Political corruption

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World map of the Corruption Perceptions Index, which measures "the degree to which corruption is perceived to exist among public officials and politicians". Blue colors indicate little corruption, red colors indicate much corruption

In broad terms, political corruption is the misuse by government officials of their governmental powers for illegitimate private gain. Misuse of government power for other purposes, like repression of political opponents and general police brutality, is not considered political corruption. Illegal acts by private persons or corporations not directly involved with the government is not considered political corruption either.

All forms of government are susceptible to political corruption. 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 trafficking, it is not restricted to these organized crime activities. In some nations corruption is so common that it is expected when ordinary businesses or citizens interact with government officials. The end-point of political corruption is a kleptocracy, literally "rule by thieves".

What constitutes illegal corruption differs depending on the country or jurisdiction. Certain political funding practices that are legal in one place may be illegal in another. In some countries, government officials have broad or not well defined powers, and the line between what is legal and illegal can be difficult to draw.

[edit] Effects

[edit] 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 unfair 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. See also: Good governance

[edit] Economic effects

Corruption also 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 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 invested at home (hence the stereotypical, but sadly often accurate, image of African dictators having Swiss bank accounts). University of Massachusetts researchers estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totaled $187bn, exceeding those nations' external debts.[3] (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, corrupt administrations in Asia like Suharto's have often taken a cut on everything (requiring bribes), but otherwise provided more of the conditions for development, through infrastructure investment, law and order, etc.

[edit] Types of abuse

[edit] Bribery

Bribery requires two participants: one to give the bribe, and one to take it. 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 some developing nations up to half of the population have paid bribes during the past 12 months. [4]

[edit] Graft

While bribery includes an intent to influence or be influenced by another for personal gain, which is often difficult to prove, graft only requires that the official gains something of value, not part of his official pay, when doing his work. Large "gifts" qualify as graft, and most countries have laws against it. (For example, any gift over $200 value made to the President of the United States is considered to be a gift to the Office of the Presidency and not to the President himself. The outgoing President must buy it if he wants to take it with him.) Another example of graft is a politician using his knowledge of zoning to purchase land which he knows is planned for development, before this is publicly known, and then selling it at a significant profit. This is comparable to insider trading in business.

[edit] Extortion and robbery

While bribes may be demanded in order to do something, payment may also be demanded by corrupt officials who otherwise threaten to make illegitimate use of state force in order to inflict harm. This is similar to extortion by organized crime groups. Illegitimate use of state force can also be used for outright armed robbery. This mostly occurs in instable states with lacking control of the military and the police. Less open forms of corruption is preferred in more stable states.

[edit] 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.

[edit] Nepotism and Cronyism

Favoring relatives (nepotism) or personal friends (cronyism). 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.

[edit] Embezzlement

Embezzlement is outright theft of entrusted funds. It is a misappropriation of property.

[edit] Kickbacks

A kickback is an official's share of misappropriated funds allocated from his or her organization to an organization involved in corrupt bidding. I.e., suppose that a politician is in charge of choosing how to spend some public funds. He can give a contract to a company that isn't 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 is susceptible to this kind of corruption. Related: Bid rigging, Bidding, Anti-competitive practices

[edit] Conditions favorable for corruption

Some argue 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." [5]
- 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.^[1]
Lacking control over and accountability 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 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. [6]
Opportunities and incentives
- Large, unsupervised public investments, combined with complex or arbitrary regulations and a lack of oversight.
- Sale of state-owned property and privatization.
- Poorly-paid government officials.
- 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.
- Costly political campaigns, with expenses exceeding normal sources of political funding.
- 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.
- A windfall from exporting abundant natural resources may encourage corruption. See the resource curse.[7]
Social conditions
- Self-interested closed cliques and "old boy networks".
- Family-, and clan-centered social structure, with a tradition of nepotism being acceptable.
- 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.

[edit] Size of public sector

It is a controversial issue whether the size of the public sector per se results in corruption. 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.

Privatization, as in the sale of government-owned property, is particularly at the risk of cronyism. Privatizations in Russia and Latin America 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.^[2]

[edit] Campaign contributions

In the political arena, it is difficult to prove corruption, but impossible to prove its absence. 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 misleading accounting reports, risk having their candidacy ruled invalid, or even be 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.

[edit] Measuring corruption

Measuring corruption - in the statistical sense - is naturally not a straight-forward matter, since the participants are generally not forthcoming about it. Transparency International, a leading anti-corruption NGO, provides three measures, updated annually: a Corruption Perceptions Index (based on experts' opinions 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 Survey, looking at the willingness of foreign firms to pay bribes. The World Bank collects a range of data on corruption, including a set of Governance Indicators.

The 10 least corrupt countries, according to the 2005 Corruption Perceptions Index, are Iceland, Finland, New Zealand, Denmark, Singapore, Sweden, Switzerland, Norway, Australia, and Austria.

According to the same survey, the 9 most corrupt countries are Chad, Myanmar, Bangladesh, Turkmenistan, Haiti, Nigeria, Equatorial Guinea, Cote d'Ivoire, and Angola.

In the US, based on public corruption convictions, Mississippi, North Dakota and Louisiana were the three most corrupt states. Nebraska, New Hampshire, Oregon, and Iowa had the least amount of corruption. The most populous states, California and Texas, are ranked in the middle, California ranking 25th and Texas in 29th. [8]

The Business Anti Corruption Portal, which was developed by Global Advice Network, a Danish-owned consultancy firm and supported by the Danish Government, offers detailed information about 17 countries' business environments and the obstacles business owners need to be aware of.

[edit] See also

Wikiquote has a collection of quotations related to:

Political corruption

[edit] Forms or aspects of corruption

Crony capitalism

[edit] Good governance

[edit] Theoretical aspects

[edit] Anti-corruption authorities and measures

[edit] Examples of corruption

[edit] Corruption in fiction

Mr. Smith Goes to Washington (1939)
Henry Adams's novel Democracy (1880)
Carl Hiaasen's novel Sick Puppy (1999)
Much of the Batman comic book series
The Ghost In The Shell Anime films and series

[edit] References

^ Western bankers and lawyers 'rob Africa of $150bn every year
^ Privatization in Competitive Sectors: The Record to Date. Sunita Kikeri and John Nellis. World Bank Policy Research Working Paper 2860, June 2002. [1] Privatization and Corruption. David Martimort and Stéphane Straub. [2]

[edit] Further reading

Axel Dreher, Christos Kotsogiannis, Steve McCorriston (2004), Corruption Around the World: Evidence from a Structural Model.
Kimberly Ann Elliott, ed, Corruption and the Global Economy (1997)
Edward L. Glaeser and Claudia Goldin, eds, Corruption and Reform: Lessons from America's Economic History U. of Chicago Press, 2006. 386 pp. ISBN 0-226-29957-0.
Arnold J. Heidenheimer, Michael Johnston and Victor T. LeVine (eds), Political Corruption: A Handbook (1989) 1017 pages.
Michael Johnston. Syndromes of Corruption: Wealth, Power, and Democracy (2005)
Johann Graf Lambsdorff (2007), The Institutional Economics of Corruption and Reform: Theory, Evidence and Policy Cambridge University Press

[edit] External links

[edit] News

IPS Inter Press Service - News on corruption from around the world
Development Gateway

[edit] International organizations and research

Anti-Corruption Resource Centre (U4) - Online research reports and extensive resources on anti-corruption in a development context
TRACE - a non-profit membership organization providing anti-bribery compliance tools
C2 Principles - a framework developed by researchers of Wharton School to reduce global corruption.
United Nations Convention against Corruption at Law-Ref.org - fully indexed and crosslinked with other documents
OECD: Corruption
World Bank anti-corruption page

The World Bank's Private Sector Development Blog on Corruption

UN Office on Drugs and Crime - Has sub-section dealing with corruption worldwide.
The Development Gateway's virtual library and online community on anti-corruption and good governance
Transparency International
- Tools against corruption
- Global Corruption Report
UNICORN: A Global Trade Union Anti-corruption Network, based at Cardiff University
Internet Center For Corruption Research
Global Integrity Report - Extensive analysis of openness and accountability of governments by Global Integrity, which grew out of the Center for Public Integrity.
Tool to analyze anti-corruption and institutional reform
Business Anti-Corruption Portal Country and sectorspecific information on corruption
Terrorism, Transnational Crime and Corruption Center - an academic research center devoted to studying transnational crime and corruption

[edit] Regional and national organisations and research

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