I had kept some notes on corruption in Asia. In the light of the on-going congressional investigation, specifically in the senate, I would rather quote herewith the effects of the corruption on politics, administration, and institutional as well as economic and environment.
“World map of the corruption Perception Index by Transparency International measures. The degree to which corruption is perceived to exist among public officials and politicians. High numbers indicate relatively more corruption.”
“In abroad terms, political corruption is when government officials use their governmental powers for illegitimate private gain. Misuse of government for other purposes, like repression of political opponents and general police brutality, is not considered political corruption. Illegal acts by private persons or corporation not directly involved with the government is not considered as political corruption either. Illegal acts by officeholders constitute political corruption only if the acts are directly related to their official duties.”
“All forms of government is susceptible to political corruption. Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and trafficking, it is not restricted to these organized crime activities. In some nations, corruption is so common that is expected when ordinary businesses or citizens interact with government officials. The end-point of political corruption is kleptocracy, literally “ruled by thieves”.
“What constitute illegal corruption differs depending on the country or jurisdiction. Certain political funding practices that are legal in one place may be illegal in another. In some countries, government officials have broad or not well defined powers, and the line between what is legal and illegal can be difficult to draw.”
BRIBERY AROUND THE WORLD
“Bribery around the world is estimated at about $1 trillion (£494bn) and the burden of corruption falls disproportionately on the bottom billion people living in extreme poverty.”
“Corruption poses a serious development challenge. In the political realm, it undermines democracy and good governance by flouting or even subverting formal processes. Corruption in elections and in legislative bodies reduces accountability and distorts representation in policymaking; corruption in the judiciary compromises the rule of law; and corruption in public administration results in the unfair provision of services. More generally, corruption erodes the institutional capacity of government as procedures are disregarded, resources are siphoned off, and pubic offices are bought and sold. At the same time, corruption undermines the legitimacy of government and such democratic values as trust and tolerance.”
“Corruption also undermines economic development by generating considerable distortion and inefficiency. In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breach agreements, or detection. Although some claim corruption reduces cost by cutting red tape, the availability of bribes can also induce officials to trive new rules and delays. Openly removing costly and lengthy regulations are better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connection from competition and thereby sustaining inefficient firms.”
CORRUPTION UNDERMINES ECONOMIC DEVELOPMENT
“Corruption also generates economic distortions the public sector by diverting public investment into capital projects where bribes and kickbacks are more plentiful. Official may increase the technical complexity of public sector projects to conceal or pave the way for such dealings, thus further distorting investment.
Corruption also lowers compliance with construction, environmental, or other regulations, reduces the quality of government services and infrastructure, and increases budgetary pressures on government.”
“Economic argue that one of the factors behind the differing economic development in Africa and Asia is that, corruption has primarily taken the form of rent extraction with the resulting financial capital moved overseas rather invested at home (hence the stereotypical, but sadly often accurate, image o African dictators having Swiss bank accounts). University of Massachusetts researchers estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totaled $187 billion dollars, exceeding those nations’ external debts. (The result expressed in retarded or suppressed development, have been modeled in theory by economist Mancur Olson.)
In the case of Africa, one of the factors for this behavior was political stability, and the fact that new governments often confiscated previous government’s corruptly-obtained assets. This encouraged officials to stash their wealth abroad, out of reach of any future expropriation. In contrast, corrupt administration like Suharto’s have often taken a cut on everything (requiring bribes), but otherwise provided more of the conditions for development, through infrastructure investment, law and order, and others.
“Corruption facilitates environmental destruction. Although even the corrupt countries may formally have legislation to protect the environment, it cannot be enforced if the officials can be easily bribed. The same applies to social rights such as workers protection, prevention of child labor and unionization. Violation of these laws and rights enables corrupt countries gain an illegitimate economic advantage in the international market.”
“Bribery requires two participants: one to give the bribe, another to take it. In some countries the culture of corruption extends to every aspect of public life, making it extremely difficult for individuals to stay in business without resorting to bribes. Bribes may be demanded in order for an official to do something he is already paid to do. They may also be demanded in order to bypass laws and regulations. In some developing, nations up to half of the population have paid bribes during the past as months.
“While bribery includes intent to influenced by another for personal gain, which is often difficult to prove, graft only requires that the officials gain something of value, not part of his official pay, when doing his work. Large “gifts” qualify as graft, and most countries have laws against it. (For example, any gift over $200 value made to the President of the United States is considered to be a gift to the Office of the Presidency and not to the President himself. The outgoing President must buy it if he wants to take it with him.) Another example of graft is a politician using his knowledge of zoning to purchase land which he knows is planned for development, before this publicly known, and then selling at a significant profit. This is comparable to insider trading in business.”
“While bribes may be demanded in order to do something, payments may also be demanded by corrupt officials who otherwise threaten to make illegitimate use of state force in order to inflict harm. This is similar to extortion by organized crime groups. Illegitimate use of state force can also be used for outright armed robbery. This mostly occurs in unstable states which lack proper control of the military and police. Less open forms of corruption preferred in more stable states.”
“Government officials, especially is involved in illegal activities, are also liable to extortion, both by senior corrupt officials or other criminals. These develop over time into complicated networks of corruption, where law enforcement merely serves as a way to discredit and destroy. The anti-corruption effort is not immune to corruption either: there are examples of cases where officials of an anti-corruption Bureau have extorted sums from corrupt officials.”
PATRONAGE FAVORS SUPPORTERS
“Patronage refers to favoring supporters, for example with government employment. This may be legitimate, as when a newly elected government changes the top officials in the administration in order to effectively implement its policy. It can be seen as corruption if this means incompetent persons, as payment for supporting the regime, are selected before more able ones. In nondemocracies many government officials are often selected for loyalty rather than ability. They may be almost exclusively selected from a particular group (for example, Sunni Arabs in Saddam Hussein’s Iraq, the nomenklatura in the Soviet Union, or the Junkers in the Imperial Germany) that support the regime in return for such favors.”
“Favoring relatives (nepotism) or personal friends (cronyism) is combined with bribery, for example, demanding that a business should employ a relative of official controlling regulations affecting the business. The most extreme example is when the entire state is inherited, as in North Korea or Syria.”
“A kickback is an official’s share of misappropriate funds allocated from his or her organization to an organization involved in corrupt bidding. For example, a politician is in charge of choosing how to spend some public funds. He can give a contract to a company that isn’t the best bidder, or allocate more than they deserve. In this case, the company benefits, and in exchange for betraying the public, the official receives a kickback payment, which is a portion of the sum of the company received. This sum itself may be all or a portion of the difference between the actual (inflated) payment to the company and the (lower) market-based price that would have been paid had the bidding been competitive. Kickbacks are not limited to government officials; any situations in which people are entrusted to spend funds that do not belong to them are susceptible to this kind of corruption. Related: Bid rigging, Bidding, Anti - competitive practices.”
“It is a controversial issue whether the size of the public sector per se results in corruption. Extensive and diverse public spending is, in itself, inherently at risk of cronyism, kickbacks and embezzlement. Complicated regulations and arbitrary, unsupervised official conduct exacerbate the problem. This is one argument that corruption necessarily follows from the opportunity is weakened by the existence of countries with low to non existent corruption but large public sector, like the Nordic countries. However, these countries score high on the East of Doping Business Index, due to good and often simple regulations, and have rule of law firmly established. Therefore, due to their lack of corruption in the first place, they can run large public sectors without inducing political corruption.”
“Privatization, as in sale of government owned property, is particularly at the risk of cronyism. Privatizations in Russia and Latin America were accompanied by large scale corruption during the sale of the state owned companies. Those with political connections unfairly gained large wealth, which had discredited privatization in these regions. While media had reported widely the grand corruption that accompanied the sales, studies have argued that in addition to increased operating efficiency, daily petty corruption is, or would be, larger without privatization, and that corruption is more prevalent in non-privatized sectors. Furthermore, there is evidence to suggest that extra legal and unofficial activities are more prevalent in countries that privatized less.”
“In the European Union, the principle of subsidiarity is applied: a government service should be provided by the lowest, most local authority that can competently provide it. An effect is that distribution of funds into multiple instances discourages embezzlement, because even small sums missing will be noticed. In contrast, in a centralized authority, even minute proportion of public funds can be large sums of money.”
“If the highest echelons of the government also take advantage from corruption and embezzlement from the state’s treasury, it is sometimes referred with the neologism “Kleptocracy”. Members of the government can take advantage of the natural resources (e.g. diamonds and oil in a few prominent cases) or state-owned productive industries. A number of corrupt governments have enriched themselves via foreign aid which is often spent on showy buildings and armaments.”
“A corrupt dictatorship typically results in many years of general hardship and suffering for the vast majority of citizen of civil society and the rule of law disintegrate. In addition, corrupt dictators routinely ignore economic and social problems in their quest to amass even more wealth and power.”
“The classic of a corrupt, exploitive dictator often given us the regime of Marshal Mobutu Sese Seko, who ruled the Democratic Republic of the Congo (which he named Zaire) from 1965 to 1997. It is said that usage of the term kleptocracy gained popularity largely in response to a need to accurately describe Mobutu’s regime. Another classic case is Nigeria, especially under the rule of General Sani Abacha which was de facto president of Nigeria from 1993 until his death in 1998. He was reputed to have stolen some US$3-4 billion. He and his relatives are often mentioned in Nigerian 419 letter scams claiming to offer vast fortunes for ‘help’ in laundering his stolen ‘fortunes’ , which in reality turn out not to exist. More than $400 billion was stolen from the treasury by Nigeria’s leaders between 1960 and 1999.”
“More recently, articles in various financial periodicals, most notably Forbes magazine, have pointed to Fidel Castro, ruler of the Republic of Cuba since 1959, of amassing a personal fortune worth US$900 million. Opponents of his regime claim that he had used money amassed through weapon sales, narcotics, international loans and confiscation of public property to enrich himself and his political cronies who hold his dictatorship together, and that the US$900 million published by Forbes is merely a portion of his assets, although that needs to be proven.”
“Politicians are placed in apparently compromising positions because of their need to solicit financial contributions for their campaign finance. If they then appear to be acting in the interest of those funded them, this gives rise to talk of political corruption. Supporters may argue that this is coincidental. Cynics wonder why these organization fund politicians at all, if they get nothing for their money.”
“Laws regulating campaign finance in the United States requires that all contributions and their use should be publicly disclosed. Many companies, especially Bribe Payers Survey, looking at the willingness of foreign firms to pay bribes. The World Banks collects a range of data on corruption, including a set of Governance Indicators.”
“The ten countries perceived to be least corrupt, according to the 2006 Corruption Perceptions Index, are Finland, Iceland, New Zealand, Denmark, Singapore, Sweden, Switzerland, Norway, Australia, and the Netherlands.”
“According to the same survey, the nine countries perceived to be most corrupt are Haiti, Indonesia, Myanmar, Iraq, Guinea, Sudan, Congo, Chad, and Bangladesh.”
“In the US, based on public corruptions, Mississippi, North Dakota, and Louisiana were the three most corrupt states. Nebraska, New Hampshire, Oregon and Iowa had the least amount of corruption. The most populous state, California and Texas, are ranked in the middle, California ranking 25th and Texas in 29th.”]
