Political Corruption in Comparative Perspective

Sources, Status and Prospects

Charles Funderburk

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317078876
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Political corruption adversely affects the efficiency and effectiveness of governments, slows the rate of economic development and poisons public attitudes towards the legitimacy of the state. Affecting governmental and non-governmental organizations, developed and developing nations and millions of people's lives, it is a subject of great interest to students from a wide variety of academic disciplines. Using a concise, comparative approach based on original case studies Political Corruption in Comparative Perspective: Sources, Status and Prospects provides context and clarity on this complex problem. Cases analysed include countries and organizations as diverse as the United States, Brazil, Russia, China, Israel, India, Pakistan, NGOs and the United Nations. International contributors discuss the historical background of political corruption in a particular country, region or organization and focus on the causes and consequences of that corruption before offering overviews and opinion on how the problem might be addressed. The range of cases used, each contributor's depth of knowledge and consistency of style applied throughout ensures that Political Corruption in Comparative Perspective: Sources, Status and Prospects is an important addition to the debate and fills a significant gap between academic study and general public knowledge of a truly global problem.

Chapter 1
Political Corruption: Causes and Consequences

Charles Funderburk

Bribery, extortion, kickbacks, public officials on the take, abuse of authority, scandals and cover-ups, police corruption, money laundering, and organized crime. These topics are the stuff of headlines, politics, and criminal investigations. While political corruption is an ancient and dishonorable endeavor, it is also an increasingly important reality of modern politics and the globalized economy.

Political corruption is about more than immorality and dishonesty. Corruption refers to a process that destroys or subverts honesty and integrity. Defined narrowly, corruption refers to acts by public officials that are dishonest or illegal, most often for private gain. More broadly, corruption includes actions by public officials that may be legal or illegal but are questionable in terms of the integrity of a system of legitimate government and the rule of law. To the extent that stable governmental institutions and the rule of law are related to economic and political development (they are), corrupt activities that undermine or manipulate the political system for private gain and political advancement impose real costs on societies. Corruption distributes resources in ways that benefit dishonest people at the expense of law-abiding citizens, and favors the wealthy over those unable to pay off corrupt officials. Graft cheats the government and taxpayers, and corruption of public officials is essential to organized crime.

In their analysis of corruption, Berg, Hahn, and Schmidhauser discuss why political corruption should be defined more broadly than simply the commission of acts contrary to existing law. Since those who hold power decide what is legal, the powerful are at liberty to define corruption and legality in a manner beneficial to their interests:

Corruption involves more than personal financial aggrandizement of public officials, direct bribery, conflicts of interest, and similar phenomena…The implications of a political system dominated almost exclusively by the affluent, and by those who associate with the wealthy, are enormous (1976: 80).

Does Corruption Matter?

Most assuredly, it does. Consequences of widespread political corruption for societies include lower rates of economic growth, slower development of economic and political institutions, widespread cynicism and alienation among the populace undermining the legitimacy of the state, and in some cases political and social instability. Specifically, corruption is related to economic development because the scope of political corruption reduces the flow of capital into a country (direct foreign investment), harms economic productivity and competitiveness, and lowers government spending on social programs, benefits, and development projects (Elliott 1997: 32–45; Klitgaard 1988: 36–38).

Transparency International (TI) is a private organization devoted to reporting and analyzing the scope of corruption worldwide. Transparency International’s Global Corruption Report for the year 2004 focused specifically on political corruption, defined as abuse of entrusted power by political leaders. Transparency International’s Corruption Perceptions Index (CPI) consists of estimates of the degree of corruption among public officials and politicians in 133 countries based on the perceptions of business people, academics, and researchers. Among the findings of this report:

• Seventy per cent of the countries scored less than 5 out of a possible “clean score” of 10.

• Political corruption is associated with lower foreign investment and lower economic productivity.

• Political corruption discourages foreign investment because it is associated with legal uncertainty, bureaucratic mismanagement, and lack of secure property rights.

• In countries with high levels of political corruption government contracts resulted in projects with substandard work at inflated prices, construction that was unsound, and a widespread perception that political pressure was used to win business advantages.

• The larger the amounts of money produced by the oil sector of the economy, the greater the potential for corruption.

• A lessening of political corruption increases economic growth (Gross Domestic Product) and increases the inflow of capital. Especially important in reducing corruption is progress in the area of strengthening political institutions, courts, law and order, and property rights (Transparency International 2004: 1–5, 310–311).

Types of Political Corruption

Bribery and extortion are perhaps the most common forms of political corruption worldwide. A bribe consists of an offer of money, gifts, or other inducements in order to secure desired action from government officials. A variation on this theme is the disguised bribe involving the sale of securities or real estate at a price well below market value in exchange for a favor. A demand by a public official for money or gifts is extortion. Bribery and extortion tend to decrease as political and legal institutions become stronger and economic entities enjoy more open and orderly access to political decision makers within a well-institutionalized policy process (Johnston 2005: 60–71).

Kickbacks involve the use by government officials of their control over the awarding of government contracts to obtain a fee, (or “commission”) for arranging the contract. A percentage (usually between 5 and 15) of the contract is returned or “kicked back” to public officials by the contractor. Insider trading, as the term implies, involves the use of their access to inside information by politicians and public officials to make a profit doing business with the government. Influence peddling involves individuals with access to high-ranking public officials. Staff members, advisers, friends, and family act as fixers, making money by selling access, arranging contacts and meetings, and intervening to secure favorable decisions and government contracts.

Control of public property, jobs, and funds provides temptation for mismanagement and corruption. Misappropriation of public funds may range from small-scale to enormous raids on the public treasury. Patronage is the assignment of government positions to political supporters, campaign contributors, friends, and family, and has long been a practice in politics. As political institutions mature in a society, procedures become more institutionalized to reduce or at least control most of these activities.

The financing of campaigns and elections is one of the murkiest areas between legal and illegal activities. Campaign contributions buy access to high-ranking public officials, and to their skills, favors, and power. Political parties finance their electoral campaigns and activities using one of three methods, or by some combination of them. Parties may fund their campaigns and activities internally by dues, by public funding, or by private contributions (Williams 2000). Financing political campaigns by private contributions may be tightly regulated or may approach a wide-open free-for-all with huge amounts of private money flowing into the political process with little regulation or accountability.

Three Stories of Political Corruption

Discussion of three case studies provides specific examples of these traditional techniques of political corruption.

Case Study One: Police Corruption in the NYPD

Since 1884, when the state legislature created the New York City police force as the first municipal police department in the United Sates, there have been recurring cycles of corruption, scandals, and investigations. The Knapp Commission on Police Corruption described the historical pattern of Police Corruption this way: “In each case, the investigators turned up substantial evidence of corruption, which was greeted by public expressions of shock and outrage. While some reforms usually followed each of these periodic scandals, the basic pattern of corrupt behavior was never substantially affected and after the heat was off, it was largely back to business as usual” (Knapp Commission 1972: 61).

The first investigation in 1894, the Lexow Committee, found systematic police extortion of houses of prostitution, payoffs to police by gambling operations, and extortion by police of protection payments from small businesses. An investigation 17 years later by the Curran Committee found systematic monthly extortion of gambling and prostitution operations, and discovered that the NYPD was hostile to civilian complaints and that the Police Commissioner was unaware of most of these complaints. Twenty years later, in 1932, a committee headed by Samuel Hofstadter reported similar findings and added that the department was extorting money from bootleggers as well as gamblers. In 1950, Harry Gross, head of the New York gambling syndicate, gave testimony that he made protection payments twice monthly to the vice squads in every division with gambling operations. There were extra payments to commanders, division inspectors, and lieutenants in charge of plainclothes squads. Payoffs for police protection exceeded one million dollars yearly, plus gifts including television sets, furs, jewelry, and automobiles. Twenty-one NYPD officers were indicted and another 57 were named as unindicted coconspirators due to insufficient evidence (Knapp Commission 1972).

Following public disclosures by Officer Frank Serpico describing his experiences as a plainclothes police officer in the NYPD in 1968 and 1969, a commission headed by US District Judge William Knapp was established in 1970 for yet another investigation of corruption in the NYPD. Officer Serpico’s testimony was included in the Knapp Commission report of 1972, and his account became the basis for a motion picture and a bestselling book. The Knapp Commission described corrupt police officers as either “grass-eaters” or “meat-eaters,” based on how actively the officers pursued graft. The majority of officers investigated, described as “grass-eaters,” accepted petty graft, took payoffs and gratuities, and solicited small payments but did not aggressively pursue payments. “Meat-eaters” spent considerable time aggressively seeking out situations they could exploit for financial gain, an approach producing payments of thousands of dollars.

The Knapp Commission identified organized crime as the largest source of police corruption in the NYPD. Organized crime made payments in order to protect its activities in drugs, gambling, loan sharking, and prostitution. Second to organized crime as a source of payments were legitimate businesses seeking to ease their operations within city regulations. Smaller sources of payments to police were private citizens and small-time criminals caught breaking the law.

The systematic nature of police corruption can be seen in the Knapp Commission’s description of “the pad,” consisting of regular payments, usually collected by police officers acting as “bagmen,” and then divided among participating officers, who were described as being “on the pad.” The size of pad payments increased with the rank of the officers. Illegal businesses, particularly vice and narcotics operations, were the largest source of pad payments. Legitimate businesses, particularly those requiring permits and licenses, sometimes operated on the pad in order to avoid summonses from police for violations. Construction companies and bars were often on the pad. Differing from the pad were one-time “scores” usually involving shakedowns or extortion of drug dealers whenever opportunities arose. As a result of the investigations originated by the Knapp Commission, 26 police officers and 14 civilians were indicted, and nearly two hundred cases were referred to the Internal Affairs Division of the NYPD (1972: 61–76, 92–115, 193).

With a police force of more than 27,000 offers at that time, it is understandable that occasional corruption occurred within the department. However, NYPD’s historical pattern of police corruption repeated itself again in 1986. This investigation began after drug traffickers in Brooklyn grew tired of police shakedowns. In the city’s 77th Precinct 13 officers were charged with extortion and drug trafficking. As publicity increased yet another commission, this one headed by Judge Milton Mollen, was established to investigate police corruption in ten precincts and the department’s Internal Affairs Division.

The arrest of Officer Michael Dowd, of the 75th precinct in Brooklyn, was the case most responsible for formation of the Mollen Commission (Goldman 1993). Officer Dowd was a ten-year veteran and a classic “meat-eater.” He owned a $35,000 Corvette sports car and four houses and was grossing $8000 per week from his corrupt activities. Dowd was described in the media as leader of a crew consisting of 15 officers, many of whom engaged in their corrupt activities while on duty. Dowd’s crew operated in a manner similar to a street gang, in that their purpose was to extort protection payments and to commit crimes, including confiscating drugs and later reselling them to dealers. In one instance this police crew planned a “bring your own drugs” barbecue (New York Times, July 8, 1994, B2). Before pleading guilty to federal charges of racketeering and drug trafficking, Dowd had become so addicted to cocaine that he was snorting it off of the dash of his police cruiser. In May 1995, only one year after the Mollen Commission reported its findings, another 20 officers from the 48th precinct were indicted on charges of trafficking in drugs and guns, brutality, theft, and other departmental violations.

Case Study Two: Corruption in Japanese Party Politics

The discussion of the NYPD provides an example of widespread corruption in a major city. The second case study illustrates corruption in a political party organization at the national level in Japan during the 1970s and 1980s. Following the defeat of Imperial Japan in the Second World War the United States established a formal legal framework by imposing a new constitution on Japan. Emerging from the amalgam of American political ideas and Japanese cultural, economic, and political traditions was a party system similar in some ways to American urban party organizations of the early twentieth century, but writ large on a nationwide scale. A disciplined national party organization was possible because economic planning in postwar Japan was highly centralized, and politicians worked closely with government planners, civil servants, and the corporate structure.

The Liberal Democratic Party (LDP) dominated Japanese politics following the Second World War until the 1990s. Despite its name, the Japanese Liberal Democratic Party consisted of a group of conservative politicians closely allied with the dominant business interests that shaped postwar economics and politics in Japan. Kakuei Tanaka, the architect of the LDP organization, was able to impose his influence into the political process using his political skills, business connections, and financial clout to create a national party organization that could consistently win national parliamentary elections. Emerging first as a regional political figure, Tanaka’s fundraising abilities and political savvy elevated him into a major player in parliament. He exercised influence over a wide range of policies, especially government spending priorities. Eventually he became the leader of the LDP and the only politician in postwar Japan without a university education to be elected prime minister. Tanaka succeeded by presenting himself to the voters as a man of the people who could deliver the goods, especially pork barrel public works projects for his district.

Much of Tanaka’s leverage over politicians in parliament was their need for money. Tanaka became legendary for his ability to obtain funding for public works and his prowess for raising huge amounts of campaign contributions for his supporters in the party. Tanaka once said to a new LDP candidate, “You can’t be a politician if this amount of money makes you nervous” (Schlesinger 1999: 112). Tanaka’s lucrative fundraising activities enabled him to create the gundan, a loyal and sizable bloc of votes in parliament. This combination of party influence, financial clout, and control of a voting bloc in the legislature elevated Tanaka to the role of kingmaker. His support was needed in order to become prime minister.

Tanaka’s party organization soon developed characteristics familiar to students of party politics and political corruption in the United States. Conflicts of interest came to be regarded as acceptable, insider trading proliferated, and influence peddling and exploitation of friends in high places were routine. Fees were expected and collected from businesses in exchange for government contracts. Generous contributions to party and elected officials poured in, along with gifts to civil servants and government ministers to reimburse “expenses,” and bribes were described as “advanced payments.”

The fact that Tanaka owned a construction company facilitated shadowy dealings and insider trading by permitting him to work through ghost companies with no direct link to him. For example, “the companies had an uncanny knack for snapping up cheap Niigata property that, unbeknownst to the old landowners, was about to soar in value, thanks to soon-to-be-announced public works projects” (Schlesinger 1999: 72).

Trouble began for Prime Minister Tanaka in the form of a bribery scandal involving Lockheed, the American aviation company. Tanaka was offered a share of a 500 million yen bribe (worth $1.6 million at the time) to ensure that All Nippon Airways purchased Lockheed aircraft. As the facts came to light in the mid-1970s the scandal picked up steam and Tanaka became the first Japanese prime minister to face criminal charges. He endured a lengthy and humiliating criminal trial during which he was successful in being re-elected to parliament three times while an accused felon. Eventually old age and poor health weakened his control of the LDP. After Tanaka suffered a stroke in 1985 during his lengthy trial, a power struggle ensued within the party and by the early 1990s the highly disciplined organization he had created collapsed. Even in the midst of his trial Tanaka was so highly regarded that a poll in 1983 showed that more than half the people of Tanaka’s hometown of Niigata chose him as the native son of whom they were most proud. Admiral Isoroku Yamamoto, who led the successful Japanese naval air attack on Pearl Harbor, finished a distant second (Schlesinger 1999: 106).

Case Study Three: Mobutu, Zaire, and the Theft of a Nation

The third case study describes political corruption on a grand scale. From 1965 until 1997 African despot Mobutu Sese Seko, with the encouragement and assistance of the United States and European powers, the World Bank, and the International Monetary Fund, looted the resources and treasury of Zaire (now the Democratic Republic of Congo) and drove the country into bankruptcy and economic chaos.

A bit of historical background: during the late nineteenth century in what became known as the “scramble for Africa,” European imperialist powers Britain, France, and Germany began to lay claim to huge porti...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Notes on Contributors
• Preface
• 1 Political Corruption: Causes and Consequences
• 2 Corruption in the United States: The Access Market
• 3 Corruption in Brazil
• 4 Corruption in Russia: Past, Present, and Future
• 5 Corruption in China: Red Capitalists on Parade
• 6 Corruption and Governance in South Asia
• 7 Corruption in the Palestinian Authority and Israel Vaughn P. Shannon
• 8 Corruption at the United Nations: A Nonprofit, Humanitarian Organization Confronts Ethical and Financial Misconduct
• 9 Changing Political Culture by Combating Corruption: The Role of Democratization NGOs in South Africa, Tajikistan, and Argentina
• 10 Conclusion: Comparative Corruption and the Challenge of Reform
• Index