sums of money are regularly involved, appears particularly prone to endemic corruption. Recommendations from the ICAC have included firstly, wider consideration of the systemic problems in the planning system; secondly that there should be a recommendation for planners to have obtained a level of training and ethics leading to professional competency and thirdly that a new, enhanced code of conduct for Council Planners and Councillors be considered for adoption .
Overview
Corruption continues to be a serious problem across the globe. According to the World Bank about $1 trillion is paid in bribes each year. This figure becomes even more significant when one realizes that in 2001–2002, the total size of the world economy was $30 trillion. In the last decade international organizations such as the United Nations, the World Bank, and OECD have made corruption control a significant focus of their agenda. A noteworthy development in this regard was the adoption of the United Nations Convention Against Corruption in December 2003, where countries agreed to an increased level of cooperation in the fight against corruption .
The effect of corruption on environmental sustainability was measured using the World Economic Forum’s Environmental Sustainability Index (ESI) and Transparency International’s Corruption Perception Index (CPI) It was found that indicators providing positive contributions towards environmental sustainability would be reduced by corruption.
History
Corruption it seems has embedded itself within the human genome, dating back to the stone ages. Roman Colosseum blames political corruption for the destruction and decline of the Roman Empire almost 1400 years ago. Even in the modern day corruption is amongst us, dictating decision making throughout many sectors of the world, even in the environment and natural resources sector. Transparency International published a report titled Global Corruption Report 2008: Corruption in the Water Sector. It discusses and addresses corruption regarding all areas within the water sector such as, water management, water for sanitation, water for food and water for energy. A prime example is in Spain, the city Marbella, where an investigation led to the arrest of the mayor, two previous mayors and dozens of city officials after the authorities learnt that 30,000 homes had been built illegally including 1,600 on parkland, not to mention the US$3 billion seized in assets. According to Transparency International (2008), money obtained via water licenses, land sales and property taxes were going towards funding politicians' personal requirements whether it was fancy homes, artwork, and/or political agendas. The money should instead be invested in providing services such as supplying some of Spain’s city with a sewage treatment plant because as it stands 4.3 million people living in 273 coastal towns have no wastewater treatment.
Another example outlined in Transparency International . Global Corruption Report 2008: Corruption in the Water Sector. New York: Cambridge University Press. is in the Punjab province in Pakistan where political corruption has allowed farmers who reside favourably in the upper reaches of the irrigation system to receive extra water at the expense of their downstream counterparts resulting in a diminished crop yield and hence loss of profit for the downstream farmers. This happens because farmers ask local elected politicians to pressure irrigation staffers. In turn, politicians receive political support from these farmers to stay in office.
A report published by Columbia University stated that Indonesia has already lost almost three quarters of its ancient forest areas due to corruption throughout all ranks. Corruption occurs in illegal logging both at the local level, with bribes and concessions given to local communities to gain access to forests, and at the national level, where government and forestry officials extend contracts to special interests, take bribes from logging companies, and open access to national parks. According to Columbia University corruption in the Indonesian government is known and accepted as part of its culture as many laws are based upon corrupt practices.
The $8billion Lesotho Highlands Water Project in South Africa was discovered to be littered with corruption. The project consisted of diverting flow from the Orange River to the urban and industrial zone of Gauteng region. Winbourne describes that in 1999 the Executive in charge of the Lesotho Highlands Water Project, Mr. Masupha Sole, had received over $2million in bribes from engineering and construction companies bidding for the contract. He was sentenced to 18 years' imprisonment. The final phase of the project was completed in 2002, despite the fact that corruption regarding the project had led to activities which caused environmental damage which affected thousands of people in the region. Environmental groups lobbied the construction but the large amounts of money invested and potential profit to be generated was most likely the deciding factor for the completion of this project.
The incidence of corruption is particularly high in poor nations and natural resources offer a rich opportunity. Bribe taking, cronyism and nepotism are of common occurrence . The following examples are given: In the Brazilian Amazon in 2000, 80% of harvested timber was estimated to be illegal according to the Brazilian Environment Agency (IBAMA); 20% of Russian timber is harvested corruptly, up to 50% in Siberia and the Russian Far East; estimated bribes to government officials in Cambodia for illegal logging trade was estimated at US$200 million in the one year, 1997. Low salaries for civil servants are given as one of the major causes amongst a combination of social, economic and administrative factors which give favourable conditions for corruption to occur.
Causes of corruption
Whilst the exact causes of corruption cannot accurately be measured due to subjectivity and extreme difficulty in adequately quantifying data using statistical measurements, Triesman discusses several potential cross-national differences in corruption levels. Factors he believes can influence a nation’s level of corruption include History and Culture, Economic Development, Political Institutions and Public Policies.
Transparency International (the non-governmental organisation) that deals with tackling corruption issues and raising public awareness releases an annual index of perceived corruption (CPI). Although one must be cautious when analysing data such as this due to its complexity and very nature, the index can provide an insight into perceived corruption and possible links to causes assessed. It is from here policy and decision makers can attempt to tackle current and future issues regarding corruption at all levels.
Dealing with corrupt behavior
This can be a difficult process as identifying the extent of corrupt activities is often problematic due to their secret nature. It is also “difficult to quantify institutional and cultural factors that might have a crucial bearing on corruption.” . Decision makers can benefit from new insights into combating corruption.
Klitgaard in his book Controlling Corruption acknowledges that through Analysis people are able to “analyse concrete solutions and devise useful solutions”. His book provides an insight into previous corruption scandals and is designed to assist readers analyse corrupt behaviour and decide what to do about it.
With rising population numbers and the need for ever-increasing infrastructure to support them, there is in modern life a growing reliance on government . Governments deal with increasingly complex issues beyond basic needs, and have need of continuing professionalism amongst employees.
There are a number of requirements for good governance and decreased levels of corruption, the most obvious being a code of conduct for employees. The Independent Commission Against Corruption in NSW also suggest further methods for minimising the risk of corruption by increasing accountability amongst government employees. It suggests establishing work management systems which involve the computerized recording of meetings and discussions; the use of reports to measure performance; to keep official diaries of appointments and use supervisors to assess ongoing performance. Further, performance should be audited for consistency. The use of teams appeared to reduce incidence of corruption as individual members became more accountable and “buddy” systems where an individual unavailable for an appointment could be substituted by another employee, also had an improved effect on integrity.
Institutions dealing with political corruption
Global Institutions include:
Transparency International - Established in 1993 Transparency International is a politically non-partisan global society brought together to pre-empt corruption on a local and global scale, they achieve this by bringing together the parties involved in politics and business and promote the transparency in their campaigns or dealings. Transparency international has over 90 national and local chapters who work on a smaller scale in the same way. Transparency International do not take on investigations of individual cases but do offer assistance to the individual parties who do this.
World Bank - The World Bank is a body made up of 187 nations which aim to fight poverty by providing financial aid and assistance, sharing knowledge and resources, and forging partnerships in both public and private enterprise. As this is the case and large contracts are often being awarded, corruption is a very big problem, The World Bank has a specific strategy to avoid this happening outlined in this page.
In 1997 the World Bank began to tackle corruption problems in Eastern Europe and Central Asia through the development of “a full program of analytic work, technical assistance, training programs and lending instruments targeted towards reducing corruption.” Corruption can occur in any organisation and The World Bank has also worked on ensuring transparency and accountability within its own projects and programmes from transport and energy to health and education.
As a result of its work in Eastern Europe and Central Asia, the World Bank has initiated the use of Governance and Anticorruption Diagnostics which aim to provide the means for societies to motivate rational debate on the priorities of reform, and thus to clarify the nature of corruption itself. Large-scale surveys of public officials, enterprise managers and citizens were one means used to this end. Others include report or scorecards completed by the public for measurement of integrity amongst public services and their agencies. The results of these surveys highlight areas for reform by drawing attention to levels of performance. The periodic and ongoing publication of Business Enterprise and Enterprise Surveys (BEEPS) by The World Bank helps to monitor levels of corruption in Eastern Europe and the Central Asian region. These give “comparative measurements of quality of governance, the investment climate and the competitive environment across the region” by specifically monitoring the quality of interactions between the private sector and the state.
By providing diagnostics which were objective and transparent, The World Bank has played an important role in helping to depoliticize the problem in Eastern Europe and Central Asia, concentrating on particular challenges and providing a means by which awareness and consensus could be built amongst a wide range of interested parties. Countries within the region were also assisted with pioneering a participatory role in forming anti-corruption strategies within and between the private sector, public officials and civil society. Ways to monitor implementation and outcomes were also provided to encourage an ongoing improvement.
Latvia provides one of the earlier and more successful cases in the work of The World Bank. The country followed up diagnostic work which showed that state capture was a more critical issue than administrative corruption. Latvia now has one of the most progressive and largely effective legal frameworks for political party and election campaign financing in the European Union.
Diagnostics, strategy and reform have been carried out by other countries, both in the above region and in others across the world. However, it is acknowledged that once present, corruption can be a persistent problem in any economy and political system, whether or not the country is developed and mature. What is needed is a change in culture which takes perseverance, persistence and time.
Institutions at a national level include:
Botswana - Directorate on Corruption and Economic Crimes (DCEC) - Formed in 1994 to combat the high rates of corruption within the political decision making process in Botswana, based on the Hong Kong ICAC, this agency has seen a considerable drop in the amount of money laundering within the government and successfully implemented changes to the legal system which have also in effect reduced this corruption. The DCEC have made significant headway but are still in the difficult situation of a fast growing population and economy with a national culture which included political corruption.
Hong Kong - Independent Commission Against Corruption (ICAC) - Working independently of the Hong Kong Civil service the ICAC works to remove all aspects of corruption from the government bodies. It was seen that the corruption was endemic within the government up until the 1970’s which lead to the forming of the ICAC. This independent body investigates and advises on all matters relating to corruption matters, its members are appointed by the State Council of the People’s Republic of China, on recommendation of the Hong Kong Governments Chief Executives.
Singapore - Corrupt Practices Investigation Bureau (CPIB) - In Singapore, there was a culture of corruption within public and private office, the punishments were inadequate and there was no way of managing it, in the early 1950’s the CPID was created to correct this. The CPIB report directly to the Prime Minister, and are independent of all other government agencies to avoid any potential corruption or pressure within its ranks. The CPID has very strong investigative powers and the punishments for the corruption crimes are now quite high.
USA - Office of Government Ethics (OGE) - Created in 1978 but becoming independent in 1989 the United States Office of Government Ethics is the department which is designed to uphold the public trust in the government officials. It is involved in helping to prevent against corruption and assist in occasions where potential conflicts or private gain from decisions may arise. This department’s primary function is to observe and prevent any misuse of power by government officials and ensure the impartiality of government officials in all decision making situations, these include the receiving of gifts and monetary backing for campaigns from internal or external sources, future business dealings or future employment prospects.
Australia - A number of States and Territories have set up their own anti-corruption organisations: NSW – Independent Commission Against Corruption; Queensland and West Australia – Crime and Misconduct Commissions; in Victoria there is a consortium of existing integrity agencies although there have been discussions regarding establishment of an ICAC and the Tasmanian government is looking at new legislation for an Integrity Commission ; in the Northern Territory as recently as August 2010 the Leader of the Opposition, Terry Mills, was calling for the formation of a unit to investigate corruption in the Territory . It would appear there is a need for increasing transparency in the dealings of government officials to prevent corruption occurring at all levels.
New South Wales - Independent Commission Against Corruption (ICAC) - The Independent Commission Against Corruption (ICAC) was established in 1989 to address the growing community concern about the ethics and integrity of the public administration in NSW by the NSW Government. It is an independent government funded agency which has the power to investigate any and all public sectors in the NSW government with the exception for the police force. They aim to expose corruption in the public sector, prevent potential corruption through advice and assistance, and educate the public of the effects and ramifications of corruption in public office.
One of the effects of corruption is a growing mistrust in governance. At a local level, ratepayers make a direct contribution towards funding councils and require services to be delivered fairly and honestly. When corruption is exposed, employee morale suffers, affecting productivity and the delivery of quality customer service. Recruitment can also be affected as public perceptions of a lack of integrity can be long lasting.
Political corruption
World map of the 2009 Corruption Perceptions Index by Transparency International, which measures "the degree to which corruption is perceived to exist among public officials and politicians". High numbers (green) indicate less perception of corruption, whereas lower numbers (red) indicate higher perception of corruption.
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by private persons or corporations not directly involved with the government. An illegal act by an officeholder constitutes political corruption only if the act is directly related to their official duties.
Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and human trafficking, it is not restricted to these activities.
The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, certain political funding practices that are legal in one place may be illegal in another. In some cases, government officials have broad or poorly defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, bribery alone is estimated to involve over 1 trillion US dollars annually. A state of unrestrained political corruption is known as a kleptocracy, literally meaning "rule by thieves".
Effects
Effects on politics, administration, and institutions
Corruption poses a serious development challenge. In the political realm, it undermines democracy and good governance by flouting or even subverting formal processes. Corruption in elections and in legislative bodies reduces accountability and distorts representation in policymaking; corruption in the judiciary compromises the rule of law; and corruption in public administration results in the inefficient provision of services. More generally, corruption erodes the institutional capacity of government as procedures are disregarded, resources are siphoned off, and public offices are bought and sold. At the same time, corruption undermines the legitimacy of government and such democratic values as trust and tolerance.
Economic effects
Corruption undermines economic development by generating considerable distortions and inefficiency. In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting red tape, the availability of bribes can also induce officials to contrive new rules and delays. Openly removing costly and lengthy regulations are better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connections from competition and thereby sustaining inefficient firms.
Corruption also generates economic distortions in the public sector by diverting public investment into capital projects where bribes and kickbacks are more plentiful. Officials may increase the technical complexity of public sector projects to conceal or pave the way for such dealings, thus further distorting investment. Corruption also lowers compliance with construction, environmental, or other regulations, reduces the quality of government services and infrastructure, and increases budgetary pressures on government.
Economists argue that one of the factors behind the differing economic development in Africa and Asia is that in the former, corruption has primarily taken the form of rent extraction with the resulting financial capital moved overseas rather than invested at home (hence the stereotypical, but often accurate, image of African dictators having Swiss bank accounts). In Nigeria, for example, more than $400 billion was stolen from the treasury by Nigeria's leaders between 1960 and 1999. University of Massachusetts researchers estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totaled $187bn, exceeding those nations' external debts. (The results, expressed in retarded or suppressed development, have been modeled in theory by economist Mancur Olson.) In the case of Africa, one of the factors for this behavior was political instability, and the fact that new governments often confiscated previous government's corruptly-obtained assets. This encouraged officials to stash their wealth abroad, out of reach of any future expropriation. In contrast, Asian administrations such as Suharto's New Order often took a cut on business transactions or provided conditions for development, through infrastructure investment, law and order, etc.
Environmental and social effects
Corruption facilitates environmental destruction. Corrupt countries may formally have legislation to protect the environment, it cannot be enforced if officials can easily be bribed. The same applies to social rights worker protection, unionization prevention, and child labor. Violation of these laws rights enables corrupt countries to gain illegitimate economic advantage in the international market.
The Nobel Prize-winning economist Amartya Sen has observed that "there is no such thing as an apolitical food problem." While drought and other naturally occurring events may trigger famine conditions, it is government action or inaction that determines its severity, and often even whether or not a famine will occur. Governments with strong tendencies towards kleptocracy can undermine food security even when harvests are good. Officials often steal state property. In Bihar, India, more than 80% of the subsidized food aid to poor is stolen by corrupt officials. Similarly, food aid is often robbed at gunpoint by governments, criminals, and warlords alike, and sold for a profit. The 20th century is full of many examples of governments undermining the food security of their own nations – sometimes intentionally.
Effects on Humanitarian Aid
The scale of humanitarian aid to the poor and unstable regions of the world grows, but it is highly vulnerable to corruption, with food aid, construction and other highly valued assistance as the most at risk. Food aid can be directly and physically diverted from its intended destination, or indirectly through the manipulation of assessments, targeting, registration and distributions to favour certain groups or individuals. Elsewhere, in construction and shelter, there are numerous opportunities for diversion and profit through substandard workmanship, kickbacks for contracts and favouritism in the provision of valuable shelter material. Thus while humanitarian aid agencies are usually most concerned about aid being diverted by including too many, recipients themselves are most concerned about exclusion. Access to aid may be limited to those with connections, to those who pay bribes or are forced to give sexual favours. Equally, those able to do so may manipulate statistics to inflate the number beneficiaries and syphon of the additional assistance.
Other areas: health, public safety, education, trade unions, etc.
Corruption is not specific to poor, developing, or transition countries. In western European countries, there have been cases of bribery and other forms of corruption in all possible fields: under-the-table payments made to reputed surgeons by patients willing to be on top of the list of forthcoming surgeries, bribes paid by suppliers to the automotive industry in order to sell poor quality connectors used for instance in safety equipment such as airbags, bribes paid by suppliers to manufacturers of defibrillators (to sell poor quality capacitors), contributions paid by wealthy parents to the "social and culture fund" of a prestigious university in exchange for it to accept their children, bribes paid to obtain diplomas, financial and other advantages granted to unionists by members of the executive board of a car manufacturer in exchange for employer-friendly positions and votes, etc. Examples are endless. These various manifestations of corruption can ultimately present a danger for the public health; they can discredit certain essential institutions or social relationships.
Corruption can also affect the various components of sports activities (referees, players, medical and laboratory staff involved in anti-doping controls, members of national sport federation and international committees deciding about the allocation of contracts and competition places).
There have also been cases against (members of) various types of non-profit and non-government organisations, as well as religious organisations.
Ultimately, the distinction between public and private sector corruption sometimes appears rather artificial and national anti-corruption initiatives may need to avoid legal and other loopholes in the coverage of the instruments.
Types
Bribery
A bribe is a payment given personally to a government official in exchange of his use of official powers. Bribery requires two participants: one to give the bribe, and one to take it. Either may initiate the corrupt offering; for example, a customs official may demand bribes to let through allowed (or disallowed) goods, or a smuggler might offer bribes to gain passage. In some countries the culture of corruption extends to every aspect of public life, making it extremely difficult for individuals to stay in business without resorting to bribes. Bribes may be demanded in order for an official to do something he is already paid to do. They may also be demanded in order to bypass laws and regulations. In addition to using bribery for private financial gain, they are also used to intentionally and maliciously cause harm to another (i.e. no financial incentive). In some developing nations, up to half of the population has paid bribes during the past 12 months.
In recent years, efforts have been made by the international community to encourage countries to dissociate and incriminate as separate offences, active and passive bribery. Active bribery can be defined for instance as the promising, offering or giving by any person, directly or indirectly, of any undue advantage [to any public official], for himself or herself or for anyone else, for him or her to act or refrain from acting in the exercise of his or her functions. (article 2 of the Criminal Law Convention on Corruption (ETS 173) of the Council of Europe). Passive bribery can be defined as the request or receipt [by any public official], directly or indirectly, of any undue advantage, for himself or herself or for anyone else, or the acceptance of an offer or a promise of such an advantage, to act or refrain from acting in the exercise of his or her functions (article 3 of the Criminal Law Convention on Corruption (ETS 173)). The reason for this dissociation is to make the early steps (offering, promising, requesting an advantage) of a corrupt deal already an offence and, thus, to give a clear signal (from a criminal policy point of view) that bribery is not acceptable. Besides, such a dissociation makes the prosecution of bribery offences easier since it can be very difficult to prove that two parties (the bribe-giver and the bribe-taker) have formally agreed upon a corrupt deal. Besides, there is often no such formal deal but only a mutual understanding, for instance when it is common knowledge in a municipality that to obtain a building permit one has to pay a "fee" to the decision maker to obtain a favourable decision. A working definition of corruption is also provided as follows in article 3 of the Civil Law Convention on Corruption (ETS 174): For the purpose of this Convention, "corruption" means requesting, offering, giving or accepting, directly or indirectly, a bribe or any other undue advantage or prospect thereof, which distorts the proper performance of any duty or behaviour required of the recipient of the bribe, the undue advantage or the prospect thereof.
Governmental corruction of judiciary
Governmental corruction of judiciary includes governmental spending on the courts, which is completely financially controlled by the executive in many transitional and developing countries. This undermines the principle of checks and balances and creates a critical financial dependence on the judiciary. It covers latent governmental spending on the judiciary in the form of privileges – cars, country houses,expenses. Such a system is completely outside the realm of transparency and creates a precedent for the corruption of the judiciary by executive authorities.
Trading in influence
Trading in influence, or influence peddling in certain countries, refers to the situation where a person is selling his/her influence over the decision process involving a third party (person or institution). The difference with bribery is that this is a tri-lateral relation. From a legal point of view, the role of the third party (who is the target of the influence) does not really matter although he/she can be an accessory in some instances. It can be difficult to make a distinction between this form of corruption and certain forms of extreme and poorly regulated lobbying where for instance law- or decision-makers can freely "sell" their vote, decision power or influence to those lobbyists who offer the highest retribution, including where for instance the latter act on behalf of powerful clients such as industrial groups who want to avoid the passing of certain environmental, social, or other regulations perceived as too stringent, etc. Where lobbying is (sufficiently) regulated, it becomes possible to provide for a distinctive criteria and to consider that trading in influence involves the use of "improper influence", as in article 12 of the Criminal Law Convention on Corruption (ETS 173) of the Council of Europe.
Patronage
Patronage refers to favoring supporters, for example with government employment. This may be legitimate, as when a newly elected government changes the top officials in the administration in order to effectively implement its policy. It can be seen as corruption if this means that incompetent persons, as a payment for supporting the regime, are selected before more able ones. In nondemocracies many government officials are often selected for loyalty rather than ability. They may be almost exclusively selected from a particular group (for example, Sunni Arabs in Saddam Hussein's Iraq, the nomenklatura in the Soviet Union, or the Junkers in Imperial Germany) that support the regime in return for such favors. A similar problem can also be seen in Eastern Europe, for example in Romania, where the government is often accused of patronage (when a new government comes to power, in a few months time it changed most of the officials in the public sector).
Nepotism and cronyism
Favoring relatives (nepotism) or personal friends (cronyism) of an official is a form of illegitimate private gain. This may be combined with bribery, for example demanding that a business should employ a relative of an official controlling regulations affecting the business. The most extreme example is when the entire state is inherited, as in North Korea or Syria. A milder form of cronyism is an "old boy network", in which appointees to official positions are selected only from a closed and exclusive social network – such as the alumni of particular universities – instead of appointing the most competent candidate.
Seeking to harm enemies becomes corruption when official powers are illegitimately used as means to this end. For example, trumped-up charges are often brought up against journalists or writers who bring up politically sensitive issues, such as a politician's acceptance of bribes.
In the Indian political system, leadership of national and regional parties are passed from generation to generation creating a system in which a family holds the center of power, some examples are most of the dravidian parties of south India and also the largest party in India - Congress.
Electoral fraud
Electoral fraud is illegal interference with the process of an election. Acts of fraud affect vote counts to bring about an election result, whether by increasing the vote share of the favored candidate, depressing the vote share of the rival candidates, or both. Also called voter fraud, the mechanisms involved include illegal voter registration, intimidation at polls, and improper vote counting.
Embezzlement
Embezzlement is outright theft of entrusted funds. It is a misappropriation of property.
Another common type of embezzlement is that of entrusted government resources; for example, when a director of a public enterprise employs company workers to build or renovate his own house.
Kickbacks
A kickback is an official's share of misappropriated funds allocated from his or her organization to an organization involved in corrupt bidding. For example, suppose that a politician is in charge of choosing how to spend some public funds. He can give a contract to a company that is not the best bidder, or allocate more than they deserve. In this case, the company benefits, and in exchange for betraying the public, the official receives a kickback payment, which is a portion of the sum the company received. This sum itself may be all or a portion of the difference between the actual (inflated) payment to the company and the (lower) market-based price that would have been paid had the bidding been competitive. Kickbacks are not limited to government officials; any situation in which people are entrusted to spend funds that do not belong to them are susceptible to this kind of corruption. Kickbacks are also common in the pharmaceutical industry, as many doctors and physicians receive pay in return for added promotion and prescription of the drug these pharmaceutical companies are marketing. (See: Anti-competitive practices, Bid rigging.)
Unholy alliance
An unholy alliance is a coalition among seemingly antagonistic groups, especially if one is religious, for ad hoc or hidden gain. Like patronage, unholy alliances are not necessarily illegal, but unlike patronage, by its deceptive nature and often great financial resources, an unholy alliance can be much more dangerous to the public interest. An early, well-known use of the term was by Theodore Roosevelt (TR):
"To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day." – 1912 Progressive Party Platform, attributed to TR and quoted again in his autobiography where he connects trusts and monopolies (sugar interests, Standard Oil, etc.) to Woodrow Wilson, Howard Taft, and consequently both major political parties.
Involvement in organized crime
An illustrative example of official involvement in organized crime can be found from 1920s and 1930s Shanghai, where Huang Jinrong was a police chief in the French concession, while simultaneously being a gang boss and co-operating with Du Yuesheng, the local gang ringleader. The relationship kept the flow of profits from the gang's gambling dens, prostitution, and protection rackets undisturbed.
The United States accused Manuel Noriega's government in Panama of being a "narcokleptocracy", a corrupt government profiting on illegal drug trade. Later the U.S. invaded Panama and captured Noriega.
Conditions favorable for corruption
It is argued that the following conditions are favorable for corruption:
- Information deficits
- Lack of government transparency.
- Lacking freedom of information legislation. The Indian Right to Information Act 2005 has "already engendered mass movements in the country that is bringing the lethargic, often corrupt bureaucracy to its knees and changing power equations completely."
- Lack of investigative reporting in the local media.
- Contempt for or negligence of exercising freedom of speech and freedom of the press.
- Weak accounting practices, including lack of timely financial management.
- Lack of measurement of corruption. For example, using regular surveys of households and businesses in order to quantify the degree of perception of corruption in different parts of a nation or in different government institutions may increase awareness of corruption and create pressure to combat it. This will also enable an evaluation of the officials who are fighting corruption and the methods used.
- Tax havens which tax their own citizens and companies but not those from other nations and refuse to disclose information necessary for foreign taxation. This enables large scale political corruption in the foreign nations.
- Lacking control of the government.
- Democracy absent or dysfunctional. See illiberal democracy.
- Lacking civic society and non-governmental organizations which monitor the government.
- An individual voter may have a rational ignorance regarding politics, especially in nationwide elections, since each vote has little weight.
- Weak civil service, and slow pace of reform.
- Weak rule of law.
- Weak legal profession.
- Weak judicial independence.
- Lacking protection of whistleblowers.
- Lack of benchmarking, that is continual detailed evaluation of procedures and comparison to others who do similar things, in the same government or others, in particular comparison to those who do the best work. The Peruvian organization Ciudadanos al Dia has started to measure and compare transparency, costs, and efficiency in different government departments in Peru. It annually awards the best practices which has received widespread media attention. This has created competition among government agencies in order to improve.
- Opportunities and incentives
- Individual officials routinely handle cash, instead of handling payments by giro or on a separate cash desk—illegitimate withdrawals from supervised bank accounts are much more difficult to conceal.
- Public funds are centralized rather than distributed. For example, if $1,000 is embezzled from a local agency that has $2,000 funds, it is easier to notice than from a national agency with $2,000,000 funds. See the principle of subsidiarity.
- Large, unsupervised public investments.
- Sale of state-owned property and privatization.[citation needed]
- Poorly-paid government officials.
- Government licenses needed to conduct business, e.g., import licenses, encourage bribing and kickbacks.
- Long-time work in the same position may create relationships inside and outside the government which encourage and help conceal corruption and favoritism. Rotating government officials to different positions and geographic areas may help prevent this; for instance certain high rank officials in French government services (e.g. treasurer-paymasters general) must rotate every few years.
- Costly political campaigns, with expenses exceeding normal sources of political funding, especially when funded with taxpayer money.
- Less interaction with officials reduces the opportunities for corruption. For example, using the Internet for sending in required information, like applications and tax forms, and then processing this with automated computer systems. This may also speed up the processing and reduce unintentional human errors. See e-Government.
- A windfall from exporting abundant natural resources may encourage corruption.
- War and other forms of conflict correlate with a breakdown of public security.
- Social conditions
- Self-interested closed cliques and "old boy networks".
- Family-, and clan-centered social structure, with a tradition of nepotism/favouritism being acceptable.
- A gift economy, such as the Chinese guanxi or the Soviet blat system, emerges in a Communist centrally planned economy.
- In societies where personal integrity is rated as less important than other characteristics (by contrast, in societies such as 18th and 19th century England, 20th century Japan, and post-war western Germany, where society showed almost obsessive regard for "honor" and personal integrity, corruption was less frequently seen)[citation needed]
- Lacking literacy and education among the population.
- Frequent discrimination and bullying among the population.
- Tribal solidarity, giving benefits to certain ethnic groups
Relation to economic freedom
According to a study of the conservative think tank The Heritage Foundation, lack of economic freedom explains 71% of corruption the poorer the Index of Economic Freedom, the more corruption there is in a country. Below is a list of examples of governmental activities that limit economic freedom, create opportunities for corruption (incentives for individuals and/or companies to buy privileges or favors worth of money, from politicians or officials), and have in recent economic history also led to corruption:
- Licenses, permits, etc.
- Foreign trade restrictions. Officials may then, e.g., sell import or export permits.
- Credit bailouts.
- State ownership of utilities and natural resources. 'In analyzing India's state-run irrigation system, professor Shyam Kamath - - wrote: Public-sector irrigation systems everywhere are typically plagued with cost and time overruns, endemic inefficiency, chronic excess demands, and widespread corruption and rent seeking.'
- Access to loans at below-market rates. In Chile, '$4.6 billion was awarded to government banks in direct subsidies through "soft" loans' between 1940 and 1973.
Size of public sector
It is a controversial issue whether the size of the public sector per se results in corruption. As mentioned above, low degree of economic freedom explains 71% of corruption. The actual share may be even greater, as also past regulation affects the current level of corruption due to the slowing of cultural changes (e.g., it takes time for corrupted officials to adjust to changes in economic freedom). The size of the public sector in terms of taxation is only one component of economic un-freedom, so the empirical studies on economic freedom do not directly answer this question.
Extensive and diverse public spending is, in itself, inherently at risk of cronyism, kickbacks, and embezzlement. Complicated regulations and arbitrary, unsupervised official conduct exacerbate the problem. This is one argument for privatization and deregulation. Opponents of privatization see the argument as ideological. The argument that corruption necessarily follows from the opportunity is weakened by the existence of countries with low to non-existent corruption but large public sectors, like the Nordic countries. However, these countries score high on the Ease of Doing Business Index, due to good and often simple regulations, and have rule of law firmly established. Therefore, due to their lack of corruption in the first place, they can run large public sectors without inducing political corruption.
Like other governmental economic activities, also privatization, such as in the sale of government-owned property, is particularly at the risk of cronyism. Privatizations in Russia, Latin America, and East Germany were accompanied by large scale corruption during the sale of the state owned companies. Those with political connections unfairly gained large wealth, which has discredited privatization in these regions. While media have reported widely the grand corruption that accompanied the sales, studies have argued that in addition to increased operating efficiency, daily petty corruption is, or would be, larger without privatization, and that corruption is more prevalent in non-privatized sectors. Furthermore, there is evidence to suggest that extralegal and unofficial activities are more prevalent in countries that privatized less.
There is the counter point, however, that oligarchy industries can be quite corrupt ( "competition" like collusive price-fixing, pressuring dependent businesses, etc. ), and only by having a portion of the market owned by someone other than that oligarchy, i.e. public sector, can keep them in line ( if the public sector gas company is making money & selling gas for 1/2 of the price of the private sector companies... the private sector companies won't be able to simultaneously gouge to that degree & keep their customers: the competition keeps them in line ). Private sector corruption can increase the poverty/helplessness of the population, so it can affect government corruption, in the long-term.
In the European Union, the principle of subsidiarity is applied: a government service should be provided by the lowest, most local authority that can competently provide it. An effect is that distribution of funds into multiple instances discourages embezzlement, because even small sums missing will be noticed. In contrast, in a centralized authority, even minute proportions of public funds can be large sums of money.
Governmental corruption
If the highest echelons of the governments also take advantage from corruption or embezzlement from the state's treasury, it is sometimes referred with the neologism kleptocracy. Members of the government can take advantage of the natural resources (e.g., diamonds and oil in a few prominent cases) or state-owned productive industries. A number of corrupt governments have enriched themselves via foreign aid, which is often spent on showy buildings and armaments.
A corrupt dictatorship typically results in many years of general hardship and suffering for the vast majority of citizens as civil society and the rule of law disintegrate. In addition, corrupt dictators routinely ignore economic and social problems in their quest to amass ever more wealth and power.
The classic case of a corrupt, exploitive dictator often given is the regime of Marshal Mobutu Sese Seko, who ruled the Democratic Republic of the Congo (which he renamed Zaire) from 1965 to 1997. It is said that usage of the term kleptocracy gained popularity largely in response to a need to accurately describe Mobutu's regime. Another classic case is Nigeria, especially under the rule of General Sani Abacha who was de facto president of Nigeria from 1993 until his death in 1998. He is reputed to have stolen some US$3–4 billion. He and his relatives are often mentioned in Nigerian 419 letter scams claiming to offer vast fortunes for "help" in laundering his stolen "fortunes", which in reality turn out not to exist. More than $400 billion was stolen from the treasury by Nigeria's leaders between 1960 and 1999.
More recently, articles in various financial periodicals, most notably Forbes magazine, have pointed to Fidel Castro, General Secretary of the Republic of Cuba since 1959, of likely being the beneficiary of up to $900 million, based on "his control" of state-owned companies. Opponents of his regime claim that he has used money amassed through weapons sales, narcotics, international loans, and confiscation of private property to enrich himself and his political cronies who hold his dictatorship together, and that the $900 million published by Forbes is merely a portion of his assets, although that needs to be proven.
Whistleblowers
Campaign contributions
In the political arena, it is difficult to prove corruption. For this reason, there are often unproved rumors about many politicians, sometimes part of a smear campaign.
Politicians are placed in apparently compromising positions because of their need to solicit financial contributions for their campaign finance. If they then appear to be acting in the interests of those parties that funded them, this gives rise to talk of political corruption. Supporters may argue that this is coincidental. Cynics wonder why these organizations fund politicians at all, if they get nothing for their money.
Laws regulating campaign finance in the United States require that all contributions and their use should be publicly disclosed. Many companies, especially larger ones, fund both the Democratic and Republican parties. Certain countries, such as France, ban altogether the corporate funding of political parties. Because of the possible circumvention of this ban with respect to the funding of political campaigns, France also imposes maximum spending caps on campaigning; candidates that have exceeded those limits, or that have handed in misleading accounting reports, risk having their candidacy ruled invalid, or even being prevented from running in future elections. In addition, the government funds political parties according to their successes in elections.
In some countries, political parties are run solely off subscriptions (membership fees).
Even legal measures such as these have been argued to be legalized corruption, in that they often favor the political status quo. Minor parties and independents often argue that efforts to rein in the influence of contributions do little more than protect the major parties with guaranteed public funding while constraining the possibility of private funding by outsiders. In these instances, officials are legally taking money from the public coffers for their election campaigns to guarantee that they will continue to hold their influential and often well-paid positions.
The development of Corruption Free Politics by the Agenda 2058 Foundation in South Africa, has been the turning point in the war against political corruption. Indeed by removing the need for donations, state subsidies and other gratuities, the WNPC's (as Agenda 2058 calls them) enable political solvency, political autonomy, and remove the need for the grey money, which ordinarily is condoned on the basis of campaign finance needs. For more information read www.agenda2058.org.
As indicated above, the Committee of Ministers of the Council of Europe recognised in 1996 the importance of links between corruption and political financing. It adopted in 2003 the Recommendation on Common Rules against Corruption in the Funding of Political Parties and Electoral Campaigns (Rec(2003)4). This text is quite unique at international levels as it aims i.a. at increasing transparency in the funding of political parties and election campaigns (these two areas are difficult to dissociate since parties are also involved in campaigning and in many countries, parties do not have the monopoly over the presentation of candidates for elections), ensuring a certain level of control over the funding and spending connected with political activities, and making sure infringements are subject to effective, proportionate, and dissuasive sanctions. In the context of its monitoring activities, the Group of States Against Corruption has identified a great variety of possible improvements in those areas (see the country reports adopted under the Third Evaluation Round).
Measuring corruption
Measuring corruption statistically is difficult if not impossible due to the illicit nature of the transaction and imprecise definitions of corruption. While "corruption" indices first appeared in 1995 with the Corruption Perceptions Index, all of these metrics address different proxies for corruption, such as public perceptions of the extent of the problem.
Transparency International, an anti-corruption NGO, pioneered this field with the Corruption Perceptions Index, first released in 1995. This work is often credited with breaking a taboo and forcing the issue of corruption into high level development policy discourse. Transparency International currently publishes three measures, updated annually: a Corruption Perceptions Index (based on aggregating third-party polling of public perceptions of how corrupt different countries are); a Global Corruption Barometer (based on a survey of general public attitudes toward and experience of corruption); and a Bribe Payers Index, looking at the willingness of foreign firms to pay bribes. The Corruption Perceptions Index is the best known of these metrics, though it has drawn much criticism and may be declining in influence.
The World Bank collects a range of data on corruption, including survey responses from over 100,000 firms worldwide and a set of indicators of governance and institutional quality. Moreover, one of the six dimensions of governance measured by the Worldwide Governance Indicators is Control of Corruption, which is defined as "the extent to which power is exercised for private gain, including both petty and grand forms of corruption, as well as 'capture' of the state by elites and private interests." While the definition itself is fairly precise, the data aggregated into the Worldwide Governance Indicators is based on any available polling: questions range from "is corruption a serious problem?" to measures of public access to information, and not consistent across countries. Despite these weaknesses, the global coverage of these datasets has led to their widespread adoption, most notably by the Millennium Challenge Corporation.
In part in response to these criticisms, a second wave of corruption metrics has been created by Global Integrity, the International Budget Partnership, and many lesser known local groups, starting with the Global Integrity Index, first published in 2004. These second wave projects aim not to create awareness, but to create policy change via targeting resources more effectively and creating checklists toward incremental reform. Global Integrity and the International Budget Partnership each dispense with public surveys and instead uses in-country experts to evaluate "the opposite of corruption" – which Global Integrity defines as the public policies that prevent, discourage, or expose corruption. These approaches compliment the first wave, awareness-raising tools by giving governments facing public outcry a checklist which measures concrete steps toward improved governance.
Typical second wave corruption metrics do not offer the worldwide coverage found in first wave projects, and instead focus on localizing information gathered to specific problems and creating deep, "unpackable" content that matches quantitative and qualitative data. Meanwhile, alternative approaches such as the British aid agency's Drivers of Change research skips numbers entirely and favors understanding corruption via political economy analysis of who controls power in a given society.
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