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




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Editor's choice

  • Base Erosion and Profit Shifting (BEPS)
  • Base Erosion and Profit Shifting: "Currently tax planning results in locating the profits in tax havens where nothing is happening. BEPS is rewriting the international tax rules to realign the location of the profits and the real activity."
  • Bloomberg
    UN Special Envoy for Cities and Climate Change Michael R. Bloomberg at the OECD. A week before world leaders gather at the UN Climate Summit in New York Mr Bloomberg, will take part in a public discussion with OECD Secretary-General Angel Gurría on how cities can be empowered to take the lead in combatting climate change.
  • OECD Yearbook 2014
    Catherine L. Mann has been appointed as the new OECD Chief Economist. She replaces Pier Carlo Padoan, who became Italy’s minister of economy and finance in February 2014, and will take up her post in October. Ms Mann will be the second woman in the OECD's 50-year history to be chief economist.Click for bio.
  • Climate change video
  • Climate change: World leaders, business heads and civil society representatives at the UN Climate Summit in September 2014 and the COP20 talks in December in Lima will discuss ways to reduce greenhouse emissions, strengthen climate resilience and mobilise finance and political will for a meaningful global agreement in 2015. The OECD is providing data and guidance to steer these discussions.
  • Better Life Index
    How do you measure a Better Life?
    The OECD has launched a new interactive infographic where visitors can explore the priorities of people worldwide. Be a part of it. Create and share your Better Life Index.
  • Tim Harcourt Video
  • G20 and Australia: Economist Tim Harcourt speaks to the BBC about how Australia has gone from "Down Under to Down Wonder".
  • OECD Week 2014 : Resilient economies for inclusive societies. Forum 2014 was organised around three cross-cutting themes: Inclusive Growth, Jobs, and Trust. Watch the video. And check out our 2014 yearbook by clicking here.

Most Popular Articles

Subscribe Now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Poll

Is deflation a major risk in OECD economies?

Yes
No
Don't know

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2014