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Corruption

In philosophical, theological, or moral discussions, corruption is spiritual or moral impurity or deviation from an ideal. Corruption may include many activities including bribery and embezzlement. Government, or 'political', corruption occurs when an office-holder or other governmental employee acts in an official capacity for his or her own personal gain. Most of us have an idea of what corruption is. But we dont necessarily share the same idea. That is why we need to ask the question about what corruption is. For example, do you believe giving money to speed up the processing of an application is corruption? Do you think awarding contracts to those who gave large campaign contributions is corruption? Do you think bribing a doctor to ensure your mother gets the medicine she needs is corruption? Do you think using government construction equipment to build an addition on ones house is corruption? Corruption is not just the clearly bad cases of government officials skimming off money for their own benefit. It includes cases where the systems dont work well, and ordinary people are left in a bind, needing to give a bribe for the medicine or the licenses they need. All of the above are examples of public corruption. They all involve the misuse of public office for private gain. In other words, they involve a government official benefiting at the expense of the taxpayer or at the expense of the average person who comes into contact with the government. By contrast, Private corruption is between individuals in the private sector, such as the Mafia extorting money from a local business. This course deals primarily with public corruption.

Definition
Public Corruption: The misuse of public office for private gain.

Ask Your Self


Which of the following scenarios are illustrations of public corruption: Companies colluding to fix prices in their industries Drivers bribing a police officer to avoid speeding tickets

Political party officials rigging elections Companies selling their faulty products Children buying illegal narcotics for recreational use

Corruption vs. Gift Giving


Corruption is not only a western concept. In any society, there is a difference between what happens above board and what is under the table, of what is accepted and what causes outrage. Although different societies have their own notions of corruption, here are four questions to help determine what is right: Transparency: Do I mind if others know or the press reports on what I do? Accountability: Do I report my actions to others? Do they hold me to standards? Reciprocity: Would I feel hurt if others did the same thing? Generalization: Would it harm society if everybody did the same thing?

Gift giving in many village traditions, for example, is not considered corruption as the transaction is transparent and not secret; the scale is modest, not life-changing; the benefits are usually shared with the community, for example the council of elders; and the public rights are not violated. Ask Your Self Imagine that you are an official working for the government. What hospitality or gifts should you accept from contractors? Use the four questions listed above to guide you in your decisions. Cup of coffee or tea, lunch, dinner for your family Theatre tickets, overseas holiday, expenses for your children to study abroad Book, scarf, shirt or tie, TV set and video, car, house

Types of corruption
There are three broad classifications of corruption, which are however not mutually exclusive:

Petty and Grand corruption


Petty Corruption: Practiced on a smaller scale. Defined as the use of public office for private benefit in the course of delivering a pubic service. Usually involves relatively small amounts of money, including bribery (grease money or speed payments) The public servant abuses his/her position by accepting a benefit for what is a routine transaction or approval. The direct victim of this abuse of power is the citizen. Grand Corruption: The most dangerous and covert type of corruption. Instances where policy making, its design and implementation are compromised by corrupt practices. Found where public officers in high positions (such as councilors), in the process of making decisions of significant economic value, routinely demand bribes or kickbacks for ensuring that tenders or contracts are awarded to specific contractors. Occurs at financial, political and administrative centres of power.

Political and Business corruption:


Business Corruption Often not regarded as a crime, rather as a means to accelerate business processes. Proponents claim that the end result is not affected; the mechanisms used to achieve the result are simply accelerated; In essence, bureaucracy is bypassed and time is utilised. Includes bribery, insider trading, money laundering, embezzlement, tax evasion and accounting irregularities.

Political Corruption Occurs predominantly in developing and less developed countries. Usually associated with the electoral process. Includes: Voting irregularities Nepotism and cronyism

Rule of a few False political promises Paying journalists for favorable coverage of candidates and parties Influencing voters by the distribution of money, food and/or drink Holding on to power against the will of the people.

Chaotic and Organized Corruption Organized Corruption A well-organised system of corruption in which there is a clear idea: Of whom to bribe; How much should be offered And are confident that they will receive the favour in return.

Organized corruption is often perpetrated by crime gangs and syndicates and includes white-collar crime and identity theft. Chaotic Corruption A disorganised system where there is no clarity regarding whom to bribe and how much payment should be offered. There is: No guarantee that further bribes will not have to be paid to other officials; No reasonable assurance that the favour will be delivered; No coordination between the recipients of benefits, with the result that the price of corruption is often inflated.

Other Types: Bribery


Bribery requires two participants: one to give the bribe, and one 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 has paid bribes during the past 12 months In recent years, efforts have been made by the international community to encourage countries to dissociate and incriminate as separate offences, active and passive bribery. Active bribery can be defined for instance as the promising, offering or giving by any person, directly or indirectly, of any undue advantage [to any public official], for himself or herself or for anyone else, for him or her to act or refrain from acting in the exercise of his or her functions. (article 2 of the Criminal Law Convention on Corruption (ETS 173) of the Council of Europe). Passive bribery can be defined as the request or receipt [by any public official], directly or indirectly, of any undue advantage, for himself or herself or for anyone else, or the acceptance of an offer or a promise of such an advantage, to act or refrain from acting in the exercise of his or her functions (article 3 of the Criminal Law Convention on Corruption (ETS 173)). The reason for this dissociation is to make the early steps (offering, promising, requesting an advantage) of a corrupt deal already an offence and, thus, to give a clear signal (from a criminal policy point of view) that bribery is not acceptable. Besides, such a dissociation makes the prosecution of bribery offences easier since it can be very difficult to prove that two parties (the bribe-giver and the bribe-taker) have formally agreed upon a corrupt deal. Besides, there is often no such formal deal but only a mutual understanding, for instance when it is common knowledge in a municipality that to obtain a building permit one has to pay a "fee" to the decision maker to obtain a favourable decision. A working definition of corruption is also provided as follows in article 3 of the Civil Law Convention on Corruption (ETS 174): For the purpose of this Convention, "corruption" means requesting, offering, giving or accepting, directly or indirectly, a bribe or any other undue advantage or prospect thereof, which distorts the proper performance of any duty or behaviour required of the recipient of the bribe, the undue advantage or the prospect thereof.

Trading in influence
Trading in influence, or influence peddling in certain countries, refers to the situation where a person is selling his/her influence over the decision process involving a third

party (person or institution). The difference with bribery is that this is a tri-lateral relation. But from a legal point of view, the role of the third party (who is the target of the influence) does not really matter although he/she can be an accessory in some instances. It can be difficult to make a distinction between this form of corruption and certain forms of extreme and poorly regulated lobbying where for instance law- or decision-makers can freely "sell" their vote, decision power or influence to those lobbyists who offer the highest retribution, including where for instance the latter act on behalf of powerful clients such as industrial groups who want to avoid the passing of certain environmental, social or other regulations perceived as too stringent etc.). Where lobbying is (sufficiently) regulated, it becomes possible to provide for a distinctive criteria and to consider that trading in influence involves the use of "improper influence", as in article 12 of the Criminal Law Convention on Corruption (ETS 173) of the Council of Europe.

Graft
While bribery includes an intent to influence or be influenced by another for personal gain, which is often difficult to prove, graft only requires that the official gains 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 or she wants to keep it.) Another example of graft is a politician using his knowledge of zoning to purchase land which he knows is planned for development, before this is publicly known, and then selling it at a significant profit. This is comparable to insider trading in business.

Patronage
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 that incompetent persons, as a 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 Imperial Germany) that support the regime in return for such favors.

Nepotism and cronyism


Favoring relatives (nepotism) or personal friends (cronyism) of an official is a form of illegitimate private gain. This may be combined with bribery, for example demanding that a business should employ a relative of an official controlling regulations affecting the business. The most extreme example is when the entire state is inherited, as in North Korea or Syria. A milder form of cronyism is an "old boy network", in which appointees to official positions are selected only from a closed and exclusive social network such as the alumni of particular universities instead of appointing the most competent candidate. Seeking to harm enemies becomes corruption when official powers are illegitimately used as means to this end. For example, trumped-up charges are often brought up against journalists or writers who bring up politically sensitive issues, such as a politician's acceptance of bribes. In Indian political system, leadership of national and regional parties are passed from generation to generation creating a system in which a family holds as center of power, burning examples are most of the dravidian parties of south India and also the largest party in India - Congress.

Embezzlement
Embezzlement is outright theft of entrusted funds. It is a misappropriation of property. Another common type of embezzlement is that of entrusted government resources; for example, when a director of a public enterprise employs company workers to build or renovate his own house.

Kickbacks
A kickback is an official's share of misappropriated funds allocated from his or her organization to an organization involved in corrupt bidding. For example, suppose that a politician is in charge of choosing how to spend some public funds. He can give a contract to a company that is not 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 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 situation in which people are entrusted to spend funds that do not belong to them are susceptible to this kind of corruption. Kickbacks are also common in the Pharmaceutical Industry, as many doctors and physicians receive pay in return for added promotion and prescription of the drug these Pharmaceutical Companies are marketing. (See: Anticompetitive practices, Bid rigging.)

Unholy alliance
An unholy alliance is a coalition among seemingly antagonistic groups, especially if one is religious, for ad hoc or hidden gain. Like patronage, unholy alliances are not necessarily illegal, but unlike patronage, by its deceptive nature and often great financial resources, an unholy alliance can be much more dangerous to the public interest. An early, well-known use of the term was by Theodore Roosevelt (TR): "To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day." 1912 Progressive Party Platform, attributed to TR and quoted again in his autobiography where he connects trusts and monopolies (sugar interests, Standard Oil, etc.) to Woodrow Wilson, Howard Taft, and consequently both major political parties.

Different Sectors of Corruption


Corruption can occur in many different economic sectors, whether it be public or private industry or even NGOs

Government/Public Sector
Public sector corruption is one of the more dangerous forms of corruption as corruption of the governing body can lead to widespread effects. Recent research by the World Bank suggests that

who makes policy decisions (elected officials or bureaucrats) can be critical in determining the level of corruption because of the incentives different policy-makers face.

Legislative System (Political)


Political corruption is the abuse of public power, office, or resources by elected government officials for personal gain, e.g. by extortion, soliciting or offering bribes. It can also take the form of office holders maintaining themselves in office by purchasing votes by enacting laws which use taxpayers' money.

Executive System (Police)


Police corruption is a specific form of police misconduct designed to obtain financial benefits, other personal gain, and/or career advancement for a police officer or officers in exchange for not pursuing, or selectively pursuing, an investigation or arrest. One common form of police corruption is soliciting and/or accepting bribes in exchange for not reporting organized drug or prostitution rings or other illegal activities. Another example is police officers flouting the police code of conduct in order to secure convictions of suspects for example, through the use of falsified evidence. More rarely, police officers may deliberately and systematically participate in organized crime themselves. In most major cities, there are internal affairs sections to investigate suspected police corruption or misconduct. Similar entities include the British Independent Police Complaints Commission.

Judiciary System
Judicial Corruption refers to corruption related misconduct of judges, through receiving or giving bribes, improper sentencing of convicted criminals, bias in the hearing and judgement of arguments and other such misconduct. Governmental corruption of judiciary is broadly known in many transitional and developing countries because the budget is almost completely controlled by the executive. The latter undermines the separation of powers, as it creates a critical financial dependence of the judiciary. The proper national wealth distribution including the government spending on the judiciary is subject of the constitutional economics.

It is important to distinguish between the two methods of corruption of the judiciary: the government (through budget planning and various privileges), and the private.

Corporate
As corporations and business entities grow larger, sometimes with a monetary turnover many times that of small countries, the threat of corruption in the business world, within the organization, in dealings with other organizations and in dealings with the government is a looming and growing threat. Companies may indulge in political corruption.

Unions
Labour unions were formed to protect and further the rights of employees via collective bargaining. However, as with other entities, corruption has been known to happen within the organizations. In addition, some unions have been infiltrated by, or associated with organized crime syndicates.

Non-Government Organizations
NGOs and other non-profit organizations are not immune to corruption and may be linked to political corruption.

History
The economy of India was under socialist-inspired policies for an entire generation from the 1950s until the late 1980s. The economy was characterised by extensive regulation, protectionism, and public ownership, policies vulnerable to pervasive corruption and slow growth. In 1960s, Chakravarthi Rajagopalachari suggested License Raj was often at the core of corruption. The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in October 1993, studied the problem of the criminalisation of politics and of the nexus among criminals, politicians and bureaucrats in India. The report contained several observations made by official agencies on the criminal network which was virtually running a parallel government.

It also discussed criminal gangs who enjoyed the patronage of politicians of all political parties and the protection of government functionaries. According to Jitendra Singh, "in the bad old days, particularly pre-1991, when the License Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied, and corruption emerged almost as an illegitimate price mechanism, a shadowy quasi-market, such that scarce resources could still be allocated within the economy, and decisions could get made. These were largely distortions created by the politico-economic regime. While a sea change has occurred in the years following 1991, some of the distorted cultural norms that took hold during the earlier period are slowly being repaired by the sheer forces of competition. The process will be long and slow, however. It will not change overnight. One of the major problems and obstacles to development in India has been endemic corruption and political inertia to change. As of March 2013, 150 of India's 523 parliament members were facing criminal charges. Many of the biggest scandals since 2010 have involved very high levels of government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam, the 2010 Commonwealth Games scam and the Adarsh Housing Society scam, Coal Mining Scam, mining scandal in Karnataka and cash for vote scam.

Bureaucracy
A 2005 study done by Transparency International (TI) in India found that more than 50% of the people had firsthand experience of paying bribe or peddling influence to get a job done in a public office. Taxes and bribes are common between state borders; Transparency International estimates that truckers pay annually 22,200 crores (US$ 4.5 billion) in bribes. Government regulators and police share in bribe money, each to the tune of 43% and 45% respectively. The en route stoppages including those at checkpoints and entry-points take up to 11 hours in a day. About 60 percent of these (forced) stoppages on road by concerned authorities such as government regulators, police, forest, sales and excise, octroi, weighing and measuring department are for extorting money. The loss in productivity due to these stoppages is an important national concern. The number of truck trips could increase by 40%, if forced delays are avoided. According to a 2007 World Bank published report, the travel time for a Delhi-

Mumbai trip can be reduced by about 2 days per trip if the corruption and associated regulatory stoppages to extract bribes was eliminated. A 2009 survey of the leading economies of Asia, revealed Indian bureaucracy to be not just least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and Indonesia; further it was also found that working with India's civil servants was a "slow and painful" process.

Land and property


Officials are alleged to steal state property. In cities and villages throughout India, consisting of municipal and other government officials, elected politicians, judicial officers, real estate developers and law enforcement officials, acquire, develop and sell land in illegal ways.

Tendering processes and awarding contracts


A 2006 report claimed state-funded construction activities in Uttar Pradesh, such as road building, were dominated by construction mafias, which are groupings of corrupt public works officials, materials suppliers, politicians and construction contractors. Corruption caused problems in government funded projects are not limited to the state of Uttar Pradesh. According to The World Bank, aid programs are beset by corruption, bad administration and underpayments. As an example, the report cites only 40% of grain handed out for the poor reaches its intended target. The World Bank study finds that the public distribution programs and social spending contracts have proven to be a waste due to corruption. As an example, India enacted the so-called Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) on 25 August 2005. The Central government outlay for this welfare scheme is 40000 crore (US$7.3 billion) in FY 20102011. After 5 years of implementation, in 2011, the programme was widely criticised as no more effective than other poverty reduction programs in India. Despite its best intentions, MGNREGA is beset with controversy about corrupt officials pocketing money on behalf of fake rural employees, poor quality of infrastructure built under this program, and unintended destructive effect on poverty.

Medicine

In Government Hospitals, corruption is associated with non availability/duplication of medicines, getting admission, consultations with doctors and availing diagnostic services. National Rural Health Mission is another health care-related government program that has been subject to large scale corruption allegations. This social spending and entitlement program hoped to improve health care delivery across rural India. The program has been run since 2005 by the Ministry of Health of the Indian government. The Indian government mandated a spending of INR 277 billion in 2004 05, and increased it annually to be about 1% of India's gross domestic product. The National Rural Health Mission program has been clouded by a large-scale corruption scandal in which top government appointed officials were arrested, several of whom died under mysterious circumstances including one in prison. Corruption, waste and fraud-related losses from this government program has been alleged to be 100 billion (US$2 billion).