Corruption in the Global Era

Causes, Sources and Forms of Manifestation

Lorenzo Pasculli, Nicholas Ryder

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429589249
• Edition: 1
• Topic: Law
• Subtopic: Financial Law
• Index: Law

Corruption is a globalising phenomenon. Not only is it rapidly expanding globally but, more significantly, its causes, its means and forms of perpetration and its effects are more and more rooted in the many developments of globalisation. The Panama Papers, the FIFA scandals and the Petrobras case in Brazil are just a few examples of the rapid and alarming globalisation of corrupt practices in recent years. The lack of empirical evidence on corrupt schemes and a still imperfect dialogue between different disciplinary areas and between academic and practitioners hinder our knowledge of corruption as a global phenomenon and slow down the adoption of appropriate policy responses.

Corruption in the Global Era seeks to establish an interdisciplinary dialogue between theory and practice and between different disciplines and to provide a better understanding of the multifaceted aspects of corruption as a global phenomenon. This book gathers top experts across various fields of both the academic and the professional world – including criminology, economics, finance, journalism, law, legal ethics and philosophy of law – to analyze the causes and the forms of manifestation of corruption in the global context and in various sectors (sports, health care, finance, the press etc.) from the most disparate perspectives. The theoretical frameworks elaborated by academics are here complemented by precious insider accounts on corruption in different areas, such as banking and finance and the press. The expanding links between corrupt practices and other global crimes, such as money laundering, fraud and human trafficking, are also explored. This book is an important resource to researchers, academics and students in the fields of law, criminology, sociology, economics and ethics, as well as professionals, particularly solicitors, barristers, businessmen and public servants.

Part I
Introduction

1 Corruption and globalisation

Towards an interdisciplinary scientific understanding of corruption as a global crime

Lorenzo Pasculli and Nicholas Ryder

Corruption as a global crime: an introduction

Corruption is undoubtedly a global crime. Not only in the sense that it is globally widespread – that is, different corrupt behaviours are perpetrated in every country – but also especially in the sense that the developments of globalisation are increasingly globalising the causes, the means, the forms of perpetration and the effects of corruption. Global interconnectedness and the neo-liberal discourses of economic growth, free markets, individualism, consumerism, privatisation and deregulation have created new needs, desires and fashions, but legitimate and adequate means to pursue them are not equally available worldwide (Passas, 2000), in a state which Durkheim would define as ‘chronic anomie’ (Durkheim, 1897: p. 215). At the same time, the rapid technological advances and the mobility of people, assets and knowledge typical of globalisation afford new opportunities to pursue such materialistic goals through corrupt and fraudulent schemes and to do so across different countries. Current failures and shortcomings of national anti-corruption measures and legislation – physiologically incapable to cope with globalised offences – and the lack of an efficient and truly global system to prevent them, investigate them and prosecute its authors provide motivations and opportunities for the development of transnational corrupt schemes. The harm caused by corrupt practices is not limited to one jurisdiction anymore, but it increasingly often affects more than one country, different international organisations or even the whole international community. Recent examples, such as the Petrobras case in Brazil, the investigations of the possible influence of Russia on the United States (US) presidential elections, the FIFA corruption scandals, and some of the practices revealed by the leaking of the Panama Papers, as well as evidence of systemic corruption in developing countries, such as Global Witness’s findings on the Uganda mining sector (Global Witness, 2017), are clear proof of this. International initiatives such as the Global Anti-Corruption Summit held in London on 12 May 2016 or, with particular regard to the European context, the project to establish an EU Integrity network launched in Vienna in May 2018 (BAK, 2018) show that policymakers are aware of the globalisation of corruption and its potentially destructive consequences.

In such a context, gaining an increasingly comprehensive and in-depth knowledge of corruption as a globalising phenomenon is essential. Besides, a solid knowledge of the forms of manifestations of such a phenomenon, its sources and its causes is a necessary condition for the adoption of appropriate policies and regulation to contrast it. The literature on corruption is relatively young and evidence on the extent and the dynamics of corrupt schemes is difficult to gather due to the usual secrecy of such practices. While public and academic interest in corruption is gradually increasing, also thanks to the work of non-governmental organisations (NGOs), such as Transparency International or Global Witness, more efforts are required to keep our knowledge up to date with the rapidly evolving features of corruption. Particularly, the observation of the global dimensions of corruption exposes some of its characters which are still understudied and suggests the approach to be taken in order to fill this gap. This book aims at filling, at least partially, such gap by contributing to a better understanding of corruption in the global context and at advancing the academic and public debate on corruption. This project originates from the collaborative research activities of the Financial Crime Research Network at the University of the West of England and the Global Integrity Research Network, which allowed us to study some of the emerging and globalising features of corruption calling for more investigation. In the following paragraphs, we will illustrate some of these features and the research methods required to analyse them, which the authors of the various essays included in this book have endeavoured to adopt. In doing so, we will also anticipate some of the contents of the following chapters and highlight the important relations between them.

Defining corruption

Before undertaking any study, it is appropriate to define its subject. We shall endeavour here to define corruption as the object of our analysis. Defining corruption is not a straightforward task and requires the solution of some problematic issues. Here we will provide a preliminary working definition based on the findings of the studies collected in this volume and of previous research. The following chapters will shed light on specific defining traits of corruption, which will contribute to its fuller understanding.

Corruption as a social phenomenon and as a legal construct

Corruption can be studied either as a social phenomenon – that is, corruption as concretely manifested and observed in a series of social practices, relationships and networks – or, as Ian Robinson suggests in his chapter, as a legal construct – that is, corruption as a set of behaviours defined and qualified as corrupt (and therefore criminal and illegal) by the law. This book is especially concerned with the study of corruption as a social phenomenon. There are various reasons for this.

First, quite obviously, any phenomenon is a logical antecedent to its legal regulation. Or, in other words, the law should be based on an appropriate knowledge of the phenomena it seeks to regulate: studying the phenomenon is necessary to plan, design, criticise and reform the law. This observation could sound like a platitude, if only there weren’t so many examples around the world of laws which do not reflect an appropriate knowledge of their subject. Anti-corruption laws make no exception and some legal definitions of corruption are a good example of this. Recent studies demonstrate that in the United Kingdom (UK) questionable practices that are perceived by the public as corrupt, such as revolving door appointments, are perfectly legal (Whyte, 2015; Beetham, 2015; Ellis and Whyte, 2016). While there might be good policy and legal reasons to avoid the criminalisation or prohibition of every behaviour which could be perceived as ‘corrupt’, these studies raise questions about the adequacy of the existing legal definitions to capture the many and evolving aspects of corruption and the consequent ability of the law to address them. Moreover, legal definitions of corruption, both at a national and at an international level, tend to define ‘corruption’ as a limited set of criminalised conducts, such as active and passive bribery in both the public and private sector, trading in influence, embezzlement, and abuse of functions. The United Nations Convention against Corruption (UNCAC) and the Council of Europe (CoE) Criminal Law Convention on Corruption are clear examples of this (the word ‘corruption’ is mentioned only once in Chapter 2 of the CoE Convention dedicated to the criminalisation of corruption offences and it is not even mentioned in the equivalent Part III of the UNCAC). But corruption is more than this. Scholars from different disciplines agree that, as a phenomenon, corruption is not confined to bribery and other criminal offences, but it encompasses and feeds upon a set of collusive relationships, influences and arrangements which, while not being necessarily criminal, can still lead to abuses of power and trust for personal interests (cf. Grasso, 2017; Huisman Vande Walle, 2010; Gray, 2013; Johnston, 2005; Doig and Theobald, 2000). In some jurisdictions some of these practices, however questionable, might not even be illegal, but merely unethical. The notions of corruption as a social fact and corruption as a legal construct, therefore, do not necessarily coincide. An in-depth knowledge of the former is required in order to assess and, if need be, adjust the latter accordingly.

A second reason to focus on corruption as a phenomenon rather than as a legal construct resides in our ambition to understand it as a global issue. Legal definitions of corruption vary from jurisdiction to jurisdiction. Behaviours which are unequivocally against the law in certain jurisdictions might not be such in other ones. Button, Shepherd and Blackbourn remind us that in some of the United States receiving a commercial bribe is always lawful, while giving a bribe is illegal in other states only if it is given without the consent of the customer’s senior management. Interestingly enough, such differences occur also when the international law provides some level of harmonisation, since, eventually, the implementation of international norms still depends on national lawmakers. The offence of trading of influences (so-called peddling), as such, is not an offence in the UK trading in influence, but it is a crime in other countries, such as France (Article 432–11 of the Code pénal) or Italy (Article 346-bis of the codice penale), as a result of the obligation of criminalisation imposed by both the UNCAC and the Council of Europe’s (CoE) Criminal Law Convention on Corruption. If we wish to capture the globalising elements of corruption we must, therefore, transcend localised legal definitions.

Corruption beyond illegality

What we have been saying so far makes it clear that, as a social phenomenon, corruption not only is not limited to bribery but also can even go beyond criminal or illegal behaviours to encompass also unethical behaviours which might be technically legal. This is a starting point already, which gives an account of the possible breadth of corruption. We must refrain, however, from providing a definition of corruption which is so broad as to encompass any sort of unethical behaviour, thus becoming entirely useless. We need, therefore, to identify the qualifying element of the practices we consider constitutive of corruption.

The Latin etymology of the word ‘corruption’ (cum + rumpere: break in many parts) indicates decay, decomposition or disintegration. The same is true in other languages. He Jiahong (Chapter 3) reminds us that the biological etymology of the Chinese word for corruption, fubai, has exactly the same meaning. Corruption is, therefore, not just illegality or immorality but specifically a breach of integrity. Like corruption, integrity is a very elusive expression. It clearly implies, however, the idea of the wholeness of a particular substance. We can define it as the internal coherence of a certain system not only with its own original ethos but also with its physiological functions (aimed at implementing the values and interests constitutive of that ethos). Corruption is precisely the ‘subversion’ of such functions, to use Steven Montagu-Cairns’s expression (Chapter 2) or their ‘deviation’ from public expectations of honesty (the ethos), as expressed by Paolo Moro (Chapter 16). In other words, corruption is a ‘betrayal’ (Roux, Chapter 7). This idea implies the abuse – that is, the manipulative or distortive employment – of powers, prerogatives or instruments to pursue purposes and interests different from those which they are intended to fulfil. It’s this abusive element that distinguishes corruption from other illegal or unethical behaviours. This is why the well-known definition of corruption as abuse of entrusted power for private gain is so successful – and, indeed, it is adopted by many of the authors of this book (see, e.g., Roux, Robinson, Mennini, Cairns, Moro). Brian Cathcart’s account of the developments which led to halting the second Leveson Inquiry on the British press provides examples of collusion between politics and the press which, while not being necessarily (or obviously) illegal, still deserve to be considered corrupt insofar as they result in the abuse of public power and influences contrary to public interest. It must be clarified, however, that it is not only public power that can be corrupted for private interests. Prerogatives entrusted to private bodies, such as corporations or banks, can be equally abused to satisfy interests different than those they are meant to serve, as some of the cases illustrated by Ian Robinson, Demelza Hall and Steven Montagu-Cairns make clear in their chapters. Incidentally, this feature is well captured by legislators around the world. The UK Bribery Act 2010, for instance, considers the improper performance of a relevant function or activity as one constitutive element of the offence of bribery.¹ In China, as He Jiahong reminds us (Chapter 3), many corrupt practices are criminalised as ‘duty crimes’ or ‘official occupational crimes’ (zhiwu fanzui), which, according to the Chinese Criminal Code, are acts characterised by the private use of the privileges of position in national agencies, national companies, business or enterprise work units, or people’s organisations, for the purposes of embezzlement, bribery, favouritism, dereliction of duty, or violation of a citizen’s personal and democratic rights.

Despite the apparent clarity of such a definition, in practice determining what is corrupt – that is, what is in effect a breach of integrity – and what is not can be very difficult. In his chapter, aptly titled ‘The Grey Zone’, Ian Robinson explores the uncertain boundaries between deliberate misselling and misrepresentation of financial products and financial practices which are rather the fruit of incompetence or of the inability to predict events that are outside the previously experienced range of outcomes in the complexity of financial systems. Similarly, Steven Montagu-Cairns (Chapter 2) investigates the thin line between advantageous but reasonable and proportionate corporate hospitality and lavish gifts which amount to proper bribes. An example of such practice is also provided by the Dutchmed case of bribery within the World Bank–funded Health Sector Reform Project in Romania, examined by Costantino Grasso (Chapter 13). Studying such grey areas is fundamental to support policy- and lawmakers in the increasingly challenging endeavour to determine what should remain legal, what should become illegal, and what should be criminalised. Matthew Hall’s chapter, for instance, discusses the opportunity of introducing a new offence of match-fixing in sports to distinguish it from bribery so as to strengthen deterrence and minimise the risk of interpretative confusion which might hinder prosecution and conviction.

The global means and ways of perpetration of corruption

As many other forms of crime, corruption is facilitated and often enabled by the many ways of interconnectedness opened by globalisation. Transportation and communication technologies, in particular, together with the deterritorialisation of markets and business, multiply the means, the motivations and the opportunities to perpetrate corrupt schemes across different states and foster the connections between corruption offences and other crimes. In other words, corruption is becoming transnational and transversal, in the terms we will explain ahead.

Transnationality

The abundance of corrupt practices perpetrated across different states exposed by the news and by NGOs makes the transnational character of corruption self-evident. It is, however, appropriate to give a more theoretical framing to such feature. Transnationality can concern either the modalities and means of perpetration of corrupt schemes or their effects. As for the ways and means of perpetration, corruption is transnational when: (a) corrupt schemes are committed, prepared, planned, directed or controlled in more than one state; or (b) corrupt schemes are committed in one state but involve groups or individuals who engage in corrupt activities in more than one state. As for the effects, corruption is transnational when: (c) the interests harmed or endangered by corrupt schemes are shared by more than one state, if not by the entire international community; or (d) it is committed in one state but has substantial effects in another state. Each of these four conditions alone is enough to make corruption transnational in nature (cf. Pasculli, 2012). This definition of transnationality is well known with regard to organised crime and legally acknowledged by the UN Convention against Transnational Organized Crime signed in Palermo in 2000. In this paragraph, we will address specifically the transnationality of means and perpetration, while we will address the transnationality of the consequences later.

The research findings illustrated in the chapters of this book help clarify that the transnationality of corruption depends mostly on three factors: (a) the interaction between individuals or entities from different countries; (b) the employment of transportation, information or communication technologies to facilitate such interactions; (c) the difficulties in preventing, investigati...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Contents
• List of contributors
• Part I Introduction
• Part II Corruption beyond bribery and illegality
• Part III Causes of corruption: motivations, opportunities and sources
• Part IV Forms of manifestation and effects: the transnationality and transversality of corruption
• Index