What is corruption?

Financial, Fiscal and Enterprise Affairs Directorate (DAF)

Corruption is talked about openly in most countries these days and few countries deny they suffer from it. Which is a good thing, since it provides politicians, business and labour leaders, journalists and civil society with a rare opportunity: that of agreeing on the urgency of stamping it out. But agreeing on what exactly is meant by corruption is another matter. Even the most widely used definition, which is “the abuse of public office for private gain”, may err on the side of over-simplification.

The early 1990s witnessed a proliferation of initiatives aimed at fighting corruption – on the national, regional and international levels. Fighting corruption has engendered an unusually high degree of international co-operation, leading to an armoury of international instruments, such as the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or indeed, the Council of Europe’s Criminal Law Convention on Corruption. The reason the international community has mobilised to fight the problem is simple: corruption respects no borders, knows no economic distinctions and infects all forms of government.

In the long run, no country can afford the social, political or economic costs that corruption entails. It erodes public confidence in political institutions and leads to contempt for the rule of law; it distorts the allocation of resources and undermines competition in the market place; it has a devastating effect on investment, growth and development. Furthermore, corruption exacts an inordinately high price on the poor by denying them access to vital basic services. A whole host of conditions can influence corruption, its different manifestations, its pervasiveness and, indeed, its perception by ordinary citizens.

Understanding the multifaceted dimension of corruption is essential in order to identify workable ways of dealing with it. Corruption comes in many guises. Bribery, extortion, fraud, trafficking, embezzlement – but also nepotism and cronyism – are all different manifestations of it. Even the most straight-forward acts of bribery need not always involve the exchange of money. Other gifts or advantages, such as membership of an exclusive club or promises of

scholarships for children, have been used as “sweeteners” to clinch deals. Whatever form it takes, corruption is always a two-way transaction; it requires a supply side (the briber) and a demand side (the one who receives the bribe). That is why measures must be designed to hit both sides of the corruption equation.

UNFAIR PLAY

Another aspect of corruption is that it can occur in many different sectors of the economy. A commonly cited and morally reprehensible form is when government officials abuse public trust by accepting bribes from private businesses. However, the distinctions

between the private and public sectors have been blurred by privatisation, and corruption within the private sector is not without pernicious consequences as well. While not as common, bribes

happen between public officials too. And a recent bribery scandal involving government representatives and officials of the International Olympic Committee in a bid to influence the choice of venue for the Olympic Games is a reminder that propriety is something to be maintained between public officials and respected non-governmental organisations as well.

There are different degrees of corruption too. Some would distinguish

between “petty” corruption and “grand” corruption. The former usually involves small sums paid to low level officials to “grease the wheels” or cut through bureaucratic red tape. The headline making cases of large multinational companies paying millions of dollars to government leaders or politicians to obtain lucrative business contracts are examples of corruption on a grander scale. The distinction should not imply that some forms of corruption are worse than others. Indeed, petty corruption which can interfere with the delivery of basic education and healthcare programmes, can have very serious consequences, even to the extent of causing many more years of grinding poverty for the world’s economically disadvantaged.

When corruption permeates a country’s political and economic institutions, it is no longer a matter of a few dishonest individuals, but rather institutional, systemic corruption. It is a phenomenon which thrives where institutions are weak or non-existent. And it is strongly related to poor governance. Systemic corruption happens most where adequate legislative controls are lacking, where there is no independent judiciary or oversight, and where independent professional media and civil society agencies are absent. Reforms aimed at providing greater transparency and accountability of public institutions and government operations are urgently needed to redress such corruption.

There is much to be done. And let it not be forgotten that wherever corruption occurs and at whatever level, the ultimate victims of corruption are ordinary citizens and society at large. That is why fighting corruption is so important. Finding effective, credible and enforceable measures to stamp out corruption and to hold those guilty accountable is more than a noble objective. Our economic, political and legal institutions may depend on it.

Bibliography

Ź OECD, No Longer Business as Usual: Fighting Bribery and Corruption, Paris, forthcoming, September 2000.

The author is head of the anti-corruption unit.

©OECD Observer No 220, April 2000




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