By Ronquillo C. Tolentino
Notes On Corruption
(Last of two parts)
“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, 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 are susceptible to this kind of corruption Related: Bid rigging, Bidding, Anti-competitive practices”.
“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.”
“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.”
“If the highest echelons of the government 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 even 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, espeicially under the rule of General Sani Abacha who was de facto president of Nigeria from 1993 until his death in 1998. He was 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, ruler of the Republic of Cuba since 1959, of amassing a personal fortune worth US$900 million. 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.”
“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 interest 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.”
“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 ten countries perceived to be least corrupt, according to the 2006 Corruption Perceptions Index, are Finland, Iceland, New Zealand, Denmark, Singapore, Sweden, Switzerland, Norway, Australia, and The Netherlands.”
“According to the same survey, the nine countries perceived to be most corrupt are Haiti, Indonesia, Myanmar, Iraq, Guinea, Sudan, DR Congo, Chad, and Bangladesh”.
“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.”
Notes: Watch for the Aklan Media Forum’s Kapihan sa Aklan to start on March 29, 2008… Tibyog Aklan. The political monolith organized by former congressman Allen Salas Quimpo, is still very strong and the joint leadership of Governor Carlito S. Marquez and Congressman Joeben Miraflores. /MP
