Understanding and Preventing Corruption

A. Graycar, T. Prenzler

• Publisher: Palgrave Pivot
• Year: 2013
• ISBN:
  9781137335098
• Topic: Social Sciences
• Subtopic: Criminology
• Index: Social Sciences

Graycar and Prenzler present a readily accessible guide to the issues of public and private sector corruption, outlining the nature and dimensions of corruption problems in a variety of settings across the world, and providing a set of practical strategies to prevent corruption that also facilitate economic growth and development.

Part I

Corruption Is Complex

1

Describing Corruption

Abstract: Rather than defining the term ‘corruption’, the opening chapter introduces the topic of corruption by firstly identifying types of behaviours typically labelled ‘corruption’, including bribery, extortion, embezzlement, conflicts of interest, patronage, nepotism and cronyism. The chapter also addresses the issue of grey areas, especially around customary gift giving. The focus then moves to the question of where corruption occurs by introducing the TASP model of analysis – Types, Activities, Sectors and Places. Diverse examples of corruption are provided across these domains. Attention is also given to the scale of corrupt activities in different locations, using a number of case studies, including examples of large-scale and endemic corruption.

Graycar, Adam and Prenzler, Tim. Understanding and Preventing Corruption. Basingstoke: Palgrave Macmillan, 2013. DOI: 10.1057/9781137335098.

Types of corruption

Corruption has been with us since the beginning of time. It is not a new phenomenon of the 21st century. There is probably no more corruption now than there was in ancient times, though it is hard to assemble the evidence to support this judgement. What we do know is that corruption causes both harm and outrage when it is discovered in modern industrial societies, and responding to it becomes a matter of significant debate and often government action.

Corruption in our world affects everybody. All countries experience corruption. The World Economic Forum (2013) has estimated that the cost of corruption equals more than 5 per cent of global GDP (about US$2.6 trillion). Corruption adds up to about 10 per cent of the total cost of doing business globally. The World Bank (2007) has estimated that about $1 trillion per year is paid in bribes, while about $40 billion per year is looted by corrupt political leaders. The impacts of corruption severely and disproportionally affect the poorest and most vulnerable in any society, and when it is widespread, corruption deters investment, weakens economic growth and undermines the basis for law and order. In rich countries corruption pushes taxes to higher levels than they need be, and reduces services to lesser quality than they might be.

Throughout history people have always sought to advance their position, get a better deal, make more money, or look after those near and dear to them. How they do this has been documented by anthropologists, economists, sociologists, political scientists, lawyers and many other scholars. Mostly such scholars record the accepted and legitimate processes by which these ends are achieved. This is the stuff of social sciences. However, there are times when these ends are gained by misuse of positions of power or of resources that are commonly owned. This is when corruption comes into play.

There are many behaviours that can be deemed corrupt. These occur in many settings, and have varying consequences. Very often there is debate about whether the behaviour is acceptable, harmful or simply routine.

Bribery, the most commonly perceived aspect of corrupt behaviour, occurs when somebody offers money to persuade another to do something that is wrong or, if not wrong, inappropriate in the circumstances. It is done to facilitate a satisfactory outcome that might not have happened without the money, or might not have happened as quickly. The inducement might be in cash, but it could also be in the form of inside information, meals and entertainment, holidays, employment, sexual favours. It can involve getting somebody to do something, not to do something, or to overlook something.

In return for money an official at a motor registry may allow somebody waiting in line for a long time to have their matter dealt with more quickly, or provide somebody with something to which they are not entitled, such as a driver’s licence without having passed the correct test. In some countries doctors receive money to see patients more quickly (or at all!) or teachers to give students good results. Health inspectors may receive money to overlook unhygienic conditions in a restaurant kitchen, while judges may receive money to adjudicate in favour of the party offering the bribe.

Sometimes the bribe is very small and the stakes are low: for example, allowing somebody, for a few dollars, to jump the queue and have their matter dealt with quickly. Sometimes the stakes can be more serious, such as in allowing somebody without the necessary skills to be on the road, or to use equipment or to deliver services which could harm the public if not done correctly, or having a legal case settled corruptly with significant winners and losers.

Sometimes the stakes are much higher, and can affect companies or communities. A corrupt official can be bribed by a company to issue government contracts to that company. This can be for something minor such as ordering photocopier toner from a specific supplier, or more substantial such as ordering medical supplies for a hospital, all the way up to an entire health system, or buying planes under a huge defence contract. Sometimes it is just business, and one company wins the contract and another loses. At other times the consequences are severe, such as when bribery enables the erection of unsafe high-rise buildings, the illegal logging of environmentally pristine forest, or building dams and diverting water so that both communities and the environment suffer, while a corrupt official benefits.

As already noted, the payments are not always in cash. A gift of tickets to a regular sporting event can make the recipient act favourably towards the person offering the tickets. When it is a ticket to some major and highly desirable event the ticket can be particularly valuable, as might be the consideration in return. Lavish holidays may be offered by drug companies to doctors to persuade them to prescribe specific brands of drugs; developers wishing to undertake construction in contravention of a building code may offer municipal officers free renovations or other building work on their homes, or a municipal officer regulating brothels may be offered ‘free’ sex.

Bribery can involve large amounts of money or small amounts, or no cash at all. It can be for something minor, or its results can have profound consequences. It can flow in either direction. It can be offered by the principal, or it can be solicited by the agent. There are many terms in many cultures which describe bribery – kickbacks, sweetheart deals, baksheesh, payola, secret commissions, incentive payments, perks, gratuities, fringe benefits, and ‘a drink for you’, to mention just a few.

Extortion involves the use of force or threat or intimidation to extract payments. Coercion is the key here, but it need not necessarily be physical. A health inspector who threatens to shut down a restaurant even though all is in order, and a safety inspector who threatens to shut down a building site if a payment is not made, are practising extortion, as is a court official who will ‘lose’ a file and delay or prejudice a case if a payment is not made. Again, it is not always cash that is extorted. Teachers have sought sex from students in return for good results; employers have sought sex from job seekers to obtain a job, or from employees to keep the job. A customs official may want a share of goods brought into a country illicitly, or a police officer a share of drugs that are being seized.

Again, there is a matter of scale and impact in the extortion. A few dollars for a health inspector threatening to report a clean kitchen as dirty, or a police officer seeking money or else s/he will book you for speeding, are different from an official withholding approval for a major construction, a customs official refusing to clear a shipload of bananas that will rot in the sun unless the paperwork is done, or a group of stevedores refusing to unload these bananas. Corrupt tax officials may extort and intimidate while armed police or military, or unarmed border officials, may extort to allow one to pass through a checkpoint. Organized crime has a long history of both corruption and extortion, and at times combines both to achieve results.

Misappropriation, theft, fraud or embezzlement can be corrupt. While certainly criminal, most examples of theft do not involve corruption. Shoplifting, burglary, stealing from the boss, writing dud cheques or robbing a bank are not acts of corruption. A government official who steals money from the safe at work is not involved in government corruption. S/he is a thief.

When one uses one’s office or position to steal that for which one has responsibility, then theft and fraud have a place in corruption studies. The scale can be huge, such as when political leaders stash some of their nation’s money in personal foreign bank accounts. Or it can involve an official selling food from a relief-aid shipment, or medical supplies that find their way into private practice when they have been donated for community health programmes. Officials who manipulate records or accounts so that a proportion of payments come to them are guilty of corrupt misappropriation. All sorts of contract manipulation and procurement irregularities come into play here. Where misappropriation is part of the corruption lexicon it takes away funds from public sources, and the consequence is that policy goals of government cannot be achieved, or services to help citizens are diminished.

Self-dealing involves taking advantage of one’s position in order to further one’s interests rather than the interests of the organization. It may involve hiring one’s own company or the company belonging to close associates or relatives to provide public services, and avoiding tender processes. In this way the organization does not necessarily receive the best-priced or best-delivered services. Examples include the head of maintenance at a public university who issued cleaning contracts to a company owned by her and her husband, and excluded other competition, and a purchasing officer who owned a share in a car dealership and who would purchase official vehicles only from that dealership. In one suburban municipality it was necessary to obtain a certificate from the council before a house could be sold (to show that there had been no unauthorized alterations or renovations). The mayor’s family owned one of the real estate companies in town, and from time to time a certificate would not be forthcoming unless the property was listed with the mayor’s family company. Canadian political scientists Kernaghan and Langford (1990) define self-dealing as ‘a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself’. Self-dealing is essentially a form of conflict of interest.

Conflict of interest occurs when an individual occupying a formal position is required to make (public) decisions, but a decision made in a certain way might benefit that individual privately. Conflict of interest does not necessarily involve cash: it might entail the possibility of promoting a cause about which the individual cares or placing somebody near and dear into a favourable position. In essence the individual is acting neither independently nor objectively when that is expected of him or her, and the decision which puts private benefit ahead of professional judgement is one based on conflict of interest. An advertising agency could not (ethically) represent two companies that had products that were in competition with each other, and a lawyer would not represent a client while at the same time representing a client with conflicting interests.

Conflict of interest occurs often in politics. Politicians have many interests paraded before them and thrust upon them, and support and resolution may at times appear conflicted. There may be no improper act in a discussion or a decision, but perception is also a very important part of the integrity structure. Gifts are sometimes given to officials by people or organizations about whom the...

Table of contents

• Cover
• Title
• Part I  Corruption Is Complex
• Part II  Designing Counter-Measures
• Part III  Combating and Reducing Corruption
• Postscript
• References