corruption

/kəˈrʌpʃ(ə)n/
noun
noun: corruption; plural noun: corruptions
1. 1.
dishonest or fraudulent conduct by those in power, typically involving bribery.
"the journalist who wants to expose corruption in high places"
synonyms dishonesty, dishonest dealings, unscrupulousness, deceit, deception, duplicity,
: double-dealing, fraud, fraudulence, misconduct, lawbreaking, crime, criminality,
delinquency, wrongdoing, villainy; More
bribery, bribing, subornation, venality, graft, extortion, jobbery, profiteering;
payola;
informalcrookedness, shadiness, sleaze, palm-greasing;
malfeasance, misfeasance;
archaicknavery;
raremalversation
"senior officials have been implicated in corruption"
antonyms
honesty
:
o the action or effect of making someone or something morally depraved.
"the corruption of youth was a powerful motif"
synonyms sin, sinfulness, ungodliness, unrighteousness, profanity, impiety, impurity; More
: immorality, depravity, vice, iniquity, turpitude, degeneracy, perversion,
pervertedness, debauchery, dissolution, dissoluteness, decadence, profligacy,
wantonness, indecency, lasciviousness, lewdness, lechery;
wickedness, evil, baseness, vileness
"he is aware of his fall into corruption"
antonyms
morality, purity
:
2. 2.
the process by which a word or expression is changed from its original state to one regarded as
erroneous or debased.
"a record of a word's corruption"
synonyms alteration, falsification, doctoring, manipulation, manipulating, fudging,
: adulteration, debasement, degradation, abuse, subversion, misrepresentation,
misapplication;
rarevitiation
"these figures have been subject to corruption"
o the process by which a computer database or program becomes debased by
alteration or the introduction of errors.
"this procedure creates a temporary file to prevent accidental corruption"
3. 3.
ARCHAIC
the process of decay; putrefaction.
"the potato turned black and rotten with corruption"
 Google Dictionary

WIKI

"Corrupt" redirects here. For other uses, see Corrupt (disambiguation).

Individual nation articles should be consulted on specific national responses to
corruption.

In general, corruption is a form of dishonesty or criminal activity undertaken by a person or

organization entrusted with a position of authority, often to acquire illicit benefit. Corruption
may include many activities including bribery and embezzlement, though it may also involve
practices that are legal in many countries.[1] Political corruption occurs when an office-holder
or other governmental employee acts in an official capacity for personal gain. Corruption is
most commonplace in kleptocracies, oligarchies, narco-states and mafia states.[citation needed]

Corruption can occur on different scales. Corruption ranges from small favors between a
small number of people (petty corruption),[2] 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. Corruption and crime are endemic sociological occurrences which appear with regular
frequency in virtually all countries on a global scale in varying degree and proportion.
Individual nations each allocate domestic resources for the control and regulation of
corruption and crime. Strategies to counter corruption are often summarized under the
umbrella term anti-corruption.

Contents
 1Scales of corruption
o 1.1Petty corruption
o 1.2Grand corruption
o 1.3Systemic corruption
 2Corruption in different sectors
o 2.1Government/public sector
 2.1.1Political corruption
 2.1.2Police corruption
 2.1.3Judicial corruption
o 2.2Corruption in the education system
o 2.3Within labor unions
o 2.4Corruption in religion
o 2.5Corruption in philosophy
 o 2.6Corporate corruption
o 2.7Arms for cash
 3Methods
o 3.1Bribery
o 3.2Embezzlement, theft and fraud
o 3.3Graft
o 3.4Extortion and blackmail
o 3.5Influence peddling
o 3.6Networking
o 3.7Abuse of discretion
o 3.8Favoritism, nepotism and clientelism
 4Corruption and economic growth
 5Causes of corruption
o 5.1Preventing corruption
o 5.2Enhancing Civil Society Participation
 6Anti-corruption programmes
 7Corruption tourism
 8Legal corruption
o 8.1Examples of legal corruption
 8.1.1Foreign corrupt practices of industrialized OECD countries 1994
study
 8.1.2"Specific" legal corruption: exclusively against foreign countries
o 8.2A Siemens corruption case
 9Historical responses in philosophical and religious thought
 10See also
 11References
 12Further reading

Scales of corruption[edit]

A billboard in Zambia exhorting the public to "Just say no to corruption".

An anti-corruption billboard at the entry into Niamey, capital of Niger. The text, translated
from French, reads: "Together, let's fight against corruption at the borders", and "With my
identity card or my passport plus my vaccinaton certificate, I can travel in all tranquillity
within the realm of ECOWAS".

Stephen D. Morris,[3] a professor of politics, writes that political corruption is the illegitimate
use of public power to benefit a private interest. Economist Ian Senior[4] defines corruption as
an action to (a) secretly provide (b) a good or a service to a third party (c) so that he or she
can influence certain actions which (d) benefit the corrupt, a third party, or both (e) in which
the corrupt agent has authority. Daniel Kaufmann,[5] from the World Bank, extends 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.[6]

The research work on social corruption developed at The Unicist Research Institute defines
that corruption allows individuals to profit from the environment through illegitimate actions
while they disintegrate the system they are part of.[7]

Corruption can occur on different scales. Corruption ranges from small favors between a
small number of people (petty corruption),[8] 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.

A number of indicators and tools have been developed which can measure different forms of
corruption with increasing accuracy.[9]

Petty corruption[edit]

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,[10][11] and many other private and
government sectors.

Grand corruption[edit]
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.[12]

The government system in many countries is divided into the legislative, executive and
judiciary branches in an attempt to provide independent services that are less subject to grand
corruption due to their independence from one another.[13]

Systemic corruption[edit]

Systemic corruption (or endemic corruption)[14] 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.[15]
Specific acts of corruption include "bribery, extortion, and embezzlement" in a system where
"corruption becomes the rule rather than the exception."[16] 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.[17] Some scholars argue that there is a negative duty[clarification needed] of western governments
to protect against systematic corruption of underdeveloped governments.[18][19]

Corruption in different sectors[edit]

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.

Government/public sector[edit]

Public corruption includes corruption of the political process and of government agencies
such as 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.[20]

Political corruption[edit]

Main article: Political corruption

A political cartoon from Harper's Weekly, January 26, 1878, depicting U.S. Secretary of the
Interior Carl Schurz investigating the Indian Bureau at the U.S. Department of the Interior.
The original caption for the cartoon is: "THE SECRETARY OF THE INTERIOR
INVESTIGATING THE INDIAN BUREAU. GIVE HIM HIS DUE, AND GIVE THEM
THEIR DUES."

Political corruption is the abuse of public power, office, or resources by elected government
officials for personal gain, by extortion, soliciting or offering bribes. It can also take the form
of office holders maintaining themselves in office by purchasing votes by enacting laws
which use taxpayers' money.[21] Evidence suggests that corruption can have political
consequences- with citizens being asked for bribes becoming less likely to identify with their
country or region.[22]

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.

The Kaunas "Golden Toilet".

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.[23] 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.[23] 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 [23] the local municipality even considered
demolishing the building at one point.[24] 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.

Various sources acclaim the Spanish People's Party – Partido Popular -, to be Europe's most
corrupt party, with about yearly 45 billion euro worth of corruption.[25]

Police corruption[edit]

Main article: Police corruption

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 other 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.

Another example is police officers flouting the police code of conduct in order to secure
convictions of suspects—for example, through the use of falsified evidence. More rarely,
police officers may deliberately and systematically participate in organized crime themselves.
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.

Judicial corruption[edit]

Judicial corruption refers to corruption-related misconduct of judges, through receiving or

giving bribes, improper sentencing of convicted criminals, bias in the hearing and judgement
of arguments and other such misconduct.

Governmental corruption of judiciary is broadly known in many transitional and developing

countries because the budget is almost completely controlled by the executive. The latter
undermines the separation of powers, as it creates a critical financial dependence of the
judiciary. The proper national wealth distribution including the government spending on the
judiciary is subject to the constitutional economics.

It is important to distinguish between the two methods of corruption of the judiciary: the
government (through budget planning and various privileges), and the private.[26] Judicial
corruption can be difficult to completely eradicate, even in developed countries.[27] Corruption
in judiciary also involves the government in power using the judicial arm of government to
oppress the opposition parties in the detriments of the state.
Corruption in the education system[edit]

Corruption in education is a worldwide phenomenon. Corruption in admissions to universities

is traditionally considered as one of the most corrupt areas of the education sector.[28] Recent
attempts in some countries, such as Russia and Ukraine, to curb corruption in admissions
through the abolition of university entrance examinations and introduction of standardized
computer-graded tests have largely failed.[29] Vouchers for university entrants have never
materialized.[30] The cost of corruption is in that it impedes sustainable economic growth.[30][30]
Endemic corruption in educational institutions leads to the formation of sustainable corrupt
hierarchies.[31][32][33] While higher education in Russia is distinct with widespread bribery,
corruption in the US and the UK features a significant amount of fraud.[34][35] The US is distinct
with grey areas and institutional corruption in the higher education sector.[36][37] Authoritarian
regimes, including those in the former Soviet republics, encourage educational corruption and
control universities, especially during the election campaigns.[38] This is typical for Russia,[39]
Ukraine,[40] and Central Asian regimes,[41] among others. The general public is well aware of
the high level of corruption in colleges and universities, including thanks to the media.[42][43]
Doctoral education is no exception, with dissertations and doctoral degrees available for sale,
including for politicians.[44] Russian Parliament is notorious for "highly educated" MPs[45] High
levels of corruption are a result of universities not being able to break away from their
Stalinist past, over bureaucratization,[46] and a clear lack of university autonomy.[47] Both
quantitative and qualitative methodologies are employed to study education corruption,[48] but
the topic remains largely unattended by the scholars. In many societies and international
organizations, education corruption remains a taboo. In some countries, such as certain
eastern European countries, some Balkan countries and certain Asian countries, corruption
occurs frequently in universities.[49] This can include bribes to bypass bureaucratic procedures
and bribing faculty for a grade.[49][50] The willingness to engage in corruption such as accepting
bribe money in exchange for grades decreases if individuals perceive such behavior as very
objectionable, i.e. a violation of social norms and if they fear sanctions regarding the severity
and probability of sanctions.[50]

Within labor unions[edit]

The Teamsters (International Brotherhood of Teamsters) is an example of how the civil

RICO process can be used. For decades, the Teamsters had been substantially controlled by
La Cosa Nostra. Since 1957, four of eight Teamster presidents were indicted, yet the union
continued to be controlled by organized crime elements. The federal government has been
successful at removing the criminal influence from this 1.4 million-member union by using
the civil process.[51]

Corruption in religion[edit]

Main articles: Simony, Cardinal-nephew, and Criticism of the Catholic Church §  Criticism
of corruption

Wikiquote has quotations related to: Corruption in religion

The history of religion includes numerous examples of religious leaders calling attention to
corruption in the religious practices and institutions of their time. Jewish prophets Isaiah and
Amos berate the rabbinical establishment of Ancient Judea for failing to live up to the ideals
of the Torah.[52] 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.[53] Corruption was one of the important
issues during the Investiture Controversy. In 1517, Martin Luther accuses the Catholic
Church of widespread corruption, including selling of indulgences.[54]

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.,
to develop and promote a new hermeneutical approach to Scripture that would de-emphasize
the social Gospel and emphasize themes, such as individual salvation, more congenial to free
enterprise.[55]

Business leaders, of course, had long been working to "merchandise" themselves

through the appropriation of religion. In organizations such as Spiritual Mobilization,
the prayer breakfast groups, and the Freedoms Foundation, they had linked capitalism
and Christianity and, at the same time, likened the welfare state to godless paganism.
[56]

Corruption in philosophy[edit]

19th century German philosopher Arthur Schopenhauer acknowledges that academics,

including philosophers, are subject to the same sources of corruption as the society they
inhabit. He distinguishes the corrupt "university" philosophers, whose "real concern is to earn
with credit an honest livelihood for themselves and ... to enjoy a certain prestige in the eyes
of the public"[57] from the genuine philosopher, whose sole motive is to discover and bear
witness to the truth.

To be a philosopher, that is to say, a lover of wisdom (for wisdom is nothing but

truth), it is not enough for a man to love truth, in so far as it is compatible with his
own interest, with the will of his superiors, with the dogmas of the church, or with the
prejudices and tastes of his contemporaries; so long as he rests content with this
position, he is only a φίλαυτος [lover of self], not a φιλόσοφος [lover of wisdom]. For
this title of honor is well and wisely conceived precisely by its stating that one should
love the truth earnestly and with one’s whole heart, and thus unconditionally and
unreservedly, above all else, and, if need be, in defiance of all else. Now the reason
for this is the one previously stated that the intellect has become free, and in this state,
it does not even know or understand any other interest than that of truth.[58]

Corporate corruption[edit]

See also: Corporate crime

The examples and perspective in this section may not represent a worldwide view
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Petrobras headquarters in downtown Rio de Janeiro.

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.

Further information: Operation Car Wash

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 #58
in the 2016 Fortune Global 500 list.[59] It is being investigated over corporate and political
collusion and corruption.[60]

Odebrecht is a privately held Brazilian conglomerate consisting of diversified businesses in

the fields of engineering, real estate, construction, chemicals and petrochemicals. The
company was founded in 1944 in Salvador da Bahia by Norberto Odebrecht, and the firm is
now present in South America, Central America, North America, the Caribbean, Africa,
Europe and the Middle East. Its leading company is Norberto Odebrecht Construtora [pt].[61]
Odebrecht is one of the 25 largest international construction companies and is still led by
Odebrecht family.

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.[62][63][60] 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 Sérgio Moro since March 17, 2014.[64][65]
[66][60]

Arms for cash[edit]

 The examples and perspective in this section may not represent a worldwide view
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"Arms for cash" can be done by either a state-sanctioned arms dealer, firm or state itself to
another party it just in regards regards as only a good business partner and not political
kindred or allies, thus making them no better than regular gun runners. Arms smugglers, who
are already in to Arms trafficking may work for them on the ground or with shipment. The
money is often laundered and records are often destroyed. [67] It often breaks UN, national or
international law.[67] Payment can also be in strange or indirect ways like arms paid for in
post-war oil contracts, post-war hotel ownership, conflict diamonds, corporate shares or the
long term post-war promises of superfus[clarification needed] future contracts between the parties
involved in it, etc...

Main article: Mitterrand–Pasqua affair

In 2006 Transparency International ranked Angola a lowly 142 out of 163 countries in the
Corruption Perception Index just after Venezuela and before the Republic of the Congo with
a 2.2 rating.[68][69] Angola was at 168th place (out of 178 countries) on Transparency
International’s Corruption Perceptions Index (CPI), receiving a 1.9 on a scale from 0 to 10.[70]
On the World Bank's 2009 Worldwide Governance Index, Angola had done very poorly on
all six aspects of governance assessed. While its score for political stability improved to 35.8
in 2009 (on a 100-point scale) from 19.2 in 2004, Angola earned especially low scores for
accountability, regulatory standards, and rule of law. The score for corruption declined from
an extremely low 6.3 in 2004 to 5.2 in 2009.[71][72]

The country is regarded poorly and that corruption is wounding the economy badly despite
the emerging oil industries wealth.[71]

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, involved 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.[71]

“Angolagate”, which was carried out and uncovered over the course of the 1990s. 42
individuals, including: 42 people, 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 [fr] the
son of François Mitterrand and a former French Minister of the Interior, were all charged,
accused, indicted or convicted with illegal arms trading, tax fraud, embezzlement, money
laundering and other crimes.[71][73] "[74]
Methods[edit]
In systemic corruption and grand corruption, multiple methods of corruption are used
concurrently with similar aims.[75]

Bribery[edit]

Main article: 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 the common form of
corruption. The types of favours given are diverse and may include money, gifts, sexual
favours, company shares, 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.[76]

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, theft and fraud[edit]

Main article: Embezzlement

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 and other
corrupt activity.

Graft[edit]

Main article: Graft (politics)

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.

Extortion and blackmail[edit]

Main article: Extortion

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 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.

Influence peddling[edit]

Influence peddling is the illegal practice of using one's influence in government or

connections with persons in authority to obtain favours or preferential treatment for another,
usually in return for payment.

Networking[edit]

Main article: Business networking

Networking 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.[77][78]

Euro bank notes hidden in sleeve.

Abuse of discretion[edit]

Main article: 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.

Favoritism, nepotism and clientelism[edit]

Main article: Nepotism

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.[79]

Some states do not forbid these forms of corruption.[citation needed]

Corruption and economic growth[edit]

Corruption is strongly negatively associated with the share of private investment and, hence,
it lowers the rate of economic growth.[80]

Corruption reduces the returns of productive activities. If the returns to production 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.[80]

Corruption creates the opportunity for increased inequality, reduces the return of productive
activities, and, hence, makes rentseeking and corruption activities more attractive. This
opportunity for increased inequality not only generates psychological frustration to the
underprivileged but also reduces productivity growth, investment, and job opportunities.[80]

Causes of corruption[edit]
According to a 2017 survey study, the following factors have been attributed as causes of
corruption:[81]

 Greed of money, power, Luxury or any other materialistic desires.

 Higher levels of market and political monopolization
 Low levels of democracy, weak civil participation and low political transparency
 Higher levels of bureaucracy and inefficient administrative structures
 Low press freedom
 Low economic freedom
 Large ethnic divisions and high levels of in-group favoritism
 Gender inequality

 Resource wealth
 Poverty
 Political instability
 Weak property rights
 Contagion from corrupt neighboring countries
 Low levels of education
 Lack of commitment to the society.
 Extravagant Family.

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. [82]

Preventing corruption[edit]

R. Klitgaard[83] postulates that corruption will occur if the corrupt gain is greater than the
penalty multiplied by the likelihood of being caught and prosecuted:

Corrupt gain > Penalty × Likelihood of being caught and prosecuted

The degree of corruption will then be a function of the degree of monopoly and discretion in
deciding who should get how much on the one hand and the degree to which this activity is
accountable and transparent on the other hand. Still, these equations (which should be
understood in a qualitative rather than a quantitative manner) seem to be lacking one aspect: a
high degree of monopoly and discretion accompanied by a low degree of transparency does
not automatically lead to corruption without any moral weakness or insufficient integrity.
Also, low penalties in combination with a low probability of being caught will only lead to
corruption if people tend to neglect ethics and moral commitment. The original R.Klitgaard
equation has therefore been amended by C. Stephan[84] into:

Degree of corruption = Monopoly + Discretion – Transparency – Morality

The moral dimension has an intrinsic and an extrinsic component. The intrinsic component
refers to a mentality problem, the extrinsic component to external 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 the amended Klitgaard equation, 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[85] have independently
addressed the important 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.

Enhancing Civil Society Participation[edit]

Creating bottom-up mechanisms, promoting citizens participation and encouraging the values
of integrity, accountability, and transparency are crucial components of fighting corruption.
The implementation of the ALACs “Advocacy and Legal Advice Centres (ALACs)” has led
to a significant increase in the number of citizen complaints against acts of corruption
received and documented[86] and also to the development of strategies for good governance by
involving citizens willing to fight against corruption.[87]

Anti-corruption programmes[edit]
See also: List of anti-corruption agencies

Wikimedia Commons has media related to Anti-corruption.

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."[88] 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[89] 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[90] 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.[91]

In 2013, a document[92] 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.
[92]

Corruption tourism[edit]
See also: Kleptocracy Tour
In some countries people travel to corruption hot spots or a specialist tour company takes
them on corruption city tours, as it is the case in Prague.[93][94][95][96] Corruption tours have also
occurred in Chicago,[97] and Mexico City[98][99]

Legal corruption[edit]
Though corruption is often viewed as illegal, there is an evolving concept of legal corruption,
[5][100][original research?]
as developed by Daniel Kaufmann and Pedro Vicente. 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.[101]

Examples of legal corruption[edit]

In 1977 the USA had enacted the Foreign Corrupt Practices Act (FCPA)[102] "for the purpose
of making it unlawful... to make payments to foreign government officials to assist in
obtaining or retaining business" and invited all OECD countries to follow suit. In 1997 a
corresponding OECD Anti-Bribery Convention was signed by its members.[103][104]

17 years after the FCPA enacting, a Parliamentary Financial Commission in Bonn presented a
comparative study on legal corruption in industrialized OECD countries[105] As a result, they
reported that in most industrial countries even at that time (1994) foreign corruption was
legal, and that their foreign corrupt practices had been diverging to a large extent, ranging
from simple legalization, through governmental subsidization (tax deduction), up to extremes
like in Germany where foreign corruption was fostered, whereas domestic was legally
prosecuted. Consequently, in order to support national export corporations the Parliamentary
Financial Commission recommended to reject a related previous Parliamentary Proposal by
the opposition leader which had been aiming to limit German foreign corruption on the basis
of the US FCPA.[106] Only after the OECD Anti-Bribery Convention came into force, did
Germany withdraw the legalization of foreign corruption in 1999.[107]

Foreign corrupt practices of industrialized OECD countries 1994 study[edit]

The Foreign corrupt practices of industrialized OECD countries 1994 (Parliamentary

Financial Commission study, Bonn).[105]

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:

 Payments must be necessary in order to be able to survive against foreign competition

 They must be common in the industry
 A corresponding application must be made to the Treasury each year
 Payments must be appropriate
 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:

 The business expense deduction (of the bribe money) is eliminated.

 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.
 There may be a general fine of up 200 FF fixed per case.

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 as 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[edit]

Referring to the recommendation of the above-mentioned Parliamentary Financial

Commission's study,[105] the then Kohl administration (1991–1994) decided to maintain the
legality of corruption against officials exclusively in foreign transactions[108] and confirmed
the full deductibility of bribe money, co-financing thus a specific nationalistic corruption
practice (§4 Abs. 5 Nr. 10 EStG, valid until March 19, 1999) in contradiction to the 1994
OECD recommendation.[109] The respective law was not changed before the OECD
Convention also in Germany came into force (1999).[110] According to the Parliamentary
Financial Commission's study, however, in 1994 most countries' corruption practices were
not nationalistic and much more limited by the respective laws compared to Germany.[111]

Development of the shadow economy in (West-) Germany 1975–2015. Original shadow

economy data from Friedrich Schneider, University Linz.

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)[112] 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.[113] 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.[114]

A Siemens corruption case[edit]

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.[115] Because the crime was
committed in 1999, after the OECD convention had come into force, this foreign corrupt
practice could be prosecuted. According to Bucerius Law School professors Frank Saliger
and Karsten Gaede, for the first time a German court of law convicted foreign corrupt
practices like national ones although the corresponding law did not yet protect foreign
competitors in business.[116]

During the judicial proceedings however it was disclosed that numerous such black accounts
had been established in the past decades.[112]

Historical responses in philosophical and religious

thought[edit]
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.[117]

The New Testament, in keeping with the tradition of Ancient Greek thought, also frankly
acknowledges the corruption of the world (ὁ κόσμος)[118] and claims to offer a way of keeping
the spirit "unspotted from the world."[119] Paul of Tarsus acknowledges his readers must
inevitably "deal with the world,"[120] 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."[121] New Testament readers are advised to refuse to "conform to the present
age"[122] and not to be ashamed to be peculiar or singular.[123] They are advised not be friends of
the corrupt world, because "friendship with the world is enmity with God."[124] They are
advised not to love the corrupt world or the things of the world.[125] The rulers of this world,
Paul explains, "are coming to nothing"[126] While readers must obey corrupt rulers in order to
live in the world,[127] the spirit is subject to no law but to love God and love our neighbors as
ourselves.[128] New Testament readers are advised to adopt a disposition in which they are "in
the world, but not of the world."[129] 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".[130]
What is corruption?
Merridian Dictionary
What is corruption? (See below a discussion of
characteristics of corruption).

The simplest definition is:

Corruption is the misuse of public power (by elected

politician or appointed civil servant) for private gain.

In order to ensure that not ony public corruption but also

private corruption between individuals and businesses could
be covered by the same simple definition:

Corruption is the misuse of entrusted power (by heritage,

education, marriage, election, appointment or whatever
else) for private gain.

This broader definition covers not only the politician and the
public servant, but also the CEO and CFO of a company, the
notary public, the teamleader at a workplace, the
administrator or admissions-officer to a private school or
hospital, the coach of a soccerteam, etcetera.

A much more difficult, scientific definition for the concept

‘corruption’ was developed by profesor (emeritus) dr. Petrus
van Duyne:

Corruption is an improbity or decay in the decision-making

process in which a decision-maker consents to deviate or
demands deviation from the criterion which should rule his
or her decision-making, in exchange for a reward or for the
promise or expectation of a reward, while these motives
influencing his or her decision-making cannot be part of the
justification of the decision.
 

Major corruption comes close whenever major events

involving large sums of money, multiple ‘players’, or huge
quantities of products (think of food and pharmaceuticals)
often in disaster situations, are at stake. Preferably,
corruption flourishes in situations involving high technology
(no one understands the real quality and value of products),
or in situtions that are chaotic. Think of civil war: who is
responsible and who is the rebel? Natural disasters like
earthquakes, floods, droughts. The global community reacts
quickly but local government might be disorganised and
disoriented. Who maintains law and order? Or maybe the
purchase of a technologically far advanced aircraft, while
only a few can understand the technologies implied in
development and production of such a plane. Mostly , the
sums of money involved are huge, a relatively small amount
of corrupt payment is difficult to attract attention. Or the
number of actions is very large, for instance in betting
stations for results of Olympic Games or international
soccer-tournaments which can easily be manipulated. Geo-
politics might play a role like e.g. the East-West conflict did
in the second half of the 20th century, in which the major
country-alliances sought support from non-aligned countries.

Fighting corruption takes place in many ‘theaters’:

 political reforms, including the financing of political

parties and elections;
 economic reforms, regulating markets and the financial
sector;
 financial controls: budget, bookkeeping, reporting;
 Public supervision: media, parliament, local
administrators and councils, registration;
 free access to information and data;
 maintaining law and order;
 improving and strengthening of the judicial system;
 institutional reforms: Tax systems, customs, public
administration in general;
 whistleblowers and civil society organisations (NGO’s).
We know that corruption will not disappear from society. Our
efforts are meant to restrict corruption and to protect as
much as possible the poor and weak in our societies. In the
end all corruption costs are paid by the consumer and the
tax-payer. They need protection.

The small corruption (peanuts, facilitation payments –

allowed by the OECD!) do not cost much but are awksome to
the public. It is less damaging in total amounts but it makes
it difficult to understand why we fight the grand corruption if
we fail to fight the small ‘bakshis’. Major corruption thrives
on a broad base of small corruption-payments or bribes.

—————————————————————————————————
———————–

120625, Characteristics of corruption?

Characteristics of Corruption

Discussion of corruption is extremely difficult as it is a

hidden phenomenon in our societies. Both parties in
exchange of power for privileges want to keep their
transaction secret. That makes it so difficult to establish
how wide and deep corruption penetrated our economy and
social life. Moreover, what for some is no more than ‘a
friendly turn’ is for others ‘misbehaviour’. What in one place
can be friendliness is unacceptable elsewhere. Normal
behaviour at a particular hour of the day may be
unacceptable at another hour.

Let us have a look into some of the characteristics.

a) Recipients and payers.

b) Extortion.

c) Lubricant of society.

d) An ethical problem.
e) Poverty reduction.

f) Small is beautiful.

g) Culture.

h) ‘Kindness among friends’.

a) Recipients and payers

Corruption is the abuse of entrusted power and elected authority for
private profit.

Worldwide complaints are heard about politicians and public

officials who accept bribes and enrich themselves privately
at the expense of the common citizen. This may be at the
expense of the employee and the employer; consumer and
producer; renter and tenant; the one applying for a permit to
do something, or asking exemption from an obligation to pay
or to deliver a product or a service. All those cases may be
considered to be abuse of power and authority for one’s own
benefit.

Complainers forget that necessarily there should also be

payers who benefit from that abuse of power and authority.
The other side of the coin shows payers assuming that their
‘gift’ to a politician or a public official, may in return deliver
profitable preferential treatment or delivery.

Please note that repeatedly is stressed the behaviour by

public officials and politicians. Often the last ones are
forgotten. Anyone who wants to fight corruption and
safeguard integrity in governance should not only prevent
politicians and public officials from unlawfully accepting
gifts, but should also fight the ‘high and mighty’ that abuse
their power and authority to give privileges such as land
rights, permits, diplomas, allowances, money, against a
reward.
All over the world we see, generally speaking, that
accepting bribes is publicly denounced. The parliamentarian
accepting bribes for using his influence and legislative
power to endorse proposals profitable to some, is
condemned in public by everyone. However, in private, those
who gain from those profitable proposals praise his
approach as realistic. For them he is the perfect
representative who recognizes that ‘there is no escaping
from corruption, if you don’t want to lose the competitive
struggle’.

Test Ask family, neighbours, colleagues at work, their

opinion on this subject.
Do they support the opinion that it is wrong to bribe
politicians and public officials, whereas, the other way
round, they themselves bribing these officials for their own
profit would not be wrong? Would they denounce someone
bribing an official or politician?

b) Extortion

Many among us go one step further. They do not only blame

politicians and public officials for willingly accepting bribes.
They also often allege that those having authority in our
society ask to be bribed or give us the opportunity to bribe.
This means that the question ‘who is to blame’, shifts from
the person who pays to the person who extorts and
receives. Again on the ground of the allegation: ‘There’s no
escaping from it, for if you don’t pay, you are bound to fall
behind’.

Such asking for a gift may be incidental or general. A

generally accepted practice in Pakistanin the nineties of the
20 century, for example, was that every invoice written out
th

for the government was increased by 7 percent, as a gift to

the public official and/or politician in recompense for the
privilege of being allowed to supply a product or service.
Naturally, on top of that there came incidental additional
payments by way of thanks for benefits obtained.

In every society it is known, either publicly or furtively,

which public official is open to transactions with gifts being
made reciprocally. The gift on the part of the official may
then imply considering an application with priority, or
assigning a contract, scholarship or employment. The
potential payer will look for his “prey”; he will look for the
politician/public official of whom everybody knows that he
can be ‘bought’, that he is prepared to break the rules in
exchange for a ‘gift’. Therefore, the reputation that a public
official or politician enjoys, is of great significance. Some
will never be approached with a ‘proposition’, as the
potential extortionists or bribers do know that they (those
public officials or politicians) are not open to such practices.
Equally, as regards some business enterprises, it is a known
fact that they do not keep any cash for bribes. They run less
risk of falling victims to extortion.

Test: Ask yourself whether it is an easy way out of a

personal problem to claim that you are not corrupt but that
others force you to give bribes, expatriates buying their
licenses claiming that the authorities are corrupt!

c) Lubricant of society

Many think that paying bribes is required to ensure smoother

operation of society. They think that without an occasional
gift (for example, around Christmas and New Year), or
incidentally (a gift on the occasion of a marriage or when a
child is born) for instance upon entering into a contract for
the supply of a product or a service, such contracts might be
lost to them and might be assigned to others.

For their own enterprises that would then amount to a loss,

implying loss of sales potential, which is not what any
enterprise or entrepreneur works for. For entrepreneurs who
want to secure sales, those gifts are a cost item which they
account for in advance in their prices. As a consequence
products and services cost unnecessarily more than is
needed from a commercial point of view, for as a matter of
fact these gifts have already been budgeted.

If corruption is judged purely on the basis of business

economics, macro-economically it costs money to society
which should be considered as a loss. From the micro-
economic point of view, for the bribing entrepreneur, it is
profitable. The payer of a bribe secures a desired
transaction which – if evaluated on purely commercial
grounds – strictly speaking, should have been assigned to
someone else. That will harm individual entrepreneurs and
transactions; it will harm the national economy and the
world economy.

The fact is that, being influenced by payment of bribes,

buyers (the politicians, the public officials?), will often not
make the best decision, but take an inferior decision.

It is not the best producer that wins, and it is not the best
product that wins, but the delivering contract-party that is
willing to ‘fork out’ the most money. Naturally, those
additional payments will end up in the economy anyway and
are, therefore, a burden from a macro-economic point of
view, either for the taxpayer or for the consumer.

Test: did you ever refuse to pay a bribe, or would you if you
had the potential to ask for a bribe, refuse to do so? Did you
feel any consequences?

d) An ethical problem

The mere fact that both the payer and the recipient of bribes
want to keep their behaviour secret (and often succeed in
doing so as well) shows that such behaviour is generally
considered to be improper. Many consider corruption to be
an ethical problem, a behavioural problem. And refer to it as
being ‘sinful’, a ‘wrongdoing’. It is a problem to be solved by
means of personal ‘reform’.
Those who took the initiative to establish Transparency
International (TI), the global coalition against corruption, in
the last decade of the past century, began calling corruption
‘bad business practices’, which is a moral judgment, not an
economical. On the contrary, some in the business
community consider corruption to be ‘good business
practices’, as they make more money using corruption as a
business tool!

During the initial attempts to establish TI, insight grew that

we were dealing with an economic phenomenon and that
‘transparency’ should be the key-word.

Still there is also an ethical problem. Corruption is not only

an economical phenomenon in any society or economy. It is
not sufficient to call it an economical phenomenon; this
ignores the more general importance of a corruption-free
society for all aspects of life and for all population groups,
poor and rich alike. It also ignores that bribery takes always
place within a certain social context. It is a structural
problem in companies where the course of actions is not
transparent, where the law is not observed, and observance
is not monitored.

A striking aspect in recent developments in trade and

industry (and in society at large) is the fact that ethics has
become important to corporate behaviour again. Standards
and values are seen as essential conditions and
characteristics for the good quality of citizenship,
entrepreneurship and governance. The concepts ‘people,
planet and profit’ are now cherished all over the world in
enterprises and often referred to in their annual reports.
They emphasize the fact that in a business-enterprise it is
not only pursuit of ‘profit’ that counts, but that businesses
should also take into account the interests of ‘people’ in our
society (people, their personnel, executive staff,
shareholders, clients, neighbours, etc.) and also the physical
world surrounding us, our ‘planet’, introducing economical
management of raw materials and energy, concern about
possible climate, prevention of waste, processing of waste.
Apart from the economics and the financial outcomes of
entrepreneurial decisions, socially and ecologically
justifiable behavior is now also identified as being
important.

Emphasizing the ‘sinfulness’ of corruption, aims at improving

especially individual and personal behaviour. Poor
entrepreneurship (in a moral sense) should then be improved
on a personal basis. Our focusing on the conditions and the
implications of corrupt behaviour aims rather on the entire
structure of society and economy, and on the conditions
that exist within that structure to prevent and fight corrupt
behaviour and safeguard integrity. Good entrepreneurship is
judged with regard to its quality in all three aspects: People,
Planet and Profit. The qualification ‘poor’ is not a sign of
sinfulness, but a quality that signifies an adverse effect on
all three aspects, not only on the economics.

Corruption is an economic phenomenon with an ethical aura.

e) Poverty reduction.

Poverty in the world is often brought up to account for the

phenomenon of corruption. Is that satisfactory? Is it correct
and is it proven that the poor are more corrupt than the rich?
How come then, that some political leaders, e.g. Suharto
inIndonesia, Mobutu inCongo, and Abacha inNigeria, but also
Kohl inGermanyand Mitterrand and Chirac inFrance, are or
were so deeply implicated in bribery affairs? They can hardly
be said to suffer poverty, can they? Neither can this be said
from business leaders, often millionaires, if not billionaires,
who are implicated in corruption affairs with those political
leaders.

The explanation that refers to individual poverty reduction is

especially given by those who have a keen eye for
corruption among lower operational staff in government
service, notably lower office clerks, police officers, customs
officers, the military, teachers, admission staff in hospitals,
bus ticket collectors, car-park attendants, garbage
collectors, etc., who on an operational level often have good
opportunities to extract extra income or privileges from
decisions they might take of importance to entrepreneurs
and citizens.  Consequently, these have a certain value.

The explanation that is given for their sometimes corrupt

behaviour is that they are poorly paid and that, therefore,
they are forced to live on what they can get by way of
bribes. Then it fits into the picture painted by this
explanation to say that this problem can become even more
serious if not only their salaries are low, but, on top of that,
they are not paid in time.

Investigations into the effect of the level of income enjoyed

by a person, however, provide sufficient proof that this
explanation is not correct. Low pay does surely not
automatically imply that, consequently, the person
concerned is corrupt. What is of much greater importance
for the prevention of, or fight against, corruption at a lower
level in all kinds of hierarchies, is the clearness and
transparency of the rules and of the decision-making
process, and the control exercised on the application of the
rules. Timely payment of salaries is an important pre-
condition to prevent corrupt behaviour.

f) Small is beautiful

In the OESO treaty, made for the purpose of fighting

corruption, room has been left for citizens and businesses to
make so-called ‘facilitating payments’. By that is meant any
small payment to a public official for the purpose of
somewhat expediting or easing a transaction, that in itself is
in accordance with the rules and the law. The example that
is always given to illustrate such a case is the transport of
fresh vegetables. Is the payment of an insignificant amount
of money to the customs officer who can speed up a border
check on the perishable cargo in the truck or ship, allowed?
He is not doing anything unlawful, he is doing what he has to
do, but he does it a bit quicker or earlier. As a result there
will be a considerably bigger chance for these vegetables to
reach their market fresh. The assumption is that without
such ‘facilitating payment’, that truck or that ship may be
detained for many more hours or even days, causing the
cargo to turn bad, which will result in large financial losses.

Test: We all know similar examples from our own

environment. Is someone attended without standing in line?
Do you get a timely answer to your letter without waiting for
that letter to reach the top of the pile of papers in front of
the handling official? Do you convince the policeman to tear
up the parking-ticket, what argument is strong enough to
convince him that the ticket should not have been written?

Investigations made inKenya proved that a Kenyan spends

an average amount of 113 Euros per month on bribes, about
one third of the average income that can be spent monthly.
On average a Kenyan will find himself in a situation in which
he ‘has to’ bribe someone 16 times per month;  and 10 out
of those 16 times a police officer will be involved. Kenyan
businesses set aside 3 percent on average of their turnover
for the purpose of bribing the government and one another.

For many people ‘petty’ corruption is more annoying than

grand-scale corruption. Citizens have a horror of little extras
having to be paid for all kinds of services of public
authorities. ‘Petty’ corruption is rampant in the lower ranks
of organizations, wherever at higher levels ‘grand’ corruption
prevails among public officials and politicians. When lower
ranking public officials and politicians see, that their higher
ranking colleagues line their pockets with big gifts, it might
occur to them that it is justifiable to get their share.

A boss who takes his share in ‘grand’ corruption, will have a

harder time acting against ‘petty’ corruption by his
underlings within his own service or political party.
 

Test: for yourself what ‘petty corruption’ you observe in your

own social environment. The results of such an investigation
would then enable politicians and public officials to join the
battle to prevent such corruption on the basis of sound
arguments and to foster safeguarding of integrity.

g) Culture

Gifts are inherent to human relations and therefore present

in all cultures. You give and receive gifts on the occasion of
birthdays, Santa Claus or Christmas; on the occasion of
memorable events; an appointment or a departure; marriage
or a retirement.

Everybody sees what you give or receive. Such openness is

of great importance. In many cultures presenting of gifts is
part of the payment traffic. If you make a gift to a village
chief in Africa, make it visible to all the villagers who will all
benefit from such a gift.

When you receive a gift from them, it will also be open and
visible to everyone. Corrupt payments are made in hiding,
are not made known. A gift made in public will also impose a
certain obligation upon the recipient. On a next occasion
you will show your gratitude by reciprocating the gift and
you share the gift received with your family and friends. In
fact, in our everyday life it is not much different. You give
and receive on birthdays, on the occasion of marriages and
births, and on other festive occasions. Look at the
reciprocal state visits of Heads of government and Heads of
state, exchanging gifts.

Bribes are also gifts, but they are made in secret. High-
ranking politicians and public officials in many countries
accumulate big fortunes thanks to bribes received. The
value of Mobutu has been estimated to be between 2.5 and 6
billion dollars, that of Chiluba 5 billion dollars; the Suharto
family has been estimated to have total possessions of 86
billion guilders (1998, some 40 billion euro). At the time of
his death, Houphouet-Boigny, former president of theIvory
Coast, was probably one of the hundred richest persons in
the world who paid from his private savings a replica of the
Saint Peter’s cathedral as this stands inVatican City, in his
own family village. In quite some countries the possessions
of the dictator amount to more than the total national debt.

h) ‘Kindness among friends’

It is essential, whether you just want to be ‘thoughtful’, or

whether your gift is presented with a certain intention. Is it
a sign of thoughtfulness or is it hiding a particular purpose,
an expected ‘return’ in the future? Whether ‘attention’ or
‘intention’, the difference is of great importance for the
relationship. Is it a ‘friendly turn’ or is it an ‘investment’?

To have friends belongs to culture. However, can you ‘buy’ a

friend? Is real friendship not to be based on honesty and
transparency? To give presents reciprocally is a sign of
friendship. It should not get lost in a misuse of power for
private gains.

What is corruption?
Defining corruption can be a challenge. It takes many forms, and
perpetrators are skilled in developing new ways to be corrupt and
cover their tracks.

Corruption may be defined as the abuse of entrusted power for

private gain. Transparency International uses this definition. It
captures three elements of corruption:

1. Public and private sectors

Corruption occurs in both the public and private sectors. This
 includes media and civil society actors. Actors can be
individuals, companies, or organisations such as a political
parties.
2. Abuse of power
Corruption involves abusing power held in a state institution or a
private organisation.
3. Benefit
Both sides involved in the corrupt act benefit, either in terms of
money or undue advantage.

Sometimes the ‘advantage’ gained may not be ‘undue’ or clear-cut,

but is nonetheless an advantage. For example, in some corrupt
societies people can only secure access to public health or education
if they pay bribes. In such situations, those who can afford to pay
have an advantage over those who cannot. The bribe-giver's
‘benefit’ is merely that which is anyway his or her rightful due.
Bribe-takers receive an advantage for carrying out functions that are
anyway their duty to perform.

Grand vs petty corruption

We often describe corruption as either ‘grand’ or ‘petty’ and
‘administrative.’

 Grand corruption
Grand corruption typically takes place at the public sphere's top
tiers, and within the highest levels in private business. It includes
actors that make rules, policies and executive decisions. It often
involves large sums of money. Grand corruption is also often
called political corruption, highlighting the negative influence
of money in political processes, campaigns and political parties.
 Petty / administrative corruption
Small-scale, administrative or petty corruption is the everyday
corruption at the interface between public institutions and
citizens. We find petty corruption as bribery linked to the
 implementation of existing laws, rules and regulations – for
example when civil servants issue documents only if they receive
a payment that is higher than the advertised official price for this
service.

Petty corruption also refers to the abuse of power in daily

situations. For example, traffic police take payments from taxi
drivers in return for not going after them for the breach of traffic
rules. Usually, modest sums of money change hands in each
case. However, when petty corruption is endemic, it can result in
great costs. It can place stress on the functioning of state systems
– similar to the effect of grand corruption.
Often, it is not clear where petty corruption ends and grand
corruption begins. For example, political corruption, in addition to
the features above, can also encompass vote buying and other forms
of petty corruption. And junior officials who demand illegal
payments from citizens may do so because their managers demand
a cut of their salaries in return for having been hired. These
managers may have superiors who, in turn, expect money from
them. This corrupt chain may stretch all the way up to senior state
officials.

Corruption impedes
development
Corruption undermines economic development and threatens state
security. It also undermines democratic values. UN member states
acknowledge the threat corruption poses to development and have
included Goal 16 into the 2030 Agenda for Sustainable
Development – calling on states to 'substantially reduce corruption
and bribery in all their forms.'
Financial costs of corruption
 Officials in public institutions force citizens to pay for
services that should be free.
 Corrupt politicians pillage state budgets.
 Decision makers distort public spending as they focus on
activities that yield large bribes, such as major public works.
 International companies avoid highly corrupt environments –
economic development is slower than it would be with more
foreign investment.

The cost of corruption to society

Human lives
When people cannot get access to healthcare, safe places to live and
clean water, their lives are at risk. When buildings collapse because
developers have bribed their way out of adhering to health and
safety standards, the lives of occupants are at risk, too.

Trust
Corruption has more than just financial costs. It reduces public trust
and citizens’ willingness to participate in society. For example,
citizens who perceive politicians as corrupt may not bother to vote
in elections, get engaged in politics, or pay taxes.

Human rights
Human rights are violated as a result of corruption. For example,
courts violate the fundamental right of access to justice when they
only hear cases if parties bribe staff and judges .

Inequality
Corruption perpetuates inequality. Data shows that poor people
suffer disproportionately from corruption. In modest income
households, petty bribes to a nurse can cut deep into a family’s
disposable income.

Gender
Women sometimes bear worse consequences of corruption than
men. For example, since women attend to family health issues more
frequently, they receive more bribe requests from medical staff. In
public life, female politicians may have less access to corrupt
networks that generate votes and other support.

Crime and conflict

Corruption is often linked to organised crime. It thrives in conflict
and war. High levels of corruption can make prolonged conflict
more likely, and push post-conflict societies back into war.
Corruption also undermines the responsible management of natural
resources.

Environment
Corruption can undermine climate change initiatives, as powerful
actors bribe their way out of environmental responsibilities in
pursuit of profits.
Common types of corruption
In many countries, criminal and administrative laws prohibit
various types of corrupt acts. The UN Convention against
Corruption (UNCAC) defines corrupt criminal behaviour that
signatory states should include in their legal systems.

Actions may be corrupt even if there is no law against them. The

nature of corruption is often slippery and complex. It can evolve
into new forms that criminal or administrative law does not capture.
Therefore, anti-corruption practitioners emphasise prevention in
addition to punishment.

Common types of corruption include:

 Bribery
We call it bribery when a person with entrusted authority accepts
or asks for an undue advantage (money, but also other material
or immaterial valuables) to exercise a function, or to exercise it
in a particular way.
 Kickbacks
A kickback usually refers to a payment given in return for
receiving a contract (for example, a building company that
receives a government contract to build a road or other
infrastructure). This payment goes to someone involved in
awarding the contract.
 Foreign bribery
Bribery of foreign officials by private sector actors is also a
crime in many countries. This means that bribes that take place
outside a company’s country of origin may be punishable by the
home country’s authorities. The OECD Convention on
Combating Bribery of Foreign Public Officials in International
Business Transactions is an important international legal
instrument that criminalises foreign bribery, with a focus on the
party paying the bribe (the 'supply side').
 The fact that not all countries prohibit such bribes illustrates the
point above that not all corrupt acts are illegal.
 Trading in influence
Trading in influence – or influence peddling – is a form of
corruption where, for example, a person exerts improper
influence over a public or private sector decision-making process
in return for an undue advantage. It is mostly people in
prominent positions, with political power or connections, who
trade in influence. These people abuse their channels of influence
to gain money or favours.

UNCAC recommends criminalising this form of corruption, but

not all countries do.

Conditions that facilitate

corruption
Corruption can grow in a variety of political and economic
environments. It particularly thrives where accountable governance
structures and processes are weak. However, weak governance does
not necessarily always lead to corrupt acts – most people will still
act honestly.

1. Imperatives and incentives

Certain imperatives and incentives encourage people to engage
in corruption. These may include, for example, low and irregular
salaries for officials with large dependent families. Such officials
may feel compelled to become corrupt. Social norms can also
create incentives to participate in corruption. Some norms
encourage giving favourable treatment to particular people – for
example family members, or those affiliated with one's political
group.
2. Opportunities for personal enrichment
Actors holding extensive discretion over resource allocation in
 environments where there is weak supervision likely have ample
opportunities for corrupt enrichment.
3. Means of corruption – access and control
Incentives and opportunity create possibility, but perpetrators
need ways of actually engaging in corruption. These may include
control over an administrative process – such as tendering – or
having access to offshore accounts and money laundering
methods.
4. Limited risk of detection and punishment
Corruption will thrive where there are inadequate and ineffective
controls. A lack of policing, detection and prosecution
encourages corruption. Weak internal controls such as financial
management, auditing, and personnel systems are also
facilitating conditions. When authorities control and censor the
media and civil society, corrupt politicians and officials have less
to fear.

Addressing corruption
We know much about different elements of anti-corruption work.
However, there is no formula that will always work. How to
address corruption always depends on the context. Experience of
anti-corruption programming since the 1990s shows a constant
tension between holistic and targeted approaches. Corruption results
from a system of factors that facilitate and drive it. These factors
range from individual attitudes to international opportunity
structures – which points towards favouring holistic approaches.
However, not all reforms are feasible in every setting. This, in turn,
argues in favour of focused approaches, and to seek out context-
specific opportunities.

General implications for programming

 Work from the ground up. Ask 'what’s feasible here?' – rather
than jumping to a model that worked elsewhere. Models can help
define your range of possibilities, but always check what system
pieces need to function before the model can succeed.
 Decision-makers and practitioners must seek ways to reinforce
anti-corruption programming approaches with inputs from other
parts of the system. If civil society shall monitor budgets, the
authorities must publish these in a useable way.
Organisations like the World Bank, the United Nations,
Transparency International and others have sought to capture what
anti-corruption means. Their explanatory frameworks differ
slightly, but we see a broadly agreed ‘menu’ of anti-corruption
efforts.

Anti-corruption efforts should not just be aimed at strengthening

specific institutions or functions that are weak. They should build
and strengthen mutually-reinforcing systems that include a range of
interdependent actors, institutions, laws and policies.
Corruption and international
development cooperation
Two corruption issues concern donor aid:

1. Donor aid delivery modalities are vulnerable to corruption.

2. Aid flows may contribute to increased corruption levels in
recipient countries.
Researchers have studied which aid modalities are less vulnerable
to corruption. Findings show little evidence that aid delivered
through budget support is more or less prone to corruption than
project support. However, evidence shows that for countries with
both high levels of aid and corruption, there are compelling
arguments against budget support.

Donor aid can fuel corruption in recipient countries. It provides new

resources to plunder. However, aid effectiveness depends on the
quality of policymaking and governance – both within donor aid
agencies and recipient country governance structures. Without good
governance, aid effectiveness declines because of increased leakage
of funds from development projects or national budgets. This is
often due to corruption.

Corruption may happen at all stages of aid disbursement.

Programme design, the bidding process, the implementation phase,
and even audits are at risk. Corruption can cause inefficient and
incompetent companies to win contracts at excessive cost. It can
lead to inappropriate and failed aid projects. The danger of
corruption in development assistance is clear: aid is diverted from
its original aims by corrupt politicians and officials. The
perpetrators rather spend the funds on projects that allow for
personal enrichment. Because of this, the funds never reach the
poorest and most vulnerable citizens.

Recommended resources
 Explore U4's anti-corruption resources by topics
 Glossary of corruption-related terms
 Free 45-minute U4 online course: Managing corruption risks
in development cooperation

Academic research and policy papers on corruption has flourished

since the late 1990s. It is complemented by a multitude of blogs and
discussion fora. Here are some seminal works and chapters that we
at U4 keep returning to read:

corruption
noun

cor·rup·tion | \ kə-ˈrəp-shən \

Definition of corruption
1a: dishonest or illegal behavior especially by powerful people (such as government officials or police
officers) : depravity

b: inducement to wrong by improper or unlawful means (such as bribery) the corruption of

government officials

c: a departure from the original or from what is pure or correct the corruption of a textthe
corruption of computer files

d: decay, decomposition the corruption of a carcass

2chiefly dialectal : pus

3archaic : an agency or influence that corrupts

Synonyms Example Sentences Learn More about corruption

Keep scrolling for more

Synonyms for corruption

Synonyms

breakdown, decay, decomposition, festering, putrefaction, putrescence, rot, spoilage

Visit the Thesaurus for More 

Examples of corruption in a Sentence

There are rumors of widespread corruption in the city government. the mafia's corruption of public
officials

Kids Definition of corruption

1 : dishonest or illegal behavior corruption in politics
2 : the process of causing someone else to do something wrong
… the little scene that I had overheard was the last act in the
corruption of one of the honest hands … — Robert Louis Stevenson,
Treasure Island

3 : the act of changing or damaging something the corruption of

an ancient text the corruption of a computer file

Corruption
REVIEWED BY JAMES CHEN

Updated Mar 9, 2018

What is Corruption
Corruption is dishonest behavior by those in positions of power, such as
managers or government officials. Corruption can include giving or accepting
bribes or inappropriate gifts, double dealing, under-the-table transactions,
manipulating elections, diverting funds, laundering money and defrauding
investors. One example of corruption in the world of finance would be an
investment manager who is actually running a Ponzi scheme.

BREAKING DOWN Corruption

There are many situations in which a person can be considered corrupt. In the
financial services industry, chartered financial analysts and other financial
professionals are required to adhere to a code of ethics and avoid situations
that could create a conflict of interest. Penalties for being found guilty of
corruption include fines, imprisonment and a damaged reputation. Engaging in
corrupt behavior may have negative long-lasting effects for an organization. In
2015, five prominent investment banks were fined a cumulative total of
approximately $5.5 billion for rigging the foreign exchange market between
2007 and 2013.

Corruption is likely to cause inefficiency when assets are used inappropriately.

When corruption occurs within an organization, unflattering media coverage
typically follows, which may result in customers losing trust in its business
practices and products. A comprehensive public relations campaign is often
required to limit reputational damage and restore trust. This requires valuable
resources such as time and money, which may result in other critical areas of
the organization being deprived of resources, causing inefficiencies to develop
and possibly financial losses to be realized.
In 2016, software company PTC Inc. was ordered to pay $28 million for claims
it tried to bribe Chinese officials by providing approximately $1 million in
recreational travel. As this case has become public, PTC Inc. is likely to
require a delicate public relations effort to restore its reputation. Organizations
that have been known to engage in corruption find business development
difficult. Investors and shareholders are reluctant to commit if an organization
has a history of corruption, or bribes and favors are required to conduct
business. Corruption is likely to increase criminal activity and organized crime
in the community.

Corruption Prevention
There must be a strong focus on education; it must reinforce best business
practices and alert managers and employees where to look out for corruption.
This can be achieved by introducing mandatory learning such as anti-money
laundering (AML) courses. Senior executives and management must set a
strong culture of honesty and integrity by leading by example.

Corruption is likely to be reduced with accountability mechanisms in place; this

is likely to reinforce a culture that fosters strong ethical behavior while holding
those to account who violate the norms. Corruption can further be reduced by
making it easy to report, whether by managers, employees, suppliers and
customers, although it is often overlooked by colleagues. A robust control
environment reduces the risk of corruption. Human capital management
functions such as hiring and promoting employees should include thorough
background checks.
Search

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Glossary

Accountability

The obligation of an individual or an organisation (either in the public or the private sectors) to
accept responsibility for their activities, and to disclose them in a transparent manner. This includes
the responsibility for decision-making processes, money or other entrusted property.

Active bribery

Active bribery refers to the act of promising or giving the bribe, as opposed to the act of receiving a
bribe (passive bribery). The term does not mean the active briber has taken the initiative, since the
bribe may have been demanded by the receiving party (who commits “passive bribery”). When a
citizen reluctantly makes an informal payment in order to receive medical care, which would be
refused otherwise, she is nevertheless committing active bribery. The distinction between active and
passive bribery is primarily made in legal definitions, which need to be precise and allow for the
possibility to sanction either side of the transaction, as appropriate. The classification is similar to
the distinction between supply-side and demand-side corruption, which is used in analysing the
patterns of incentives or drivers of corrupt practices.

Administrative corruption

Corruption occurring at the interface between the state, represented by public officials/bureaucrats
in decision-making positions and the public/citizens when they need a service. For example, when a
citizien coming to take out an ID card is only provided this service if he/she pay the bureaucrat an
unofficial payment in addition to the official fee.

Anti-corruption

A term used to designate the range of approaches to combat corruption. Many broader good
governance and democracy-promotion approaches produce similar outcomes, even if they are not
explicitly labelled as "anti-corruption."

Assessment

An assessment analyses the situation in a country, sector or institution to identify the system's
shortcomings and other factors (including political dynamics) that enable and sustain corruption.

Asset forfeiture

The seizure and confiscation of assets linked to a crime, usually because they were used in
committing the crime, or derived from it.

Asset recovery

The process by which the proceeds of corruption are recoverd and returned to individuals,
governments or organisations.

Auditing

An official inspection of an organisation's (public or private sector) accounts to make sure money is
spent and reported on appropriately.

Bribery

The offer or exchange of money, services or other valuables to influence the judgment or conduct of
a person in a position of entrusted power. The benefit does not need to go to the official in question
directly – it can go to a spouse, a child, another relative, a friend, or even to the official's political
party as a donation. A bribe is sometimes paid after the fact – for instance, in monthly instalments to
the official issuing permits to street vendors as long as they are allowed to operate. This form of
bribery is called a kickback. Bribery is widely criminalised, and both the party paying the bribe and
the party receiving may be liable (see active bribery/ passive bribery). However, in practice, certain
forms of bribery are often exempt from prosecution (see facilitation payments).

Capital flight

The movement of large sums of money out of a country. This movement can be legal (for example
investors withdraw their money because of a political crisis and a lack of confidence in the economic
situation) or illegal. Illegal capital flight often concerns money earned through criminal activity, and
the intention is that the money disappears from any record in the country of origin. Any earnings on
it are not usually returned to the country of origin.

Carbon cowboys
Unscrupulous entrepreneurs who attempt to acquire rights to carbon in rainforests. They gain the
rights by signing indigenous communities to unfair contracts. They often aim to sell on the rights to
investors for a quick profit.

Citizen charters

A government document that lays out standards of service for public and private sector institutions
(schools, hospitals, water and energy suppliers etc.), and which sets out the rights of citizens to
services in that sector, as well as ways in which they can seek redress should the services not be
provided according to these standards.

Clientelism

An informal exploitative system of exchanges (of resources, services, favours) between a wealthier
and/or more powerful "patron" or "boss" and less wealthy/weaker "clients" or "followers." Such
systems are typically found in settings where formal governance structures fail to provide adequate
resources (including protection), leaving poor and/or marginalised members of society to seek
assistance from powerful figures that can deliver them. The corruption dimension is clear when the
"patron" is an elected official who distributes resources under his/her control inequitably (abusing
his/her entrusted power), as a reward for electoral support (private benefit). Similar informal
systems may not involve elected officials directly, but may nevertheless undermine formal rules and
institutions, including efforts to combat corruption.

Competitive bidding

A selection process based on open and transparent advertisement of an item or service. It ensures
that the best bidder wins according to qualifications, value-for-money, and other objective criteria,
through which family or friendship ties, bribery or threats are removed from the process.
Competitive bidding processes are typically required by law on most public contracts and purchases.

Conflict of interest

A conflict of interest is a conflict between an entrusted duty on the one hand, and the private
interest of the duty-bearer on the other hand. For example, a parliamentarian sitting in the
committee for healthcare reform might own stock in a major parmaceutical company. The existence
of this private interest could improperly influence the performance of entrusted responsibilities.
Because conflicts of interest creat opportunities for corruption to take place, they should be avoided
or managed.

Corruption

The abuse of entrusted power for private gain. Although this is the most common definition, other
definitions exist. The World Bank, for example, defines corruption more narrowly as "abuse of public
office for private gain". All expert/specialist variations nevertheless include three common elements:
abuse (misuse, violation) of entrusted power (duty, office, etc.) and private benefit. In everyday
language, the term is used more broadly to deonte a wide variety of objectionable or immoral acts,
and not onlly those associated with formal duty.

Corruption indices
Corruption indices are mutli-country tables with scores or grades reflecting corruption levels or
related features, such as the strength of systems for controlling corruption. The assumption for the
latter is that robustness of corruption-control systems directly reflects corruption risks and
consequently, the likely levels of corruption.

Criminal forfeiture

The loss, following a criminal conviction, of the right to a property that was used to commit a crime
and which was confiscated by the government.

Cronyism (see also clientelism and patronage)

The favourable treatment of friends and associates in the distribution of resources and positions.
The concept is related to nepotism, where the favourable treatment extends to family members.
(See also patronage.)

Customer due diligence

Obligation for financial institutions to implement identification processes for customers, i.e. to verify
that they are who they claim they are by checking their names, residential addresses etc.

Debarment

Debarment is the term used for an individual or a company being formally excluded from tendering
for a project that the government is funding or supporting. A company is debarred when an enquiry
or examination finds it has been involved with fraud, mismanagement, or corruption.

Demand side

The demand side of the bribe (also known as "passive" bribery) focuses on the person or entity
soliciting or receiving the bribe.

Democratic accountability

Democratic accountability refers to the idea that citizens can provide feedback to actors (political
parties; parliaments; public officials) that are in charge of policy-setting and decision-making and in
this way, shape policies and decisions.

Double taxation

Double taxation is a principle by which a taxpayer is taxed twice for the same asset or income. It
happens when tax jurisdictions overlap and a transaction, asset or income is taxed in both. Double
taxation agreements are conventions aiming to eliminate double taxation of residents.

Elite capture

Political and social elites take resources intended to benefit the majority of the population. This can
include economic, educational, social and political resources.

Embezzlement
The misappropriation of property or funds legally entrusted to someone in their formal position as
an agent or guardian. Accountants and financial managers typically have access to an agency's funds
and so are in a position to embezzle them. Other forms of embezzlement include the taking of
supplies, equipment, etc.

Endemic corruption

Endemic corruption is corruption that is primarily due to organisational weaknesses. In these cases,
corruption is the norm and not the exception.

Enhanced due diligence

Additional identification measures to be taken by financial institutions with regards to high-risk

customers and politically exposed persons (PEPs). Measures include validation and documentation
by third parties.

Entrusted authority

Refers to the authority, power, duty or office entrusted to a person through election, apppointment,
or employment contract, etc. It concerns conduct in a formal or professional capacity as opposed to
actions as a private individual.

Experience surveys

Questionnaires that ask about direct encounters with corruption, for instance: - whether
respondents have had to pay a bribe for a particular public service; - how many times in the past
year they paid a bribe; - the amount of the bribe paid.

Extortion

The practice of obtaining something (money, favours, property) through the use of threats or force.
For example, extortion takes place when armed guards exact money for passage through a
roadblock. Withholding life-saving medical attention unless a bribe is paid could also be considered
an act of extrotion. See also sextortion, which involves threats or force to obtain sexual benefits.

Facilitation payments

Refer to relatively small, individual amounts paid beyond the official fees to speed up services such
as customs clearance, work permits, border crossings, etc. Technically, these are a bribe. In many
countries, however, facilitation payments by companies doing business aborad are exempt from
prosecution for bribery in their home countries as long as they are used to speed up legal processes,
rather than to avoid regulations. This excetpion recognises the fact that in certain settings, it is
impossible to operate a business without conceding to such payments.

Favouritism

The biased distribution of resources based on personal preference. For example, giving offices or
benefits to friends and family regardless of qualification. Unfair distribution of positions and
resources is also known as cronyism or nepotism. It can be a form of corruption.
Fiduciary risk

In the context of development aid, fiduciary risk is the risk that aid funds are used incorrectly,
including that they do not achieve value for money, or are not properly accounted for. Fiduciary risk
is a particular concern when donors provide direct budget support, because partner governments'
public financial management systems are often relatively weak.

Fraud

An economic crime involving deceit, trickery or fals pretences by which someone gains unlawfully.
Fraud often accompanies corrupt acts, in particular embezzlement, where it is typically used to
falsify records to hide stolen resources.

Ghost workers

Ghost workers are employees who appear on a payroll but do not actually work for the company or
the public institution. Paychecks are created and paid to someone who either does not exist, or
exists but does not work for the company or the public institution.

Gift giving

People offer presents and favours in various circumstances. It is a cultural practice in many societies.
Problems arise when gift giving to and by public officials contradicts impartiality, professionalism,
and meritocracy. In exchange for a gift, the official is expected to show preferential treatment to the
giver. In those cases, gift-giving can be regarded as bribery.

Governance

Governance goes further than traditional conceptions of government. It focuses on relationships

between leaders, public institutions and citizens. It includes decision-making and implementation
processes. Governance can also apply to companies and NGOs.

Grand corruption

In contrast to "petty corruption", high-level or "grand" corruption is perpetrated at the highest levels
of government and usually involves both substantial benefits for the officials involved and significant
losses for the state and its citizens. It can refer to specific acts such as ministers taking multi-million
dollar bribes to award lucrative government concessions or embezzling millions from state coffers
into a secret bank account. But it also refers to illicit exchanges in the realm of policy formation (see
also state capture). Though large sums of money may be involved, other benefits like high-level
appointments, inside information and policy influence can be the currency of grand corruption.
Corruption at this level is also sometimes referred to as political corruption.

Grease money

Bribes, seen from the angle of the briber, and alluding to the "drop of oil given to a squeaky wheel"
of excessive bureaucracy to make the things move smoothly again. Also called a softener,
sweetener, gift.

Illicit financial flows (IFFs)

Cross-border movements of money illegally earned, transferred, or utilised. Illicit financial flows
(IFFs) involve the transfer of money earned through illegal activities. These activities include
corruption, criminal activities, and efforts to hide wealth from tax authorities.

Integrity

Integrity means following of a set of moral or ethical principles. A National Integrity System is an
assessment methodology developed by the NGO Transparency International. It evaluates key ‘pillars’
in a country’s governance system, both in terms of its internal corruption risks and their contribution
to fighting corruption in society at large. When all the pillars are functioning well, corruption remains
in check. Where some or all of the pillars are weak, this can allow corruption to thrive.

Integrity pact

An agreement intended to prevent corruption in public contracting. One party represents a central,
local or municipal government, government subdivision or state-owned enterprise. The other party
is usually a private company interested in obtaining or implementing the contract. Both parties
agree not to bribe or take bribes, and to punishment if they break this pledge.

Kickback

A bribe paid after the fact for an undue favour or service. For instance, a company that receives a
government contract might send the responsible official regular payoffs for the duration of the
contract. Street vendors may pay the permission-granting authority a small sum each month as long
as they are allowed to operate.

Kleptocracy

A Greek word meaning "rule by thieves", kleptocracy refers to a system of government in which
leaders use their position for private gain at the expense of the governed. It is typically correlated
with autocratic regimes with no meaningful accountability mechanism, effectively allowing the
leader to plunder the state and its citizens for personal enrichment and to entrench his hold on
power. Some well-known former kleptocrats include Francois Duvalier ("Papa Doc") of Haiti, Mobutu
of Zaire, and Suharto of Indonesia.

Lobbying

Any activity carried out to influence a government or institution's policies and decisions in favour of
a specific cause or outcome. Lobbying is an essential tool for staekholders to make their voice heard
with politicians and public officials. Citizens engage in lobbying when they write to their elected
representative or join a protest, etc. Professional lobbyists, by contrast, are paid to advocate for
specific interest of their clients before responsible public officials. They are sometimes former
officials themselves, hired due to their konwledge of the issues and contacts in the sector. But terms
of engagement of former public officials are usually clear and limited in order to distinguish
permissible lobbying from illegal trading in influence.

Measurement of corruption
There are two main approaches in appraising/evaluating corruption. One is measurement, which
aims to quantify the extent of corruption. The other is assessment, which seeks to identify the
factors that allow corruption to take place.

Money laundering

Any act or attempted act disguising the source of money or assets from criminal activity. Money
laundering includes concealing the origins and the use of the illegal assets. It is often used to hide
the proceeds of corruption, and is practiced by drug traffickers, human traffickers, kleptocrats and
white-collar criminals. Bank secrecy makes laundered money particularly hard to trace.

Neopatrimonialism

A style of governance based on informal patron-client relationships, where the elite uses resources
such as public goods and public offices to secure loyalty from the general population.

Nepotism

A form of favouritism involving family relationships, in which someone exploits his or her authority
to procure jobs or other favours for relatives. When this treatment is extended to friends and
associates, the appropriate term is cronyism.

Off-shore financial centre (OFC)

A jurisdiction providing tax and regulatory privileges, usually to companies, trusts and bank account
holders. Account holders get privileges on the condition they do not conduct active business within
that jurisdiction. Off-shore financial centres host a functional financial service centre, the
commercial response to provisions offered by tax havens.

Passive bribery

Refers to the act of receiving the bribe. This does not mean the passive briber has taken no initiative
– in many cases he or she may have demanded the bribe in the first place.

Patronage

The support or sponsorship of a patron (wealthy or influential guardian). Patronage is used to make
appointments to government jobs, promotions, contracts for work, etc. The desire to gain power,
wealth and status through their behaviour motivates most patrons. Patronage violates the
boundaries of legitimate political influence and the principles of merit.

Perception surveys

Questionnaires that ask about the respondent's views on levels of corruption in a

country/sector/institution, and sometimes his or her impression of whether the situation is changing
for the better or worse.

Petty corruption
Alternatively called "administrative" or "bureaucratic" corruption, the term refers to the everyday
corruption that takes place when bureaucrats meet the public. While the sums of money involved
tend to be small, they are far from "petty" for the people concerned. Examples include paying bribes
to get an ID; enrol in school; or have a phone line installed.

Political corruption

The term is both narrowly used to designate the manipulation of policies, institutions and rules in
the financing of political parties and in electoral campaigns, and also more broadly as a synonym for
"grand corruption", or corruption taking place at the highest levels of government where policies
and rules are formulated and executive decisions are made.

Politically exposed persons (PEPs)

Individuals who are or were in the past entrusted with prominent public functions in a foreign
country, such as heads of state, senior politicians, military officials, senior executives. Many PEPs
hold positions that can be abused for the purpose of laundering illicit funds or corruption.

Predicate offence

The criminal activity from which the proceeds of a crime are derived. Money laundering is a
derivative crime. Its status as a crime depends on the origin of the funds involved.

Principal-agent theory

This theory is based on an economic concept called the principal-agent problem. It assumes that the
problem of corruption is one of bureaucrats and other public employees (“agents”) not following the
rules and failing to fulfil the expectations of their leaders (“principals”). Agents are delegated the
responsibility to implement and enforce rules and regulations, but they can choose to pursue their
private interests instead of the public interest represented by the principal. They can do this because
principals in complex organisations don’t necessarily have access to all the information about what
goes on, and agents can withhold key information, so principals are not fully able to monitor and
control what agents do. This “information asymmetry” creates opportunities for corruption. In other
words, not participating in corrupt actions is assumed to be the normal state of affairs as mandated
by principals, and corruption is a deviation from this norm. The solution, in this way of thinking, is for
policy makers (the principals) to change the rules and the monitoring enforcement mechanisms to
limit the room for deviation and assure that bureaucrat’s behavior will stay closer to the expected
norms of clean management. This thinking gave rise to a number of “technical” reforms, including
measures aimed explicitly at corruption, and those that are assumed to implicitly alter incentives for
corruption through controls and monitoring of important government processes where corruption
can take place.

Private sector corruption

The abuse of professional obligations within a corporation or other non-governmental entity for
private gain. For example, private sector corruption occurs when a corporate employee sells
commercial secrets to a competitor. The term is also used more broadly for situations where
individuals or groups from the private sector influence public officials to take decisions and actions
that constitute abuses of entrusted power. One example would be corporations offering bribes to
public officials in exchange for favourable legislation or lucrative contracts.

Procurement

Procurement refers to the different stages of acquiring goods or services from an external source,
and where buyers (such as public institutions and organisations), often in a bidding process, look for
the best value-for-money offer for the goods and services that need to be procured.

Protected disclosure

Protected disclosure refers to a statement or report about serious wrongdoing, usually corrupt
conduct, maladministration or a waste of public money, and entitles the person who made the
disclosure to support and protection from reprisal. Protected Disclosures legislation is in place in
many countries to provide the legal framework to encourage people to report wrongdoing without
the fear of retaliation.

Public financial management (PFM)

PFM is the legal and organisational framework for supervising the budget cycle. Fiscal discipline and
effective allocation of resources and public services are the underpinning features of a sound PFM.
Donor support PFM reforms as part of a wider anti-corruption agenda because of the relative share
of public expenditure in a country's economy and the fact that corruption in PFM can directly affect
a range of different development outcomes, such as pro-poor growth, or the quality and availability
of public services.

REDD (Reducing Emissions fom Deforestation and Forest Degradation)

REDD refers to the mechanisms or schemes negotiated under the UN Framework Convention on
Climate Change. They aim to reduce carbon emissions from deforestation and forest degradation in
developing countries. The schemes commonly involve public aid financing. REDD+ schemes aim to go
beyond REDD by enhancing forest carbon stocks.

Revolving doors

Revolving doors refers to individuals' moves from jobs as legislators or regulators into jobs in
companies or lobby firms subject to legislation and regulation. It can be abused if not properly
regulated.

Risk assessment

A systematic process of evaluating the potential risks or hazards that may be involved in an activitiy
or undertaking. A corruption risk assessment involves first describing how a given governance
mechanisms operates, through a detailed mapping of all relevant sub-processes. Each element is
then analysed to identify the opportunities for corruption. Identified risks are then evaluated for
probability of occurrence and the expected impact, so that appropriate mitigation measures can be
identified and implemented. Together, the steps constitute a risk management system.

Secrecy jurisdiction
Secrecy jurisdications are also referred to as "tax havens". According to the Tax Justice Network,
they are defined as “places that intentionally create regulation for the primary benefit and use of
those not resident in their geographical domain. That regulation is designed to undermine the
legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a
deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making
use of its regulation cannot be identified to be doing so.” Secrecy jurisdictions encourage the
relocation of economic transactions to that domain. Low or minimal tax rates to non-residents might
apply. They may also host a range of financial service providers.

Sextortion

The abuse of power to obtain a sexual benefit or advantage. Related to the concept of extortion.

Shell companies

A shell company is a non-trading company, which is used as a vehicle for various financial
manoeuvres, illicit purposes, or which is kept dormant for future use in some other capacity. Shell
companies are usually incorporated in a jurisdiction in which it has no physical presence and is
unaffiliated with a regulated group.

Spoliation

Spoliation refers to the intentional destruction or alteration of a document required for evidence.
More broadly, the concept includes destruction or plunder of something valuable. It occurs when
high-ranking officials loot the wealth of their states. The spoils are the benefits reaped, the booty,
rewards, profits etc. from corrupt acts.

Sporadic corruption

Sporadic corruption is the opposite of systemic corruption. Because it occurs irregularly, it does not
threaten the mechanisms of control nor the economy as such. It is not crippling, but can seriously
undermine morale and sap the economy of resources.

State capture

Coined by the World Bank in the early 2000s, state capture refers to a type of systemic political
corruption in which private interests significantly influence a state's decision-making processes to
their own advantage. For example, businesses can improperly influence legislators to pass
favourable laws.

Supply side

Supply side refers to the person or entities who offer or provide the illicit benefit in corrupt
transactions. The officials with entrusted authority who receive illicit benefits constitute the demand
side. The distinction is similar to that between active and passive bribery, which is used primarily for
legislative purposes. Also similar is the fact that the term "demand side" does not imply that it is the
official on the receiving end who proactively solicited the bribe. The distinction between supply and
demand can be useful in analysing the different sets of incentives that contribute to corruption.
Suspicious activity reports (SARs)

SARs are documents that financial institutions must file with the national crime authorities following
a suspected incident of money laundering or fraud.

Sustainable Development Goals (SDGs)

As part of the 2030 Agenda for Sustainable Development, UN member states adopted 17 Sustainable
Development Goals (SDGs) in September 2015. These SDGs build on the Millennium Development
Goals (MDGs) and demand action by all countries to combat poverty while protecting the planet.
While corruption impedes progress in meeting all of the SDGs, Goal 16 explicitly calles on states to
"substantially reduce corruption and bribery in all their forms."

Systemic corruption

(Also know as endemic corruption). A situation when corruption is an integral part of a state's
economic, social and political system, and where most people have no alternatives to dealing with
corrupt officials. Sporadic corruption, in contrast, occurs irregularly and does not compromise the
mechanisms of governance in the same crippling way.

Tax information exchange agreements (TIEAs)

TIEAs are bilateral agreements under which countries agree to co-operate in tax matters through the
exchange of information.

Trading in influence

(Also known as influence peddling). Trading in influence occurs when a person who as real or
apparent influence on the decision-making of a public official exchanges this influence for an undue
advantage. The offence is similar to bribery with one important difference: trading in influence
concerns the "middleman", or the person that serves as the go-between the decision-maker and the
party that seeks an improper advantage. The final decision-maker may not even be aware of the
illicit exchange. One example is when an MP receives a payment from a company to attempt to
convince fellow legislators to support amendments that would benefit that company. Trading in
influence is difficult to prove because the legal definitions involve disputable criteria of
"intentionality" and "undue"/improper influence. Trading in influence is also often difficult to
distinguish from permissible forms of lobbying.

Transfer mispricing

Transfer mispricing refers to the manipulation of import and export prices. Related parties trade at
prices meant to manipulate markets or to deceive tax authorities.

Transparency

Transparency is the quality of being open, communicative and accountable. It implies that
governments and other agencies have a duty to act visibly and understandably. Transparency can
lead to improved resource allocation, enhanced efficiency, and better prospects for economic
growth.
Underground banking

Underground banking refers to informal banking arrangements that run alongside the formal
banking system. They are independent of formal systems and involve the global transfer of currency,
for example remittances from overseas workers. Underground banking systems are, however, also
known to be conduits for money laundering. Therefore, a balance needs to be found between
regulating the underground banking system to stop illicit financial flows on the one hand, and to
allow its continued use for legitimate money transfers on the other hand.

Whistleblower

Whistleblowers are people who inform the public or the authorities about corrupt transactions
and/or other unlawful or immoral behaviour they have witnessed or uncovered. These individuals
often require protection from those they expose. Whistleblower protection refers to the measures
taken to shield the informer from retaliation.

Since the early 1990s, a series of major scandals in both the financial and
most especially the political world has resulted in close attention being paid
to the issue of corruption and its links to political legitimacy and stability.
Indeed, in many countries – in both the developed as well as the developing
world – corruption seems to have become almost an obsession. Concern
about corruption has become a powerful policy narrative: the explanation of
last resort for a whole range of failures and disappointments in the fields of
politics, economics and culture. In the more established democracies, worries
about corruption have become enmeshed in a wider debate about trust in the
political class. Corruption remains as widespread today, possibly even more
so, as it was when concerted international attention started being devoted to
the issue following the end of the Cold War.

This Handbook provides a showcase of the most innovative and exciting

research being conducted in Europe and North America in the field of political
corruption, as well as providing a new point of reference for all who are
interested in the topic. The Handbook is structured around four core themes
in the study of corruption in the contemporary world: understanding and
defining the nature of corruption; identifying its causes; measuring its extent;
and analysing its consequences. Each of these themes is addressed from
various perspectives in the first four sections of the Handbook, whilst the fifth
section explores new directions that are emerging in corruption research. The
contributors are experts in their field, working across a range of different
social-science perspectives.

This is a well-constructed, thought-provoking, and complete overview of and

engagement with the corruption field, something that Routledge handbooks
are deservedly recognized for. While some of the contributions can be quite
dense and challenging, corruption as a field of study is more oriented to
advanced undergraduates and graduate students. Thus, the selections are
appropriate and likely to maintain relevance for the long term. The book also
takes some novel approaches that pay off in terms of conceptual
organization: it does not use the standard division of "definitions" and
"cases," but evolves beyond that to include the vastly undervalued but direly
needed "measurements" and "consequences." By fluidly and compellingly
fusing case studies into these broader rubrics, the overall impact of the
volume increases for students and researchers alike. Finally, the concluding
section, "New Directions," takes on some fairly innovative studies of
corruption that could become a leading edge for future research within the
discipline. Consequently, students of corruption get the foundation and the
future in this one handy volume. A welcome addition.

--M. D. Crosston, Bellevue University

Introduction: scale and focus in the study of corruption, Paul M Heywood

Section 1: Understanding corruption

2. The definition of political corruption, Mark Philp

3. Definitions of corruption, Oskar Kurer

4. The meaning of corruption in democracies, Mark Warren

5. The contradictions of corruption in Nigeria, Daniel J Smith

6. Criminal Entrepreneurship: a political economy of corruption and organised

crime in India, Andrew Sanchez Section 2: Causes

7. Causes of corruption, Bo Rothstein and Jan Teorrell

8. What does cross-national empirical research reveal about the causes of

corruption?, Daniel Triesman

9. Bureaucracy and corruption,