Corruption - Wikipedia
Corruption - Wikipedia
Historically, "corruption" had a broader meaning concerned with an activity's impact on morals and
societal well-being: for example, the ancient Greek philosopher Socrates was condemned to death
in part for "corrupting the young".[2]
Corruption and crime are endemic sociological occurrences that appear regularly in virtually all
countries on a global scale in varying degrees and proportions. Recent data suggests corruption is
on the rise.[7] Each nation allocates domestic resources for the control and regulation of corruption
and the deterrence of crime. Strategies undertaken to counter corruption are often summarized
under the umbrella term anti-corruption.[8] Additionally, global initiatives like the United Nations
Sustainable Development Goal 16 also have a targeted goal which is supposed to reduce corruption
in all of its forms substantially.[9] Recent initiatives like the Tax Justice Network go beyond bribery
and theft and bring attention to tax abuses.[10]
Stephen D. Morris,[11] a professor of politics, wrote that political corruption is the illegitimate use of
public power to benefit a private interest. Economist Ian Senior defined corruption as an action to
secretly provide a good or a service to a third party to influence certain actions which benefit the
corrupt, a third party, or both in which the corrupt agent has authority.[12] World Bank economist
Daniel Kaufmann[13] extended the concept to include "legal corruption" in which power is abused
within the confines of the law—as those with power often have the ability to make laws for their
protection. The effect of corruption in infrastructure is to increase costs and construction time,
lower the quality and decrease the benefit.[14]
Corruption is a complex phenomenon and can occur on different scales.[15] Corruption ranges from
small favors between a small number of people (petty corruption),[16] to corruption that affects the
government on a large scale (grand corruption), and corruption that is so prevalent that it is part of
the everyday structure of society, including corruption as one of the symptoms of organized crime
(systemic corruption). "Corruption of the rich" is particularly hard to measure and largely excluded
from conventional metrics like the CPI.[17]
A number of indicators and tools have been developed which can measure different forms of
corruption with increasing accuracy;[18][19] but when those are impractical, one study suggests
looking at bodyfat as a rough guide after finding that obesity of cabinet ministers in post-Soviet
states was highly correlated with more accurate measures of corruption.[20][21]
Political economist Yuen Yuen Ang "unbundles corruption" into four types, encompassing both petty
and grand corruption as well as legal and illegal versions: petty theft, grand theft, speed money,
access money.[22] According to her definition, speed money "means petty bribes that businesses or
citizens pay to bureaucrats to get around hurdles or speed things up." This is the kind of corruption
associated with the "efficient grease hypothesis," which economists found burdensome to
businesses in practice.[23] Ang defines access money as "high-stakes rewards extended by business
actors to powerful officials, not just for speed, but to access exclusive, valuable privileges."[24] Most
theories about bribery focus on speed money, but neglects access money. "From a
businessperson's point of view, access money is less a tax than an investment... making it more
sludge than grease."[25] The Unbundled Corruption Index measures the prevalence of these four
types of corruption.
Whereas corruption with theft and speed money is endemic in poor countries, access money can be
found in both poor and rich countries.[26]
Petty corruption
Petty corruption occurs at a smaller scale and takes place at the implementation end of public
services when public officials meet the public. For example, in many small places such as
registration offices, police stations, state licensing boards,[27][28] and many other private and
government sectors.
Grand corruption
Grand corruption is defined as corruption occurring at the highest levels of government in a way
that requires significant subversion of the political, legal and economic systems. Such corruption is
commonly found in countries with authoritarian or dictatorial governments but also in those without
adequate policing of corruption.[29]
The government system in many countries is divided into the legislative, executive and judicial
branches in an attempt to provide independent services that are less subject to grand corruption
due to their independence from one another.[30]
Systemic corruption
Systemic corruption (or endemic corruption)[31] is corruption which is primarily due to the
weaknesses of an organization or process. It can be contrasted with individual officials or agents
who act corruptly within the system.
Factors which encourage systemic corruption include conflicting incentives, discretionary powers;
monopolistic powers; lack of transparency; low pay; and a culture of impunity.[32] Specific acts of
corruption include "bribery, extortion, and embezzlement" in a system where "corruption becomes
the rule rather than the exception."[33] Scholars distinguish between centralized and decentralized
systemic corruption, depending on which level of state or government corruption takes place; in
countries such as the post-Soviet states both types occur.[34] Some scholars argue that there is a
negative duty of western governments to protect against systematic corruption of underdeveloped
governments.[35][36]
Corruption has been a major issue in China, where society depends heavily on personal
relationships. By the late 20th century that combined with the new lust for wealth, produced
escalating corruption. Historian Keith Schoppa says that bribery was only one of the tools of
Chinese corruption, which also included, "embezzlement, nepotism, smuggling, extortion, cronyism,
kickbacks, deception, fraud, squandering of public money, illegal business transactions, stock
manipulation and real estate fraud." Given the repeated anti-corruption campaigns it was a prudent
precaution to move as much of the fraudulent money as possible overseas.[37]
In Latin American countries, corruption is permitted as a result of the cultural norms of the
institution. In countries like the United States, there is a relatively strong sense of trust among
strangers, one that is not found in Latin American countries. In Latin American countries, this trust
does not exist, whereas the social norms imply that no stranger is responsible for the wellbeing or
happiness of another stranger. Instead, the trust is found in acquaintances. Acquaintances are
treated with trust and respect—a level of trust that is not found among acquaintances in countries
like the United States. This is what permits for corruption in Latin American countries. If there is a
strong enough trust within an administration that no one will betray the rest, corruptive policies will
take place with ease.[38]
Money in politics
While petty, grand, and systemic corruption, described above, are largely found in poor countries
with weak institutions, a newer literature has turned to money politics in wealthy democracies and
extreme global inequalities. Simon Weschle at Syracuse University examines the prevalence of
campaign finance and its consequences for democracy.[39] Kristin Surak at the London School of
Economics explores the controversial practice of millionaires buying "golden passports" with no
intention of actually migrating. In her words, "a full-blown citizenship industry that thrives on global
inequalities" has arisen."[40]
State-business collusion
While not necessarily involving bribery, recent research documents the emergence of "a particular
kind of large, non-state business group" that is akin to a mafia system in China.[41] In this situation,
the boundary between public and private actors blurs.
Causes
Much of existing literature focuses on explicit corrupt actions like bribery and embezzlement,
endemic in poor countries (see below). For "money in politics," the causes are very different and
largely ignored in conventional literature. For example, the UK is a developed economy with a robust
democracy, and yet London is a hub for money laundering.[42] In a critique of the failures and politics
leading up to the US financial crisis, a Stanford financial economist noted, "In the real world, it
turned out, important economic outcomes are often the consequences of political forces. During
2010, people within regulatory bodies told me privately that false and misleading claims were
affecting key policy decisions... I saw confusion, willful blindness, political forces, various and
sometimes subtle forms of corruption, and moral disengagement, first hand."[43]
Per R. Klitgaard[44] corruption will occur if the corrupt gain is greater than the penalty multiplied by
the likelihood of being caught and prosecuted.
Since a high degree of monopoly and discretion accompanied by a low degree of transparency does
not automatically lead to corruption, a fourth variable of "morality" or "integrity" has been introduced
by others. The moral dimension has an intrinsic component and refers to a "mentality problem", and
an extrinsic component referring to circumstances like poverty, inadequate remuneration,
inappropriate work conditions and inoperable or over-complicated procedures which demoralize
people and let them search for "alternative" solutions.
According to a 2017 survey study, the following factors have been attributed as causes of
corruption:[45]
Low levels of democracy, weak civil participation and low political transparency
Gender inequality
Poverty
Political instability
Unemployment
It has been noted that in a comparison of the most corrupt with the least corrupt countries, the
former group contains nations with huge socio-economic inequalities, and the latter contains
nations with a high degree of social and economic justice.[46]
Social norms have been posited as an explanation for why some environments are corrupt and
others are not.[47]
By sector
Corruption can occur in many sectors, whether they be public or private industry or even NGOs
(especially in public sector). However, only in democratically controlled institutions is there an
interest of the public (owner) to develop internal mechanisms to fight active or passive corruption,
whereas in private industry as well as in NGOs there is no public control. Therefore, the owners'
investors' or sponsors' profits are largely decisive.
Public sector
Public corruption includes corruption of the political process and of government agencies such as
tax collectors and the police, as well as corruption in processes of allocating public funds for
contracts, grants, and hiring. Recent research by the World Bank suggests that who makes policy
decisions (elected officials or bureaucrats) can be critical in determining the level of corruption
because of the incentives different policy-makers face.[48]
Political
The political act of "graft" (American English), is a well known and now global form of political
corruption, being the unscrupulous and illegal use of a politician's authority for personal gain, when
funds intended for public projects are intentionally misdirected in order to maximize the benefits to
illegally private interests of the corrupted individual(s) and their cronies. In some cases government
institutions are "repurposed" or shifted away from their official mandate to serve other, often corrupt
purposes.[51]
The Kaunas golden toilet case was a major Lithuanian scandal. In 2009, the municipality of Kaunas
(led by mayor Andrius Kupčinskas) ordered that a shipping container was to be converted into an
outdoor toilet at a cost of 500,000 litai (around 150,000 euros). It was to also require 5,000 litai
(1,500 euros) in monthly maintenance costs.[52] At the same time when Kaunas's "Golden Toilet"
was built, Kėdainiai tennis club acquired a very similar, but more advanced solution for 4,500
euros.[52] Because of the inflated cost of the outdoor toilet, it was nicknamed the "Golden Toilet".
Despite the investment, the "Golden Toilet" remained closed for years due to the dysfunctionality
and was a subject of a lengthy anti-corruption investigation into those who had created it and[52] the
local municipality even considered demolishing the building at one point.[53] The group of public
servants involved in the toilet's procurement received various prison sentences for recklessness,
malfeasance, misuse of power and document falsifications in a 2012 court case, but were cleared
of their corruption charges and received compensation, which pushed the total construction cost
and subsequent related financial losses to 352,000 euros.
On 7 July 2020, the Carnegie Endowment for International Peace, a global think tank, released a
report claiming the Emirati city, Dubai, of being an enabler of global corruption, crime and illicit
financial flows. It stated that the global corrupt and criminal actors either operated through or from
Dubai. The city was also called a haven for trade-based money laundering, as it gives space to free
trade zones, with minimal regulatory laws and customs enforcement.[54]
A report in September 2022 revealed that British Members of Parliament received a total of
£828,211 over a period of eight years from countries of the Saudi-led coalition in the Yemeni Civil
War. The money was granted in the form of all-expenses-paid trips to 96 MPs by Saudi Arabia (at
least £319,406), Bahrain (£197,985), the United Arab Emirates (£187,251), Egypt (£66,695) and
Kuwait (£56,872). MPs also received gifts, including a £500 food hamper, tickets for a Burns Supper,
an expensive watch and a day out at the Royal Windsor Horse Show. The Saudi-led coalition was
accused of attempting to buy influence in the UK. While the MPs registered the trips and gifts at
Westminster as per the rules, critics called it "absolutely shameful" to accept donations from
countries with poor human rights records.[55]
Judicial
Judicial corruption refers to the corruption-related misconduct of judges, through the receiving or
giving of bribes, the improper sentencing of convicted criminals, judicial activism, bias in the hearing
and judgement of arguments and other forms of misconduct. Judicial corruption can also be
conducted by prosecutors and defense attorneys. An example of prosecutorial misconduct, occurs
when a politician or a crime boss bribes a prosecutor to open investigations and file charges
against an opposing politician or a rival crime boss, in order to hurt the competition.[56]
Governmental corruption of the judiciary is broadly known in many transitional and developing
countries because the budget is almost completely controlled by the executive. The latter critically
undermines the separation of powers, because it fosters financial dependence on the judiciary. The
proper distribution of a nation's wealth, including its government's spending on the judiciary, is
subject to constitutional economics.
The judiciary may be corrupted by acts of the government, such as through budget planning and
various privileges, and by private acts.[57] Corruption in judiciary may also involve the government
using its judicial arm to oppress opposition parties. Judicial corruption is difficult to completely
eradicate, even in developed countries.[58]
Military
Military corruption refers to the abuse of power by members in the armed forces, in order for career
advancement or for personal gain by a soldier or soldiers. One form of military corruption in the
United States Armed Forces is a military soldier being promoted in rank or being given better
treatment than their colleagues by their officers due to their race, sexual orientation, ethnicity,
gender, religious beliefs, social class or personal relationships with higher-ranking officers in spite of
their merit.[59] In addition to that, the US military has also had many instances of officers sexually
assaulting fellow officers and in many cases, there were allegations that many of the attacks were
covered up and victims were coerced to remain silent by officers of the same rank or of higher
rank.[60]
Another example of military corruption, is a military officer or officers using the power of their
positions to commit activities that are illegal, such as skimming logistical supplies such as food,
medicine, fuel, body armor or weapons to sell on the local black market.[61][62] There have also been
instances of military officials, providing equipment and combat support to criminal syndicates,
private military companies and terrorist groups, without approval from their superiors.[63] As a result,
many countries have a military police force to ensure that the military officers follow the laws and
conduct of their respective countries but sometimes the military police have levels of corruption
themselves.[64]
Natural resources
Within less democratic countries, the presence of resources such as diamonds, gold, oil, and
forestry increases the prevalence of corruption. Corruption includes industrial corruption, consisting
of large bribes, as well as petty corruption such as a poacher paying off a park ranger to ignore
poaching. The presence of fuel extraction and export is unambiguously associated with corruption,
whereas mineral exports only increased corruption in poorer countries. In wealthier countries,
mineral exports such as gold and diamonds are actually associated with reduced corruption. The
international Extractive Industries Transparency Initiative seeks to create best practices for good
governance of gas, oil, and minerals, particularly focusing on the state management of revenue
from these resources. Any valued natural resource can be affected by corruption, including water for
irrigation, land for livestock grazing, forests for hunting and logging, and fisheries.[65]
Police
Police corruption is a specific form of police misconduct designed to obtain financial benefits,
personal gain, career advancement for a police officer or officers in exchange for not pursuing or
selectively pursuing an investigation or arrest or aspects of the "thin blue line" itself where force
members collude in lies to protect their precincts, unions and/or other law enforcement members
from accountability. One common form of police corruption is soliciting or accepting bribes in
exchange for not reporting organized drug or prostitution rings or other illegal activities. When
civilians become witnesses to police brutality, officers are often known to respond by harassing and
intimidating the witnesses as retribution for reporting the misconduct.[66] Whistleblowing is not
common in law enforcement in part because officers who do so normally face reprisal by being
fired, being forced to transfer to another department, being demoted, being shunned, losing friends,
not being given back-up during emergencies, receiving professional or even physical threats as well
as having threats be made against friends or relatives of theirs or having their own misconduct
exposed.[67] In America another common form of police corruption is when white supremacist
groups, such as Neo-Nazi Skinheads or Neo-Confederates (such as the Ku Klux Klan), recruit
members of law enforcement into their ranks or encourage their members to join local police
departments to repress minorities and covertly promote white supremacy.[68]
Another example is police officers flouting the police code of conduct in order to secure convictions
of suspects—for example, through the use of surveillance abuse, false confessions, police perjury
and/or falsified evidence. Police officers have also been known to sell forms of contraband that
were taken during seizers (such as confiscated drugs, stolen property or weapons).[69] Corruption
and misconduct can also be done by prison officers, such as the smuggling of contraband (such as
drugs or electronics) into jails and prisons for inmates or the abuse of prisoners.[70][71] Another form
of misconduct is probation officers taking bribes in exchange for allowing paroles to violate the
terms of their probation or abusing their paroles.[72] More rarely, police officers may deliberately and
systematically participate in organized crime themselves, either while on the job or during off hours.
In most major cities, there are internal affairs sections to investigate suspected police corruption or
misconduct. Similar entities include the British Independent Police Complaints Commission.
Private sector
Private sector corruption occurs when any institution, entity or person that is not controlled by the
public sector company, household and institution that is not controlled by the public sector engages
in corrupt acts. Private sector corruption may overlap with public sector corruption, for example
when a private entity operates in conjunction with corrupt government officials, or where the
government involves itself in activity normally performed by private entities.
Legal
Corruption facilitated by lawyers is a well known form of judicial misconduct. Such abuse is called
Attorney misconduct. Attorney misconduct can be either conducted by individuals acting on their
own accord or by entire law firms. A well known example of such corruption are mob lawyers. Mob
lawyers are attorneys who seek to protect the leaders of criminal enterprises as well as their
criminal organizations, with the use of unethical and/or illegal conduct such as making false or
misleading statements, hiding evidence from prosecutors, failing to disclose all relevant facts about
the case, or even giving clients advice on how to commit crimes in ways that would make
prosecution more difficult for any investigating authorities.[73]
Corporate
In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business
entity having a separate legal personality from the natural persons that manage its activities), or by
individuals acting on behalf of a corporation or other business entity (see vicarious liability and
corporate liability). Some negative behaviours by corporations may not be criminal; laws vary
between jurisdictions. For example, some jurisdictions allow insider trading.
Examples
Petróleo Brasileiro S.A. — Petrobras, more commonly known as simply Petrobras (Portuguese
pronunciation: [ˌpɛtɾoˈbɾas]), is a semi-public Brazilian multinational corporation in the petroleum
industry headquartered in Rio de Janeiro, Brazil. The company's name translates to Brazilian
Petroleum Corporation – Petrobras. The company was ranked No. 58 in the 2016 Fortune Global
500 list.[74] From 2014 to 2021, an investigation known as Operation Car Wash examined allegations
of corporate and political collusion and corruption by Petrobras.[75]
In 2016, the firm's executives were examined during Operation Car Wash part of an investigation
over Odebrecht Organization bribes to executives of Petrobras, in exchange for contracts and
influence.[77][78][75] Operation Car Wash is an ongoing criminal money laundering and bribes related
corporate crime investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and
judicially commanded by Judge Sergio Moro since 17 March 2014.[79][80][81][75]
PhilHealth, the Philippine Health Insurance Corporation, has been marred by a history of corruption
and mismanagement, with notable scandals including unnecessary cataract surgeries, excessive
travel expenses by executives, and fraudulent claims for deceased patients. The COVID-19
pandemic intensified these issues, leading to allegations of a "mafia" within the agency exploiting
funds through the Interim Reimbursement Mechanism and purchasing overpriced medical supplies.
These corrupt practices have severely impacted the right to healthcare, threatened PhilHealth's
financial stability, and eroded public trust. Ongoing investigations aim to address these allegations
and implement necessary reforms, but concerns about the agency's integrity and effectiveness
persist.[82]
In 2020, ABS-CBN, a major Philippine media network, faced allegations of corruption and biased
reporting, particularly during President Rodrigo Duterte's administration. Accusations included
failing to air paid political advertisements, negative reporting against Duterte, and tax evasion, all of
which the network denied or contextualized as part of their journalistic responsibility. The refusal to
renew ABS-CBN's franchise in 2020 led to its shutdown, which many viewed as an attack on press
freedom. Additionally, concerns were raised about potential corruption related to the Villar family's
acquisition of ABS-CBN's channels. Overall, the situation surrounding ABS-CBN is complex and
politically charged, highlighting the need for careful examination of the allegations and their
implications for media freedom in the Philippines.[83]
Education
Healthcare
Corruption, the abuse of entrusted power for private gain as defined by Transparency
International,[107] is systemic in the health sector. The characteristics of health systems with their
concentrated supply of a service, high discretionary power of its members controlling the supply,
and low accountability to others are the exact constellation of the variables described by Klitgaard
on which corruption depends.[108]: 26
Corruption in health care poses a significant danger to public welfare.[109] It is widespread, yet little
has been published in medical journals about this topic. As of 2019, there is no evidence on what
might reduce corruption in the health sector.[110] Corruption occurs within the private and public
health sectors and may appear as theft, embezzlement, nepotism, bribery up until extortion, or
undue influence.[111] It can occur anywhere within the sector, be it in service provision, purchasing,
construction, and hiring. In 2019, Transparency International described the 6 most common ways of
service corruption as follows: absenteeism, informal payments from patients, embezzlement,
inflating services also the costs of services, favoritism, and manipulation of data (billing for goods
and services that were never sent or done).[112]
Labor unions
Labor unions leaders may be involved in corrupt action or be influenced or controlled by criminal
enterprises.[113] For example, for many years the Teamsters were substantially controlled by the
Mafia.[114]
Stock market corruption
The Indian stock exchanges, Bombay Stock Exchange and National Stock Exchange of India, have
been rocked by several high-profile corruption
scandals.[115][116][117][118][119][120][121][122][123][124][125][126][127][128] At times, the Securities and
Exchange Board of India (SEBI) has barred various individuals and entities from trading on the
exchanges for stock manipulation, especially in illiquid small-cap and penny
stocks.[129][130][131][132][133][134][135][136]
Arms trafficking
"Arms for cash" can be done by either a state-sanctioned arms dealer, firm, or state itself to another
party. It regards them as simply good business partners and not as political kindred or allies, thus
making them no better than regular gun runners. Arms smugglers, who are already into arms
trafficking, may work for them on the ground or with shipment. The money is often laundered and
records are often destroyed.[137] It often breaks UN, national or international law.[137]
The Mitterrand–Pasqua affair, also known informally as Angolagate, was an international political
scandal over the secret and illegal sale and shipment of arms from the nations of Central Europe to
the government of Angola by the Government of France in the 1990s. It led to arrests and judiciary
actions in the 2000s, involving an illegal arms sale to Angola despite a UN embargo, with business
interests in France and elsewhere improperly obtaining a share of Angolan oil revenues. The scandal
has subsequently been tied to several prominent figures in French politics.[138]
42 individuals, including Jean-Christophe Mitterrand, Jacques Attali, Charles Pasqua and Jean-
Charles Marchiani, Pierre Falcone. Arcadi Gaydamak, Paul-Loup Sulitzer, Union for a Popular
Movement deputy Georges Fenech, Philippe Courroye the son of François Mitterrand and a former
French Minister of the Interior, were charged, accused, indicted or convicted with illegal arms
trading, tax fraud, embezzlement, money laundering, and other crimes.[138][139][140]
Philosophy
Religious organizations
The history of religion includes numerous examples of religious leaders calling attention to the
corruption which existed in the religious practices and institutions of their time. The Jewish
prophets Isaiah and Amos berate the rabbinical establishment of Ancient Judea for failing to live up
to the ideals of the Torah.[143] In the New Testament, Jesus accuses the rabbinical establishment of
his time of hypocritically following only the ceremonial parts of the Torah and neglecting the more
important elements of justice, mercy and faithfulness.[144] Corruption was one of the important
issues which led to the Investiture Controversy. In 1517, Martin Luther accused the Catholic Church
of widespread corruption, including the selling of indulgences.[145]
In 2015, Princeton University professor Kevin M. Kruse advances the thesis that business leaders in
the 1930s and 1940s collaborated with clergymen, including James W. Fifield Jr., in order to develop
and promote a new hermeneutical approach to Scripture which would de-emphasize the social
Gospel and emphasize themes, such as individual salvation, which were more congenial to free
enterprise.[146]
Methods
In systemic corruption and grand corruption, multiple methods of corruption are used concurrently
with similar aims.[148]
Bribery
Bribery involves the improper use of gifts and favours in exchange for personal gain. This is also
known as kickbacks or, in the Middle East, as baksheesh. It is a common form of corruption. The
types of favors given are diverse and may include money, gifts, real estate, promotions, sexual
favors, employee benefits, company shares, privileges, entertainment, employment and political
benefits. The personal gain that is given can be anything from actively giving preferential treatment
to having an indiscretion or crime overlooked.[149]
Bribery can sometimes form a part of the systemic use of corruption for other ends, for example to
perpetrate further corruption. Bribery can make officials more susceptible to blackmail or to
extortion.
Embezzlement and theft involve someone with access to funds or assets illegally taking control of
them. Fraud involves using deception to convince the owner of funds or assets to give them up to
an unauthorized party.
Examples include the misdirection of company funds into "shadow companies" (and then into the
pockets of corrupt employees), the skimming of foreign aid money, scams, electoral fraud and other
corrupt activity.
Graft
The political act of graft is when funds intended for public projects are intentionally misdirected to
maximize the benefits to private interests of the corrupt individuals.
While bribery is the use of positive inducements for corrupt aims, extortion and blackmail centre
around the use of threats. This can be the threat of physical violence or false imprisonment as well
as exposure of an individual's secrets or prior crimes.
This includes such behavior as an influential person threatening to go to the media if they do not
receive speedy medical treatment (at the expense of other patients), threatening a public official
with exposure of their secrets if they do not vote in a particular manner, or demanding money in
exchange for continued secrecy. Another example can be a police officer being threatened with the
loss of their job by their superiors, if they continued with investigating a high-ranking official.
Access money
According to Ang, access money "encompasses high-stakes rewards extended by business actors
to powerful officials, not just for speed, but to access exclusive, valuable privileges." Whereas
bribery and extortion is always illegal and unethical, access money can encompass both illegal and
legal actions, and it can involve only corrupt individuals or entire institutions where no person is
individually liable for corruption. "Illegal forms of access money entail large bribes and kickbacks,
but they can also include ambiguously or completely legal exchanges that omit cash bribes, for
example, cultivating political connections, campaign finance, “revolving door” practices."[150]
Influence peddling
Influence peddling is the illegal practice of using one's influence in government or connections with
persons in authority to obtain favors or preferential treatment, usually in return for payment.
Networking
Networking (both Business and Personal) can be an effective way for job-seekers to gain a
competitive edge over others in the job-market. The idea is to cultivate personal relationships with
prospective employers, selection panelists, and others, in the hope that these personal affections
will influence future hiring decisions. This form of networking has been described as an attempt to
corrupt formal hiring processes, where all candidates are given an equal opportunity to demonstrate
their merits to selectors. The networker is accused of seeking non-meritocratic advantage over
other candidates; advantage that is based on personal fondness rather than on any objective
appraisal of which candidate is most qualified for the position.[151][152]
Abuse of discretion
Abuse of discretion refers to the misuse of one's powers and decision-making facilities. Examples
include a judge improperly dismissing a criminal case or a customs official using their discretion to
allow a banned substance through a port.
Favouritism, nepotism and clientelism involve the favouring of not the perpetrator of corruption but
someone related to them, such as a friend, family member or member of an association. Examples
would include hiring or promoting a family member or staff member to a role they are not qualified
for, who belongs to the same political party as you, regardless of merit.[153]
Measurement
Several organizations measure corruption as part of their development indexes. The Corruption
Perceptions Index (CPI) ranks countries "by their perceived levels of public sector corruption, as
determined by expert assessments and opinion surveys." The index has been published annually by
the non-governmental organization Transparency International since 1995.[154] On the supply side,
Transparency International used to publish the Bribe Payers Index, but stopped in 2011.
The Global Corruption Index (GCI), designed by the Global Risk Profile to be in line with anti-
corruption and anti-bribery legislation, covers 196 countries and territories. It measures the state of
corruption and white-collar crimes around the world, specifically money laundering and terrorism
financing.[155]
Absence of corruption is one of the eight factors[156] the World Justice Project[157] Rule of Law
Index[158] measures to evaluate adherence to the rule of law in 140 countries and jurisdictions
around the globe. The annual index measures three forms of government corruption across the
executive branch, the judiciary, the military and police, and the legislature: bribery, improper
influence by public or private interests, and misappropriation of public funds or other resources.[159]
The Unbundled Corruption Index (UCI) measures perceived levels of corruption in four categories:
petty theft, grand theft, speed money, access money. It uses "stylized vignettes" instead of broadly
worded survey questions.[160]
Different types of corruption harm in different ways, though not all are immediately growth-
impeding. Following an "Unbundled Corruption" framework, Ang describes using the analogy of
drugs: "Petty theft and grand theft are like toxic drugs; they directly and unambiguously hurt the
economy by draining public and private wealth while delivering no benefits in return. Speed money is
akin to painkillers; it may relieve a headache but doesn't improve one's strength. Access money, on
the other hand, is like steroids. It spurs muscle growth and allows one to perform superhuman feats,
but it comes with serious side effects, including the possibility of a complete meltdown."[161]
Corruption can negatively impact the economy both directly, through for example tax evasion and
money laundering, as well as indirectly by distorting fair competition and fair markets, and by
increasing the cost of doing business.[162] It is strongly negatively associated with the share of
private investment and, hence, lowers the economic growth rate.[163]
Corruption reduces the returns of productive activities. If the production returns fall faster than the
returns to corruption and rent-seeking activities, resources will flow from productive activities to
corruption activities over time. This will result in a lower stock of producible inputs like human
capital in corrupted countries.[163]
Corruption creates the opportunity for increased inequality, reduces the return of productive
activities, and, hence, makes rent-seeking and corruption activities more attractive. This opportunity
for increased inequality not only generates psychological frustration for the underprivileged but also
reduces productivity growth, investment, and job opportunities.[163]
Some experts have suggested that corruption stimulated economic growth in East and Southeast
Asian countries. An often-cited example is South Korea, where President Park Chung Hee favored a
small number of companies, and later used this financial influence to pressure these chaebols to
follow the government's development strategy.[164][165] This 'profit-sharing' corruption model
incentivizes government officials to support economic development, as they would personally
benefit financially from it.[162][166]
One neglected example of high growth with corruption is the American Gilded Age, which Yuen Yuen
Ang has compared to China's Gilded Age. In both, she noted, "corruption evolved over time from
thuggery and theft to more sophisticated exchanges of power and profit," and resultingly, both saw
unequal and risky growth.[167] Biased narratives about Western development and global corruption
metrics have obscured this historical pattern.[168]
Prevention
According to the amended Klitgaard equation,[169] limitation of monopoly and regulator discretion of
individuals and a high degree of transparency through independent oversight by non-governmental
organisations (NGOs) and the media plus public access to reliable information could reduce the
problem. Djankov and other researchers[170] have independently addressed the role information
plays in fighting corruption with evidence from both developing and developed countries. Disclosing
financial information of government officials to the public is associated with improving institutional
accountability and eliminating misbehavior such as vote buying. The effect is specifically
remarkable when the disclosures concern politicians' income sources, liabilities and asset level
instead of just income level. Any extrinsic aspects that might reduce morality should be eliminated.
Additionally, a country should establish a culture of ethical conduct in society with the government
setting the good example in order to enhance the intrinsic morality.
Creating bottom-up mechanisms, promoting citizens participation and encouraging the values of
integrity, accountability, and transparency are crucial components of fighting corruption. As of 2012,
the implementation of the "Advocacy and Legal Advice Centres (ALACs)” in Europe had led to a
significant increase in the number of citizen complaints against acts of corruption received and
documented[171] and also to the development of strategies for good governance by involving
citizens willing to fight against corruption.[172]
Anti-corruption programmes
The Foreign Corrupt Practices Act (FCPA, USA 1977) was an early paradigmatic law for many
western countries i.e. industrial countries of the OECD. There, for the first time the old principal-
agent approach was moved back where mainly the victim (a society, private or public) and a passive
corrupt member (an individual) were considered, whereas the active corrupt part was not in the
focus of legal prosecution. Unprecedented, the law of an industrial country directly condemned
active corruption, particularly in international business transactions, which was at that time in
contradiction to anti-bribery activities of the World Bank and its spin-off organization Transparency
International.
As early as 1989 the OECD had established an ad hoc Working Group in order to explore "the
concepts fundamental to the offense of corruption, and the exercise of national jurisdiction over
offenses committed wholly or partially abroad."[173] Based on the FCPA concept, the Working Group
presented in 1994 the then "OECD Anti-Bribery Recommendation" as precursor for the OECD
Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions[174] which was signed in 1997 by all member countries and came finally into force in
1999. However, because of ongoing concealed corruption in international transactions several
instruments of Country Monitoring[175] have been developed since then by the OECD in order to
foster and evaluate related national activities in combating foreign corrupt practices. One survey
shows that after the implementation of heightened review of multinational firms under the
convention in 2010 firms from countries that had signed the convention were less likely to use
bribery.[176]
In 2013, a document[177] produced by the economic and private sector professional evidence and
applied knowledge services help-desk discusses some of the existing practices on anti-corruption.
They found:
The theories behind the fight against corruption are moving from a principal agent approach to a
collective action problem. Principal–agent theories seem not to be suitable to target systemic
corruption.
The role of multilateral institutions has been crucial in the fight against corruption. UNCAC
provides a common guideline for countries around the world. Both Transparency International and
the World Bank provide assistance to national governments in term of diagnostic and design of
anti-corruption policies.
The use of anti-corruption agencies have proliferated in recent years after the signing of UNCAC.
They found no convincing evidence on the extent of their contribution, or the best way to structure
them.
Traditionally anti-corruption policies have been based on success experiences and common
sense. In recent years there has been an effort to provide a more systematic evaluation of the
effectiveness of anti-corruption policies. They found that this literature is still in its infancy.
Anti-corruption policies that may be in general recommended to developing countries may not be
suitable for post-conflict countries. Anti-corruption policies in fragile states have to be carefully
tailored.
Anti-corruption policies can improve the business environment. There is evidence that lower
corruption may facilitate doing business and improve firm's productivity. Rwanda in the last
decade has made tremendous progress in improving governance and the business environment
providing a model to follow for post-conflict countries.[177]
Armenia aims to achieve zero corruption through raising awareness on the societal hazards. After
the lavish spending accusations on the Armenian anti-corruption council, through action
strategies with implementation and observing instruments progress is noticeable.[178]
In recent years, anti-corruption efforts have also been criticised for overemphasising the benefits of
the eradication of corruption for economic growth and development,[179][180][181][182] following a
diversity of literature which has suggested that anti-corruption efforts, the right kind of institutions
and "good governance" are key to economic development.[183][184] This criticism is based on the
observed fact that a variety of countries, such as Korea and China but also the US in the 19th and
early 20th century, saw high economic growth and broader socio-economic development coinciding
with significant corruption [185][186]
In popular culture
In some countries people travel to corruption hot spots or a specialist tour company takes them on
corruption city tours, as is the case in Prague.[187][188][189][190] Corruption tours have also occurred in
Chicago[191] and Mexico City.[192][193]
Films about corruption include Runaway Jury, The Firm, Syriana, The Constant Gardener, and All the
President's Men.
Legal corruption
Though corruption is often viewed as illegal, a concept of "legal corruption" has been described by
Daniel Kaufmann and Pedro Vicente.[13][194] It might be termed as processes which are corrupt, but
are protected by a "legal" (that is, specifically permitted, or at least not proscribed by law)
framework.[195]
Examples
In 1994, the German Parliamentary Financial Commission in Bonn presented a comparative study
on "legal corruption" in industrialized OECD countries[196] They reported that in most industrial
countries foreign corruption was legal, and that their foreign corrupt practices ranged from simple,
through governmental subsidization (tax deduction), up to extreme cases as in Germany, where
foreign corruption was fostered, whereas domestic was legally prosecuted. The German
Parliamentary Financial Commission rejected a Parliamentary Proposal by the opposition, which
had been aiming to limit German foreign corruption on the basis of the US Foreign Corrupt Practices
Act (FCPA from 1977), thus fostering national export corporations.[197] In 1997 a corresponding
OECD Anti-Bribery Convention was signed by its members.[198][199] It took until 1999, after the OECD
Anti-Bribery Convention came into force, that Germany withdrew the legalization of foreign
corruption.[200]
Foreign corrupt practices of industrialized OECD countries 1994 study
A study on foreign corrupt practices of industrialized OECD countries 1994 (Parliamentary Financial
Commission study, Bonn)[196] indicates widespread acceptance of bribes in business practices.
Belgium: bribe payments are generally tax deductible as business expenses if the name and
address of the beneficiary is disclosed. Under the following conditions kickbacks in connection with
exports abroad are permitted for deduction even without proof of the receiver:
The payer has to pay a lump-sum to the tax office to be fixed by the Finance Minister (at least 20%
of the amount paid).
In the absence of the required conditions, for corporate taxable companies paying bribes without
proof of the receiver, a special tax of 200% is charged. This special tax may, however, be abated
along with the bribe amount as an operating expense.
Denmark: bribe payments are deductible when a clear operational context exists and its adequacy is
maintained.
France: basically all operating expenses can be deducted. However, staff costs must correspond to
an actual work done and must not be excessive compared to the operational significance. This also
applies to payments to foreign parties. Here, the receiver shall specify the name and address, unless
the total amount in payments per beneficiary does not exceed 500 FF. If the receiver is not disclosed
the payments are considered "rémunérations occult" and are associated with the following
disadvantages:
For corporations and other legal entities, a tax penalty of 100% of the "rémunérations occult" and
75% for voluntary post declaration is to be paid.
Japan: in Japan, bribes are deductible as business expenses that are justified by the operation (of
the company) if the name and address of the recipient is specified. This also applies to payments to
foreigners. If the indication of the name is refused, the expenses claimed are not recognized as
operating expenses.
Canada: there is no general rule on the deductibility or non-deductibility of kickbacks and bribes.
Hence the rule is that necessary expenses for obtaining the income (contract) are deductible.
Payments to members of the public service and domestic administration of justice, to officers and
employees and those charged with the collection of fees, entrance fees etc. for the purpose to
entice the recipient to the violation of his official duties, can not be abated as business expenses as
well as illegal payments according to the Criminal Code.
Luxembourg: bribes, justified by the operation (of a company) are deductible as business expenses.
However, the tax authorities may require that the payer is to designate the receiver by name. If not,
the expenses are not recognized as operating expenses.
Netherlands: all expenses that are directly or closely related to the business are deductible. This
also applies to expenditure outside the actual business operations if they are considered beneficial
to the operation for good reasons by the management. What counts is the good merchant custom.
Neither the law nor the administration is authorized to determine which expenses are not
operationally justified and therefore not deductible. For the business expense deduction it is not a
requirement that the recipient is specified. It is sufficient to elucidate to the satisfaction of the tax
authorities that the payments are in the interest of the operation.
Austria: bribes justified by the operation (of a company) are deductible as business expenses.
However, the tax authority may require that the payer names the recipient of the deducted payments
exactly. If the indication of the name is denied e.g. because of business comity, the expenses
claimed are not recognized as operating expenses. This principle also applies to payments to
foreigners.
Switzerland: bribe payments are tax deductible if it is clearly operation initiated and the consignee is
indicated.
US: (rough résumé: "generally operational expenses are deductible if they are not illegal according to
the FCPA")
UK: kickbacks and bribes are deductible if they have been paid for operating purposes. The tax
authority may request the name and address of the recipient."
"Specific" legal corruption: exclusively against foreign countries
Particularly, the non-disclosure of the bribe money recipients' name in tax declarations had been a
powerful instrument for Legal Corruption during the 1990s for German corporations, enabling them
to block foreign legal jurisdictions which intended to fight corruption in their countries. Hence, they
uncontrolled established a strong network of clientelism around Europe (e.g. SIEMENS)[205] along
with the formation of the European Single Market in the upcoming European Union and the
Eurozone. Moreover, in order to further strengthen active corruption the prosecution of tax evasion
during that decade had been severely limited. German tax authorities were instructed to refuse any
disclosure of bribe recipients' names from tax declarations to the German criminal prosecution.[206]
As a result, German corporations have been systematically increasing their informal economy from
1980 until today up to 350 bn € per annum (see diagram on the right), thus continuously feeding
their black money reserves.[207]
In 2007, Siemens was convicted in the District Court of Darmstadt of criminal corruption against the
Italian corporation Enel Power SpA. Siemens had paid almost €3.5 million in bribes to be selected
for a €200 million project from the Italian corporation, partially owned by the government. The deal
was handled through black money accounts in Switzerland and Liechtenstein that were established
specifically for such purposes.[208] Because the crime was committed in 1999, after the OECD
convention had come into force, this foreign corrupt practice could be prosecuted. It was the first
time a German court of law convicted foreign corrupt practices like a national practice, although the
corresponding law did not yet protect foreign competitors in business.[209]
During the judicial proceedings it was disclosed that numerous such black accounts had been
established in the past decades.[205]
Philosophers and religious thinkers have responded to the inescapable reality of corruption in
different ways. Plato, in The Republic, acknowledges the corrupt nature of political institutions, and
recommends that philosophers "shelter behind a wall" to avoid senselessly martyring themselves.
Disciples of philosophy ... have tasted how sweet and blessed a possession
philosophy is, and have also seen and been satisfied of the madness of the
multitude, and known that there is no one who ever acts honestly in the
administration of States, nor any helper who will save any one who maintains the
cause of the just. Such a savior would be like a man who has fallen among wild
beasts—unable to join in the wickedness of his fellows, neither would he be able
alone to resist all their fierce natures, and therefore he would be of no use to the
State or to his friends, and would have to throw away his life before he had done
any good to himself or others. And he reflects upon all this, and holds his peace, and
does his own business. He is like one who retires under the shelter of a wall in the
storm of dust and sleet which the driving wind hurries along; and when he sees the
rest of mankind full of wickedness, he is content if only he can live his own life and
be pure from evil or unrighteousness, and depart in peace and good will, with
bright hopes.
The New Testament, in keeping with the tradition of Ancient Greek thought, also frankly
acknowledges the corruption of the world (ὁ κόσμος)[210] and claims to offer a way of keeping the
spirit "unspotted from the world."[211] Paul of Tarsus acknowledges his readers must inevitably "deal
with the world,"[212] and recommends they adopt an attitude of "as if not" in all their dealings. When
they buy a thing, for example, they should relate to it "as if it were not theirs to keep."[213] New
Testament readers are advised to refuse to "conform to the present age"[214] and not to be ashamed
to be peculiar or singular.[215] They are advised not be friends of the corrupt world, because
"friendship with the world is enmity with God."[216] They are advised not to love the corrupt world or
the things of the world.[217] The rulers of this world, Paul explains, "are coming to nothing"[218] While
readers must obey corrupt rulers in order to live in the world,[219] the spirit is subject to no law but to
love God and love our neighbors as ourselves.[220] New Testament readers are advised to adopt a
disposition in which they are "in the world, but not of the world."[221] This disposition, Paul claims,
shows us a way to escape "slavery to corruption" and experience the freedom and glory of being
innocent "children of God".[222]
Corruption by country
Corruption in Thailand
See also
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Further reading
Diwan, Ishac; Haidar, Jamal Ibrahim (2021). "Political Connections Reduce Job Creation: Firm-
level Evidence from Lebanon" (https://www.tandfonline.com/doi/full/10.1080/00220388.2020.18
49622) . Journal of Development Studies. 57 (8): 1373–1396.
doi:10.1080/00220388.2020.1849622 (https://doi.org/10.1080%2F00220388.2020.1849622) .
S2CID 229717871 (https://api.semanticscholar.org/CorpusID:229717871) .
Cohen, Nissim (2012). Informal payments for healthcare – The phenomenon and its context (htt
p://journals.cambridge.org/action/displayFulltext?type=1&fid=8634680&jid=HEP&volumeId=7&is
sueId=03&aid=8634678&bodyId=&membershipNumber=&societyETOCSession=) . Journal of
Health Economics, Policy and Law, 7 (3): 285–308.
Garifullin Ramil Ramzievich Bribe-taking mania as one of the causes of bribery. The concept of
psychological and psychotherapeutic approaches to the problem of bribery and bribe-taking
mania. J. Aktualnye Problemy Ekonomiki i Prava" ("Current Problems in Economics and Law"), no.
4(24), 2012, pp. 9–15 (https://elibrary.ru/item.asp?id=18207015)
Heidenheimer, Arnold J. and Michael Johnston, eds. Political corruption: Concepts and contexts
(2011).
McCormick, Richard L. "The discovery that business corrupts politics: A reappraisal of the origins
of Progressivism" American Historical Review 86 (1981): 247–74.
Mantzaris, E., Tsekeris, C. and Tsekeris, T. (2014). Interrogating Corruption: Lessons from South
Africa (https://web.archive.org/web/20160922183448/http://uludag-univ.dergipark.gov.tr/ijsi/iss
ue/17725/185670) . International Journal of Social Inquiry, 7 (1): 1–17.
Sharma, Vivek Swaroop. "Give Corruption a Chance" in The National Interest 128,
November/December 2013: 38–45. Full text available at: [1] (https://www.researchgate.net/public
ation/279587155_Give_Corruption_a_Chance) .
Wallis, John Joseph. "The concept of systematic corruption in American history." in Corruption and
Reform: Lessons from America's economic history (U of Chicago Press, 2006). 23–62. online (http
s://www.nber.org/chapters/c9977.pdf)