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Corruption

Corruption plagues both the private and the public sectors. For working purposes, the World Bank (WB), Transparency International (TI) and others define corruption in the public sector as the abuse of public office for private benefit or profit. Corrupt practices may take different forms:
  • Bribery of public inspectors for obtaining "licences",
  • Bribery of tax collectors with the purpose of reducing taxable income,
  • Kickbacks in government procurement,
  • Favouritism in the distribution of public-owned resources,
  • Embezzlement of public funds.
 
Private sector corruption involves practices such as:
  • Organised crime,
  • Bribery by firms,
  • Swindling.
 
Precise consequences of corruption are difficult to assess. The World Bank estimated that roughly $1 trillion in bribes alone was lost every year. Years ago, the magazine Business Week suggested that corruption entails a premium cost of 3% to 10% in licencing, 50% in tax collection, 20% to 100% in purchasing, and organised crime could carry a premium cost of 15% to 20%. Empirical studies, while unable to provide definite values, clearly establish that corruption:
  • Lowers the quality of the infrastructure,
  • Lowers the quality of state government services such as educational and health services,
  • Strongly correlates with income inequality,
  • Boosts the size of the unofficial economy, and therefore reduces state government revenue,
  • Increases pollution,
  • Raises the crime level,
  • Aggravates poverty,
  • Lowers a country's attractiveness to international and domestic investors,
  • Clearly goes along with a low GDP.
 
Since the mid 1990's, international governmental and non-governmental organizations have dedicated specific programmes to tracking and combating corruption:
  • The World Bank (WB) has identified corruption as among the greatest obstacles to economic and social development, considering its effects especially harsh on the poor, who depend to a larger extent on the provision of public services, and are least capable of paying the extra costs associated with bribery, fraud, and the misappropriation of economic privileges. Since 1996, the WB has supported more than 600 anti corruption programs and governance initiatives developed by its member countries, and adopted a new strategy on Governance and Anti-Corruption in 2007.
  • The United Nations (UN) launched a Global Programme against Corruption in March 1999.
  • The Organization for Co-operation and Economic Development (OECD) claims that corruption threatens good governance, sustainable economic development, democratic process, and fair business practices. in 1997, OECD adopted a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
  • The Council of Europe (CE) established a Group of States against Corruption (GRECO) in 1999, for the purpose of monitoring the CE Conventions against Corruption and Organised Crime.
  • Transparency International (TI), founded in 1993, develops and publishes a Corruption Perceptions Index (CPI) that ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians.
 
Notwithstanding, the war on corruption seems a difficult one to win. In fact, the CPI shows a generic feeling of rising corruption. A major cause for failure is that, in identifying corruption to legal offence in the economic sphere by a holder of public office, policy makers leave out other numerous and pervasive forms of corruption:
  • Corruption does not have to be institutional, it may be private (e.g. rigging a fight to win a bet, pulling strings to obtain a favour).
  • Acts can be corrupt even though they are legal (e.g. bribery to secure foreign contracts was not unlawful until very recently, see above-mentioned OECD 1997 Convention).
  • Corruption is not necessarily economic in character (e.g. academic plagiarism, police tampering with evidence, biasing selection committee processes, breaches of confidentiality).
  • Some actions that are done out of a desire to achieve good — " noble cause" corruption — (e.g. bribing city hall officials to allow a paperless refugee to obtain a resident permit) may still be corrupt actions.
  • The ultimate corruption may consist of abusing public office to "erase" corruption itself (e.g. when political leaders grant amnesties for cases of corruption or pass laws to obtain personal immunity).
 
The declaration of new rights and the launching of initiatives in support of those rights is often a reliable indicator that they do not exist for all and are restricted to the happy few. The right to land or the right to work emerged when land or work became scarce. Similarly, the right to a corruption-free society suggests that a world of prevailing probity is getting out of reach.
 
The issue is an old one and Plato (4 centuries BC) was aware of it: "Virtue is honourable but difficult, vice is easy and profitable (The Republic, Book II) ...Gifts soothe gods and persuade tyrants (Book III)".