Following the United States Government’s imposition of sanctions for corrupt behaviour against three prominent individuals and entities associated with two of them, we note the Authorities’ recent actions. However, such actions appear cosmetic and have not gone far enough to address the root causes of such behaviour and to initiate investigations with a view to taking appropriate disciplinary action against all persons involved, including those who may have aided and abetted these individuals to commit these immoral and unethical acts.
When civil society activists, including anti-corruption and transparency advocates, speak of corruption in government, they are considered anti-government and are maligned, vilified and treated as enemies of the State. This is most unfortunate, considering that if the recommendations of these advocates, who have the interest of the country at heart, had been taken on board, Guyana would not have been in the state it has found itself today in the eyes of its citizens and indeed the world at large.
Today’s article is an abridged version of a paper that this columnist had authored and published in the Public Fund Digest, Volume VI, No. 1, 2006. The paper has been referenced by many scholars and academics as well as students preparing their theses/dissertations for their doctoral degrees. Eighteen years after its publication, the issues raised in the paper are still relevant to today’s environment, especially considering recent developments in Guyana on the corruption front.
Introduction
Corruption is as old as humankind. No country is immune from it, be it a developed country or an underdeveloped one, a rich country or a poor one. Corruption is an immoral and unethical act that is committed by politicians and bureaucrats for their personal gain and at the expense of the broader interest.
The paper discusses the nature of corruption, and its causes and implications for society. It explores ways of preventing and combating corruption and concludes that, notwithstanding international and regional efforts, national governments have the primary responsibility to display a serious commitment and to put in place mechanisms aimed at reducing corruption wherever it exists. One key institution, the Legislative Audit, should be regarded as the foremost institution in the fight against corruption and should be provided with the desired level of autonomy and flexibility as well as adequate resources to enable it to do so.
Nature of corruption
Corruption is defined as the abuse/misuse of public power for private gain. Arguably, this definition is too restrictive in that it ignores the prevalence of corruption in the private sector. However, it has been argued that public sector corruption is a more fundamental problem and that controlling public sector corruption is a prerequisite for controlling corruption in the private sector.
Politicians and bureaucrats are the holders of public power. An abuse/misuse of public power occurs when in the exercise of their duties, they deviate from formal rules or established procedures for their personal gain, and in doing so the public interest is sacrificed in favour of private interest.
Corrupt behaviour manifests itself in four main forms: bribery, extortion, embezzlement and fraud. An act of bribery occurs when a person makes a payment to the agent of the State in exchange for an advantage to which he/she is not otherwise entitled, such as the provision of a service, granting of a licence, a tax rebate, or the award of a public contract. Extortion, on the other hand, involves the agent using his/her positional power to extract money or other benefits from another person although the latter is legally entitled to the service or benefit without such payments or benefits. The agent often uses coercion or threat of violence to enforce the corrupt act. Embezzlement is simply the theft of public resources by an agent, while fraud occurs when the agent uses the knowledge at his/her disposal to deceive, conceal, distort or manipulate information for personal gain.
Tax evasion, money laundering, counterfeiting, black marketing, insider dealing, and other criminal activities are not considered corrupt actions per se. However, when the responsible public officials refrain from prosecution, grant immunity, or provide inside information, then corruption is involved. Lambsdorff (2002) asserts that the self-seeking behaviour by politicians and bureaucrats is interpreted as corrupt behaviour when it is accompanied by the blunt neglect of the expectation and the interest of the public. Rose-Ackerman (1999) echoes similar sentiment by acknowledging that corruption forces scholars and policy makers to focus on the tensions between self-seeking behaviour and public values.
Corruption in the public sector appears to be more prevalent where the State interacts with members of the public, such as the judiciary, public procurement, regulatory agencies, granting of permits, privatization, foreign exchange, police and taxation. It also tends to be biased in favour of public infrastructure projects where large amounts of resources are expended. The reason for this is that the risk of being caught increases with the number of transactions as well as the number of people involved, and not with the value of the transaction per se. Therefore, persons with corrupt intent are likely to target one-off payments where the risk of exposure is less.
Judges and magistrates can be paid off for making rulings in favour of particular individuals or groups, while the police may be influenced to drop charges against someone who has violated the law. In the area of public procurement, specifications of goods and services as well as the execution of works can be framed in such a manner so to place a favoured supplier or contractor in a position of advantage vis-à-vis other competitors. This as well as other inside information, such as other competitors’ bids and the “Engineer’s Estimate”, can be leaked to the preferred supplier or contractor, while the actual assessment of bids can be biased in favour of the latter. Sometimes, this corrupt behaviour manifests itself with the tacit knowledge and encouragement of the government to patronize its supporters and close associates.
When bribes are paid to win the award of, for example, a road contract, the contractor has to find a way to recoup his/her costs. Invariably, this is done by executing the works below the required specifications or by substituting inferior materials, especially if the Engineer overseeing the works on behalf of the government, is also the recipient of bribes from the contractor.
Measuring corruption
In view of the opaque nature of corruption, actual assessments of the level of corruption that exists in a country are not readily available.
Perhaps, the best substitute measure is the Corruption Perceptions Index (CPI) which is based on surveys carried out of the perceptions of knowledgeable persons, such as senior businesspeople and political country analysts. The results, when computed using statistical methods, correlate well and provide some confidence about actual levels of corruption.
Most of the countries surveyed consider the CPI as an authoritative pronouncement of what is perhaps considered the best substitute to measure corruption in their societies. It is fair to say that countries that share a deep concern for good governance, including transparency and greater public accountability, view the index as an important measure in the fight against corruption. An improvement in a country’s CPI as well as its ranking among the countries surveyed is considered an indicator of a reduction in the level of corruption. However, the first step must be the recognition of the existence of corruption and the extent to which it is perceived to exist. It is in this regard that the importance of the CPI must be viewed.
Implications of corruption
The economic consequences for countries with perceived high levels of corruption are indeed grave. Goods and services as well as the execution of works become more costly, thereby negatively impacting on the quality and standard of living of citizens. Trade is distorted since preference is given to the procurement of goods and services that offers the greatest bribes. Infrastructure development programmes are favoured in preference to those relating to basic health care, education delivery, agriculture and housing, among others. Because of this tendency, corrupt governments tend to contract high levels of long-term public debt since loans from international financial institutions are usually taken to finance these programmes.
Corruption results in the misallocation of resources, and areas in genuine need of developmental assistance are overlooked in preference to those that offer the greatest reward for the corrupt politician or bureaucrat. Investor confidence is shaken, and countries in dire need of foreign investment are deprived of it. As a result, the international flow of goods, services and capital is affected, and investment ratios deteriorate. Various studies have shown that high levels of corruption are associated with low ratio of investment to GDP, low foreign inflows of direct investment and low levels of capital inflows.
Additionally, the loss of confidence is felt within the country, and there is a tendency for professionals and other decent-minded citizens to migrate to the more developed countries to seek employment opportunities and a better way of life.
Causes of corruption
A review of the CPI since it was developed in 1995 indicates that poor developing countries in dire need of public resources for the economic and social upliftment of their citizens are the ones perceived to be most tainted with corruption. This trend suggests that the main cause of corruption is poverty. It follows that a reduction in poverty is likely to result in a reduction in corruption.
Democracy and accountability are the twin sides of the same coin, especially in the context of small developing countries. Without the former, the latter is unlikely to be attainable. Democracy, in all its facets, invariably leads to accountability which in turn facilitates development. A lack of democracy leads to a lack of accountability which in turn results in a lack of development, inefficiencies and corrupt behaviour. Accountability starts with the casting of the ballot in a free, open and transparent process and when the votes are accurately counted. Those elected to public office are accountable to the electorate for their stewardship responsibilities, failing which there is the likelihood of a change in the management of the affairs of the country.
Corruption is prevalent in countries where there are either non-existent or weak democratic institutions. It also flourishes where there are vague, archaic and cumbersome rules as well as the exercise of high levels of bureaucratic discretion.
Combating corruption
The fight against corruption should commence with the willingness of countries not only to recognize the existence of corruption in their respective societies but also the extent to which it is perceived to be so. The CPI 2004 listed 146 countries that were surveyed. The remaining 45 countries should therefore be encouraged to be part of the survey. After all, corruption is a global problem that can easily migrate from one country to another with cancerous effect.
One of the most important ways of preventing and combating corruption is the promotion of democratic norms and values where none exists, and the strengthening of key democratic institutions where they are perceived to be weak. According to former U.S. Ambassador Michel,
Every act or action is done openly according to law and prudent judgment.
Every actor is responsible for his/her action.
Every act or action is documented and reported publicly.
Every act or action is subject to independent, professional, non-partisan audit review and public reporting of the results.
Where the review shows purposeful error has been made, prompt corrective action, including punishment where appropriate, is taken.
Corruption is likely to be minimized when there is adherence to four basic principles. The first is the arm’s length principle where decisions are made based on merit, thorough analyses of the facts and pertinent arguments, and equality of treatment, rather than on personal and other relations. There should be no room for nepotism and favouritism. The second principle relates to citizens’ participation and involvement in public decision-making to ensure collective responsibility for actions taken.
Third, decision-making needs to be transparent and must be seen to be so. In this regard, a free and independent media coupled with reasonable access to information on government programmes and activities are indispensable tools for fighting corruption. Finally, the use of discretion should be severely limited since it produces decision-making that is inconsistent and lacking in uniformity. Corrupt officials will almost certainly exploit the use of discretionary powers for their personal benefit.
The Legislative Audit’s role in fighting corruption
The Legislative Audit is the watchdog of public accountability. It is the oversight body that evaluates government’s programmes and activities to determine to what extent they have been executed with due regard to economy, efficiency and effectiveness and in compliance with relevant laws, regulations and circular instructions. Given its constitutional status, its relative independence from the Executive, its reporting relationship to the Legislature and its technical capability, the Legislative Audit is uniquely placed to fight corruption in the public sector.
Conclusion
While international and regional efforts to combat corruption need to be applauded, in the final analysis, corruption needs to be tackled at the national level through a sincere commitment on the part of governments. Decision-making needs to be open and transparent with a high degree of participation and involvement of civil society. A free and vibrant media should be encouraged.
As former Secretary-General Kofi Annan pointed out, ‘without good governance, strong institutions and a clear commitment to root out corruption and mismanagement wherever it is found, broad progress will prove illusive’. He further argued that investment strategies to achieve the Millennium Development Goals will not work in practice unless they are supported by transparent, accountable systems of governance ‘grounded in the rule of law, encompassing civil and political as well as economic and social rights, and underpinned by accountable and efficient public administration’.
Above all, important watchdog agencies, such as the Legislative Audit should be in the forefront in the fight against corruption and should be provided with the desired level of autonomy and flexibility as well as adequate resources to enable it to do so.
