Reason and Concern

By Ronquillo C. Tolentino

Notes On Corruption

(1st of two parts)

I had kept some notes on corruption in Asia. In the light of the on-going congressional investigation, specifically in the Senate, I would rather quote herewith the effects of corruption on politics, administration, and institutional as well as economic and environment.
“World map of the corruption Perceptions Index by Transparency International measures “the degree to which corruption is perceived to exist among public officials and politicians”. High numbers indicate relatively less corruption, whereas lower numbers indicate relatively more corruption.”
“In broad terms, political corruption is when government officials use 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. Illegal acts by officeholders constitute political corruption only if the acts are directly related to their official duties.”
“All forms of government is 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.”

Bribery Around The World

“Bribery around the world is estimated at about $1 trillion (£494bn) and the burden of corruption falls disproportionately on the bottom billion people living in extreme poverty.”
“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. “
“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 cost 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 Undermines Economic Development

“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 the 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, 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 $187 billion, exceeding those nations’ external debts. (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, and others”.
“Corruption facilitates environmental destruction. Although even the corrupt countries may formally have legistlation to protect the environment, it cannot be enforced if the officials can be easily bribed. The same applies to social rights such as worker protection, prevention of child labor and unionization. Violation of these laws and rights enables corrupt countries to gain an illegitimate economic advantage in the international market.”
“Bribery requires two participants: one to give the bribe, another 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. “
“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.”
“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 unstable states which lack proper control of the military and the police. Less open forms of corruption are preferred in more stable states.”
“Government officials, especially if involved in illegal activities, are also liable to extortion, both by senior corrupt officials or other criminals. These develop over time into complicated networks of corruption, where law enforcement merely serves as a way to discredit and destroy. The anti- corruption effort is not immune to corruption either: there are examples of cases where officials of an Anti- corruption Bureau have extorted sums from corrupt officials.”

Patronage Favors Supporters

“Patronage refers to favoring supporters, for example with government employment. This may be legitimate, as when a newly elected goverment 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.”
“Favoring relatives (nepotism) or personal friends (cronyism) is 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.” /MP (to be continued next issue...)