After a recent discussion on TV, I got the feeling that people hardly know what corruption is and generally share a feeling of despondency and lack of hope about reducing or eliminating it.
However, corruption is a systemic failure like many others and can be and has been cured in many countries, and within countries, in many sectors.
Over the last four years, anticorruption has been a significant part of my consultancy portfolio. Starting from my experience in ipaidabribe.com, a site that began to crowd-source corruption-related experiences of citizens, I have since worked in several countries and authored reports on various aspects of corruption.
Suffice to say that anti-corruption work is my bread and butter; I earn my livelihood from it and that is a pretty good incentive to learn and keep myself abreast. Last year, I had two significant learning experiences in anti-corruption, in the International Anti-Corruption Academy, near Vienna, and at the European University Institute, Florence. Both significantly deepened my knowledge of corruption related issues, the first in public private partnerships and private sector corruption and the second in how corruption is measured.
One thing my international work revealed is that India is far behind in approaching corruption from a systemic perspective. Just to give you an example, India does not measure corruption regularly. If you don’t measure something and record change over time, you are flying blind.
That seems to be why all our discussions are broad-brush. Even official approaches to reduce corruption seem to be knee jerk reactions, most of the time.
An important part of my anti-corruption consultancy work is to conduct learning programmes on anti corruption. The broad approach that I take in my awareness programmes is as follows:
Session 1: Is corruption due to erosion of value systems or due to erosion of systems?
Session 2: A systems approach to corruption. A taxonomy of corruption; game theories of corruption; different forms of corruption and how to deal with them.
Session 3: Case studies of reduction of corruption through systemic reforms. Also, international experience on reduction of corruption.
Session 4: Can enforcement alone cure corruption? For example, the pros and cons of a Jan Lokpal, the benami act, the money laundering legislations, procurement laws etc.
Session 5: In the light of the above, understanding, what citizens can do to reduce corruption.
These subjects are backed by presentations and a fair amount of data, to substantiate each point that I mention. I deliver this programme, customising it as required in a wide variety of locations, in training institutions for civil servants, to Public Sector Undertakings, Educational Institutions (both in India and abroad) and for policy makers.
I know this is going to sound facetious, but I’m starting this post as an education on anti-corruption. I hope to put out information in as simple a form as possible, with examples, and take readers through a guided tour of what corruption is and how it can be (and has been) cured. A kind of online course.
If you think it’s useful, please share. If you have questions, please let me know. I will answer them systematically. However, since I am proceeding sequentially, some of your questions will be answered only when they come up in the sequence of delivery.
So lets start with the first few questions:
1. What is the meaning of corruption?
1.1. The narrow legal meaning of corruption is of Public Servants using the public offices held by them to further their illegal private interests. The Prevention of Corruption Act 1988 does not specifically define the term, but describes several punishable offences that amount to acts of corruption. These fall broadly into two categories, namely, the taking of gratification other than legal remuneration for performance of an official act, and criminal misconduct , which includes abuse of office to deliver a pecuniary advantage to himself or any other person.
1.2. However, the word ‘corruption’ means in common language, much more than bribery. Cor’ in Latin, means ‘completely’ and ‘Rupt’ means ‘ruptured’. Thus wherever there is a complete breakdown of norms it could be described as corruption. For example, there is a lot of corruption in the private sector also, even though private sector corruption is not criminalized in India.
2. How does corruption arise?
Typically, we perceive corruption to be a social trend that arises out of an erosion of value systems. However, a lot of research shows that corruption is actually a system failure, rather than a social trend. Corruption nearly always follows a formula; C=M+D-A (Monopoly + discretion – accountability). Corruption is a crime of calculation, not of passion. Large numbers drift into corruption if risks are low, penalties are mild and rewards great; they will move out if the system is tightened.
3. Why is corruption harmful?
3.1. We all know that corruption is widespread. Those who pay bribes suffer directly, but even though who are not directly involved in giving or receiving bribes, are indirectly affected by the inefficiencies and inequities that corruption generates. Even those who think they did a smart thing to pay bribes, also suffer in one form or the other, eventually.
3.2. Corruption leads to the following harmful consequences;
(a) Corruption undermines democracy and the rule of law:
For instance, bribing of voters leads to the distortion of the electoral process. Bribing of judges leads to wrong decisions and great injustice.
(b) Corruption leads to violation of human rights,
For example, bribing of police leads to wrongful confinement and even instances of bad investigation, leading to the escape of criminals from punitive action.
(c) Corruption distorts markets:
For example, the cumulative bribes paid by builders for a variety of permissions, can increase the price of a flat by more than 20 percent.
(d) Corruption erodes the quality of life:
For example, it is estimated that the bribes paid in BBMP contracts could be as high as 35 percent cumulatively. That is one of the reasons why we have bad quality of roads, buildings and other facilities from the BBMP.
(e) Corruption allows organized crime, terrorism and other threats to human security to flourish:
For example, the police-criminal nexus is nearly always linked with bribes paid to the police to look the other way.
3.3. In the final analysis, we suffer huge costs by tolerating corruption, which is much more than the benefits we think we get by bribing. Apart from the economic and political costs, we pay a huge social cost, as undeserving corrupt people become rich and present the wrong role models to our children. We also pay a huge opportunity cost; because corrupt politicians and bureaucrats have no incentive to reduce corruption by simplifying procedures, introducing e-governance and reducing red tape.
4. Why do people excuse corruption?
Many people accept corruption as inevitable and unavoidable. Others condone it, even going so far as to say that nothing should be done about it; that it’s a form of gift giving. Others say that it actually is useful, because at least you get what you pay for. If we want to fight corruption effectively, we will need to tackle the following reasons that people consistently use to justify corruption.
Excuse 1: Corruption is everywhere.
Excuse 2: Corruption always existed.
3: Concept is vague and culturally determined.
Excuse 4: Cleansing will require whole change in attitudes & values.
Excuse 5: Corruption is not harmful; it is the grease that moves the economic engine.
Excuse 6: Nothing can be done if the top is corrupt and corruption is systematic.
Excuse 7: Don’t worry, with free markets, it will eventually go away.
With these ‘justifications’ in mind, people typically pay bribes for the following ten reasons:
Reason 1: Need for speed:
This results in payment of speed money to fast track applications. This in turn incentivises offices to slow down procedures deliberately, so that they can collect fast tracking payments.
Reason 2: Convenience:
Closely related to speed money. People pay because they are too busy to go to an office and find it convenient to outsource corruption to an agent for an overall service charge. This happens in cases where processes are convoluted, long drawn out and multi-step.
Reason 3: Fear, nervousness and relief:
Many people have a dread of going to government offices and fear that they will be harmed if they do not pay bribes. In many cases, the fear is totally unjustified, but still sadly persists. People also pay bribes out of relief. Therefore, one time transactions in peoples’ life, like buying a flat or getting a car, are more bribe prone than others. People consider bribing for registration as something like a tip paid out of happiness and relief at the completion of the transaction.
Reason 4: Ignorance and unwillingness to learn:
People who are otherwise savvy, do not go to websites, or do their homework enough to understand a procedure before hand.
Reason 5: Misinformation by middlemen and touts:
Closely related to ignorance and unwillingness to learn. Ignorant people are vulnerable to being cheated by corrupt officials and their touts who mislead them by mystifying processes.
Reason 6: Persuasion by peers and elders:
Closely related to ignorance and unwillingness to learn. Bribing behaviour, and the notion that unless one pays a bribe nothing can be secured, is passed on from generation to generation and fortified through peer discussions.
Reason 7: Fear of justified, unjustified or excessive punishment:
This covers payments such as bribes paid to the police to look the other way when there is a clear violation of the law. In the absence of the bribe, the bribe payer is vulnerable to punishment.
Reason 8: Faced with the denial of an essential service from a corrupt monopoly:
For example, people are cornered and pay bribes for restoration of electricity and water connections, because if they do not pay, they are subject to high levels of inconvenience.
With respect to the above reasons, one can expect that at least the bribe payers could be dissatisfied with the act of paying a bribe. However, there are two more reasons why people pay bribes, which make it especially hard to detect and cure. These are as follows:
Reason 9: Mutual benefit:
This typically happens in bribing to lower tax rates. For example, bribing to accept under-valued properties for registration or to reduce property tax rates. In such cases, both the bribe giver and the bribe taker benefit and the government suffers. Typically, for such cases, there are no complainants.
Reason 10: Avoiding business loss or getting unwarranted windfall profits:
This is a strong justification for the supply side of private sector corruption. Businesses do not mind paying bribes because of two reasons. First, if they do not pay, they suffer business loss. Second, whatever they pay can be passed on to the consumer through an enhanced selling price.
Systematically understanding why people pay bribes is a vital input into finding cures for corrupition subsequently.
5. What are the different forms of corruption?
Corruption typically takes the following forms:
Form 1: Petty Corruption:
The bribes that one pays in daily, over the counter transactions.
Form 2: Public Procurement corruption:
Corruption in the procurement by government of various goods and services, such as contracts for roads, construction, computer maintenance, etc.
Form 3: Sale of natural resources:
Corruption in handing out mining licences, bandwidth for mobiles, urban land allocations, etc.
Form 4: Policy corruption and state capture:
When a large private organization, either a commercial or even a religious institution, literally ‘buys’ political parties, or members of legislatures and officials cutting across party lines, in order to get large, policy favours from the government.
Form 5: Private sector corruption:
Though all forms of private sector corruption are not criminalized yet in India, it is a serious problem, which often provides the impetus and support for government corruption. The different forms of private sector corruption are as follows:
• Within Corporates: (eg: HR, Procurement, Cheating by submitting false bills)
• Between Corporates: (eg. Kickbacks for deals)
• Professional corruption: (eg. Unethical practices by lawyers, CAs, doctors)
• Between Corporates and Governments: (eg. bribing of government officials, acting as intermediaries and agents for bribe collection on behalf of government officials and politicians)
In addition, there is a phenomenon named ‘hyper corruption’, which is the most difficult form of corruption to be tackled. This is where the forms of corruption described above becomes part of a market chain of pay-offs and is not a question of isolated crimes perpetrated by a few freelancers. Symptoms of hyper-corruption are as follows;
• Bribe payments being couched in other terms, such as handling charges, fees, etc.,
• A well-oiled system of intermediaries and agents collecting the bribes. (For example, builders charging enhanced lawyers’ fees or agency charges, or car dealers collecting handling charges, which are nothing more than bribes that are regularly paid to everybody in the system according to agreed quotas).
• Bribes collected for recruitment and transfers of officials,
• Monthly quota payments that flow from ‘lucrative’ offices, (or officials in ‘lucrative’ postings), all the way to the top, including to the political party and political representative concerned.
In my next post, I will describe the game theories of corruption. Once that ground is covered, one has the basic background with which one can consider the really big question, which is how can we fight corruption effectively.
Simply put, if we do not understand the pathology of a disease, we cannot cure it. We can only suppress its symptoms.