Yes! TAXPAYERS BEAR THE BURDEN

DEFINING CORRUPTION
Corruption, defined here as the exploitation of public office for personal gain, is a universal phenomenon. The practice, in one manifestation or another, is as old as government itself.

Today, it thrives in the world’s wealthiest nations, and in its poorest. It exists on every continent, across people of all nationalities and religions.

Corruption can take many forms, including:
_ Bribery: where an official accepts money or some other consideration to engage in a particular course of action, or inaction.
_ Extortion: where an official demands money or some other consideration to engage in a particular course of action, or inaction.
_ Embezzlement: where an official misappropriates public assets for personal use.
_ Fraud: where an official makes a false claim for benefits for which he or she is not entitled, or in order to avoid liability for payment, such as tax or customs duty.
_ Conflict of interest: where an official stands to profit incidentally from an official act. This could involve a planning decision which has the effect of increasing the value of property owned by the official, or the awarding of a government contract to a company in which the official has a financial interest.

Closely related to corruption, but excluded from discussion here, is the ‘ABUSE OF POWER‘ for institutional ends, where there is no explicit personal gain for the offender. This category includes, for example, the use of excessive force or fabrication of evidence by police (sometimes referred to as “noble cause” corruption), or discriminatory practices by public sector employers who are motivated by factors other than personal enrichment.

COSTS OF CORRUPTION
Corruption can be costly, in both monetary and non-monetary terms. Where corruption increases the cost of doing business, consumers and TAXPAYERS bear the burden. If a successful bidder must pay 10% to a corrupt official as a condition of being awarded a contract, the funds in question are in reality
taxpayers’ funds which could otherwise be allocated to worthy public purposes.

Corruption may also distort public expenditure decisions. Corrupt officials may approve less worthwhile projects, that pay bribes, over more worthy projects, that do not. Defence spending is particularly vulnerable to bribery, because of secrecy,the discretion given to officials in defining specifications, and because it is difficult to establish what the real cost of, for example, a fighter plane should be. Bribes are easily hidden in the total cost, and corrupt officials may press for higher defence expenditure than is necessary, in order to milk a project for bribes.

Corruption is also corrosive to the legitimacy of government itself. Where elected officials, police, or public servants are seen to be “on the take”, the law abiding citizen becomes cynical, while others may be tempted to ignore the law when it suits them. Suffice it to say that when governments ask the public to contribute to the public weal, whether through taxation, compliance with regulations, or by making other personal sacrifices, that government whose officials are lacking in virtue is less likely to elicit virtuous conduct from its citizens.

EXPLAINING CORRUPTION
The universality of corruption does not defy explanation. One need only look to the common criminological theory of routine activities for a basic understanding of the problem. Corruption,like other forms of crime, has three essential ingredients: motivation, opportunity, and the absence of a capable guardian.

Motivation
The motivation for corruption is often uncomplicated. The demand for personal gain is driven by greed — a deeply ingrained, if not universal, human characteristic. The continuum of greed varies from the utterly unsatiable, as appears to have characterised the likes of Presidents Marcos and Mobutu, to its total absence in those public officials of unimpeachable integrity.

Corruption may be unilateral,such as where an official falsifies travel documents, without the complicity of others. Alternatively, corruption may require some form of exchange. In the latter case, the supply side of corruption may entail a person who seeks some kind of benefit which public officials are in a position to bestow. This may entail the conferring of some valued condition, such as a lucrative contract or favourable administrative consideration. Alternatively, it may entail withholding some undesirable condition, like arrest or criminal prosecution. Motivations for corruption may not be based on material concerns. For example, officials may obtain sexual services as part of an exchange. In addition, status and power, rather than material or corporeal benefits, may be bestowed upon a corrupt individual. Thus, illegal campaign contributions can be sought in order to enhance a party’s prospects of electoral success.

Opportunity
The opportunity to engage in corrupt practices will also vary widely. The ability to acquire valued resources, or the discretion to confer benefits, is not equally distributed across public officialdom. Government criminologists have little to offer real estate developers who might seek to circumvent regulatory requirements, nor can they offer much assistance to heroin dealers who seek to avoid arrest. Base grade clerical officers who do not travel on official business have no opportunity to engage in travel rorts.

Guardianship
Similarly, guardianship will vary across public sector workplaces.Some public officials and certain types of official transactions are subject to the strictest scrutiny, from a variety of sources. Public sector procedural and audit requirements in many jurisdictions make the diversion of funds to one’s personal account difficult to achieve, and even more difficult to conceal. On the other hand, there are those public officials, such as some police, who operate with minimal supervision,beyond the gaze of those who might exercise a degree of surveillance over their activities.

Criminologists have had a long-standing interest in corruption. More recently, economists have been showing an interest,and economic approaches dominate the new concern about corruption shown by the World Bank and the International Monetary Fund. Economists have been particularly interested in the way that government monopolies provide opportunities for corruption. If there is only one supplierof a service, typically the government, then officials can extort bribes from clients. If there is competition, clients can avoid having to pay a bribe by going elsewhere. Thus, the Philippines reduced corruption in the issuing of passports by allowing branches throughout the country, rather than one central office, to issue them. It also provided foran official “fast track” service, for clients who were ready to paymore, thus ensuring the money, that otherwise would have greased palms, got paid to the Treasury. In this sense, government monopolies — in, for example, tobacco, or gambling—are licenses for extortion, and deregulation is a solution. The economic explanation is summed up in Robert Klitgaard’s (1988) formula: Monopoly + Discretion + Accountability = Corruption.

Sharing Knowledge for common understanding: Source of content and our official acknowledgement…!

Adapted from Australian Institute of Criminology; Trends & Issues in Crime and Criminal Justice. No. 143 Public Sector Corruption and its Control by Peter Grabosky and Peter Larmour.

January 2000

ISSN 0817-8542
ISBN 0 642 24149 X

Australian Institute of Criminology
GPO Box 2944
Canberra ACT 2601
Australia.

For a complete list and the full text of the
papers in the Trends and Issues in Crime and
Criminal Justice series, visit the AIC web site at:

http://www.aic.gov.au

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