Global Corruption: An Untamed Hydra - Laurence Cockcroft World Policy Journal, Volume 27, Number 1, Spring 2010, pp. 21-28 (Article) Published by ...
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Global Corruption: An Untamed Hydra
Laurence Cockcroft
World Policy Journal, Volume 27, Number 1, Spring 2010, pp. 21-28 (Article)
Published by Duke University Press
For additional information about this article
https://muse.jhu.edu/article/379147
[ This content has been declared free to read by the pubisher during the COVID-19 pandemic. ]Laurence Cockcroft was a founding board member of Transparency International (TI), serving for nine years. He was chair-
man of the British chapter of TI from 2000–08 and continues as a member of its board of directors. He is the author of
Africa’s Way: A Journey from the Past, (I. B. Tauris, 1990).
Global Corruption: An Untamed Hydra
Laurence Cockcroft
The last 15 years have seen a remarkable with organized crime. The tales of large-
change in the perception of corruption at scale looting by the elite of many nations
both national and international levels, driv- are sadly numerous—an accumulation of
en in large part by civil society organiza- huge fortunes by a rogues’ gallery of heads
tions and watchdog groups. In the many of state, including Abacha of Nigeria ($4
countries where corruption is endemic, but billion), Suharto of Indonesia ($15 billion
where public discussion had been most lim- channeled to his family over 30 years) to
ited, it has become the focal point of in- Mobutu of Zaire ($4 billion, made and
creasingly open campaigns by civil society probably lost) and Nazarbayev of Kaza-
and political parties. In the international khstan (up to $1 billion pilfered from
arena, a series of conventions at both the national oil revenues for special accounts).
global and regional levels have influenced But at the other end of the spectrum,
corporate codes of conduct and the agendas even minor acts of corruption—like small
of development finance agencies. This in- personal bribes to police or bureaucrats—
creased awareness has achieved a notable can eat away at the fabric of society.
toughening of anti-corruption legislation in While the different forms of corruption
many countries and spurred changes in cor- may converge in a toxic stew at the national
porate behavior. But these achievements re- level in scores of countries, the goals of each
main quite modest in relation to the overall form are distinct—and each needs to be ap-
scale of the problem. There remains woe- proached with a different set of solutions.
fully inadequate recognition of the ways cor- Corruption in political finance has only one
ruption is intertwined with the larger neces- objective: the retention of power. The arrival
sities of eliminating poverty, halting climate of multi-party states in the post–Cold War
change, and rebuilding failed states. What world has raised acute problems in political
anti-corruption measures are now in place funding, since in only very few cases do
need to be vastly extended. such parties have extensive membership
Corruption manifests itself in many dif- structures and, in even fewer cases, are these
ferent ways—from the looting of major as- members able to contribute sufficient fund-
sets to small-scale bribery, to political and ing to finance electoral activities. But the
party finance, to corruption both by and cost of getting elected in a multi-party
within multinationals, and to the interface democracy is often quite high. In contempo-
© 2010 World Policy Institute 21rary India, the cost of winning a parliamen- ment itself, some 40 percent of supplies
tary election has been estimated at $50,000; were reported to have been diverted through
in Tanzania, the cost of running in a pri- corruption. In these and a host of other cases
mary election has been put at $30,000. in the developing world, the acute inequali-
These sums effectively require candidates ty in access to resources gives rise to a mas-
to seek investments that ultimately need to sive industry of small scale corruption. And
be repaid with interest—frequently in the when one’s very survival is predicated on a
form of allocating contracts to financial pay-off, it highlights just how difficult it is
backers once a party has achieved or retained to eliminate.
power. The drivers of petty corruption—
In Western democracies, the member- survival, greed, compulsion from above, or
ship-based funding of major parties has be- guanxi (Chinese for “connections”)—are sub-
come increasingly problematic and has led stantially different from that of larger insti-
to a continuous revision of the legislation tutionalized graft. Taking “commissions”
which governs political financing. This has by semi-skilled and skilled workers on ex-
seldom been successful. In 2003, the World tremely low incomes may be justified by
Economic Forum published an assessment those soliciting the bribe as a means of sur-
(based on 101 countries) of the extent to vival. But once the pattern is established,
which legal party donations influenced this can easily be regarded as a permanent
subsequent government policy when the source of additional income, with a high up-
beneficiary party took power. This was per limit. In many cases, this form of cor-
found to be a medium-scale problem in ruption is institutionalized as police offi-
70 countries—including Canada, France, cials, or say, port managers, take a small
the United States, and Britain—and a high- daily allotment from revenues and pass a
level problem in 21 countries. share upstream to their superiors. In the
Well below the level of the elites in guanxi payments typical in China (but also
both kleptocratic regimes and democracies prevalent in clan and tribal relations across
are the daily experiences of two to three bil- Africa), the senior members of a family se-
lion of the world’s poor, who often have to cure a position for a junior relative in the
bribe their way to get services that govern- expectation of being rewarded by under-
ments should provide for free. In 2001, in the-table extra income earned by the new
Pakistan, a Transparency International sur- appointee. In many cases, such networks
vey found that 90 percent of homes with become a means of simple survival in des-
access to public education paid an average perately challenged economies, rather than
bribe of $90 to teachers to ensure their chil- a means of retaining or cementing political
dren made it to higher grades—the equiva- power.
lent of 20 percent of per capita gross domes- But the problem for those who would
tic product. In the same year, surveys across seek to destroy these networks and create
Ecuador, Paraguay, and Bolivia found that more transparent governance is often that,
the delivery of virtually any public service regardless of the origins of these illicit deals,
required a bribe. In Uganda, a 2009 survey the pattern of corruption calcifies, adding
found that citizens were obliged to pay layer upon layer that can persist for genera-
bribes of between $20 and $60 for basic tions and across regimes. Indeed, the me-
health services, even AIDS relief. In a 2009 chanics of Kenya’s Anglo Leasing scandal (in
assessment of India’s food distribution pro- which the government grossly overpaid for
gram, commissioned by the central govern- passport and forensic equipment, siphoning
22 WORLD POLICY JOURNAL • SPRING 2010©Rob Rogoyski
millions of dollars into politicians’ pockets) strengthened over the past decade and has
were put in place in the latter years of the spawned a number of important initiatives.
rule of the nation’s second president, Daniel These have included the Organisation for
Arap Moi, but the graft was perpetuated by Economic Co-operation and Development
his successor, Mwai Kibaki. Many cases such (OECD) Convention Against Illicit Payments
as this—and there are far too many to list in 1997, and the 2005 UN Convention
here—have as much to do with the reten- Against Corruption. While the UN conven-
tion of political power through corrupt tion is more far reaching in scope (providing
means as with the simple enrichment of for the repatriation of corruptly gained as-
crony networks. sets) the OECD convention is the subject
While the origins of each type of cor- of a fairly effective review process by its
ruption may be diverse, the phenomenon signatory states, which the UN has so far
they create is always dynamic, like a cancer been unable to achieve.
capable of morphing and attracting newly This new emphasis on drafting interna-
malignant players—to the point where it tional law against corrupt practices has
infects entire societies. As such, the reme- triggered a significant response by multina-
dies must be idiosyncratic to the country, tional companies. For example, all of the
society, and nature of the corruption. And, 2,200 companies in the UN’s Global Com-
much like fighting cancer, the first and pact have committed themselves to abide by
often most crucial step towards a cure is either TI’s Business Principles for Counter-
recognition. ing Bribery, or the comparable principles
defined by the World Economic Forum’s
Current Initiatives Partnering Against Corruption Initiative.
International recognition of the problem, Although reality all too often has fallen
largely initiated by civil society, has short of the ideal, when cases of large-scale
Global Corruption: An Untamed Hydra 23commercial corruption have come to light, must conform to international rules...must
tough judicial responses have at least trig- be open and transparent, should go through
gered a new aversion to bribery by leading a bidding process for the big projects...and
international companies. Here are just a reject corruption and kickbacks.” These
handful of recent examples: the German en- moves give hope that Russia and China
gineering giant, Siemens, was fined $1.34 will eventually become significant support-
billion in 2008 for the widespread use of ers of the international conventions that
bribes to win overseas contracts; Loïk Le have helped shape global corporate behavior,
Floch Prigent, a former chairman of Elf, although Beijing still opposes the adoption
was charged in 2001 for corruption in the of the UN’s “peer group” monitoring
sale of frigates to Taiwan (all but implied system.
was the collusion of the French govern- Meanwhile, multilateral agencies are
ment); in January 2010, Britain’s BAE Sys- awakening to the scope of the crisis and the
tems struck a plea bargain for $450 million potential role they might play in stamping
in fines with the U.S. Department of Justice out corruption. Many had previously ig-
and the U.K. Serious Fraud Office in con- nored the issue of corruption, even as their
nection with the Al Yamamah arms deal activities provided substantial lubricants to
with Saudi Arabia where it was alleged that encourage graft. The World Bank, for exam-
bribes of $1.5 billion were paid to Prince ple, had by 1996 lent a cumulative $23.7
Bandar bin Sultan, a former Saudi ambassa- billion to Indonesia and $1.4 billion to
dor to Washington; and, in January 2009, a Zaire, much of which went directly into the
subsidiary of Halliburton was fined $579 personal accounts of Suharto and Mobutu,
million for bribes paid to win a contract for respectively. In principle, World Bank Presi-
a $4 billion natural gas plant in Nigeria’s dents Jim Wolfensohn (1995–2005) and
southern delta region. But if these prosecu- Paul Wolfowitz (2005–07) began to reverse
tions are a glimmer of hope, they also high- this trend, requiring stricter monitoring of
light the massive and widespread practice loans and allocating additional funding for
of Western companies in perpetuating civil society projects. Between 2004 and
corruption. 2009, funds committed to promoting “jus-
An even more troubling threat to the tice, law, and administration” accounted for
emergence of a set of higher corporate prin- roughly 20 percent of the bank’s overall
ciples is that all four of the BRIC countries— lending.
Brazil, Russia, India, and China—lie at the Yet the imperative to continue lending
bottom of TI’s ”Bribe Payers Index,” with and support development has prevented the
Chinese and Russian companies ranked as bank from suspending its operations in
the worst offenders. In spite of this un- countries where major, institutional corrup-
promising record, both countries are con- tion is rampant. Within a year of the public
scious of a shift in global attitudes and exposure in Kenya of the Anglo Leasing
more active climate of prosecution. In scandal, the World Bank and other donors
2008, Russia’s Basic Law against Corruption had resumed lending as usual, although it
was introduced, partly to enable the country was clear that elements of the scam (and its
to support the UN’s and OECD’s anti-corrup- perpetrators) remained in place. And, in
tion initiatives. Even in China, the issue is 2009, the expansion of lending as a response
coming to the fore. In 2006, Premier Wen to the global economic crisis has made it
Jiabao told a meeting of Chinese traders even less likely that the World Bank and its
and investors in Africa: “Our enterprises sister agency, the International Monetary
24 WORLD POLICY JOURNAL • SPRING 2010Fund, can be truly effective in combating included Vicente Fox in Mexico (2000–06),
corruption among their borrowers. Luiz Ignacio “Lula” da Silva in Brazil
(2002–present), Olusegun Obasanjo in
More Promising Ethics Nigeria (1999–2007), and Alejandro Toledo
A much more promising avenue for interna- in Peru (2001–06). None has had any last-
tional and government collaboration are the ing success in curbing the problem. Fox’s
ethical initiatives launched recently in cer- legacy to his successor, Felipe Calderón, was
tain key global industry sectors. The Extrac- an environment so conducive to the growth
tive Industries Transparency Initiative (EITI) of organized crime that it has thrust the
has focused on corruption in the oil and gas army into a domestic drug war and threat-
sectors. Now formalized as an international ened to overwhelm the state itself. Brazil’s
voluntary agreement, it is managed by a Lula fatally compromised his anti-corrup-
secretariat in Norway and
has 31 member nations in
various stages of commit-
ment, with Azerbaijan
and Nigeria most dedicat-
“ An even more troubling threat is
that all four of the BRIC countries
ed to making their energy
sectors transparent—less
so Kazakhstan, Kyrgyzstan, and Turk-
rank as the worst offenders.
menistan. Still, it’s a good start. In October
2009, the top 14 defense companies from
”
tion strategy by buying parliamentary votes
in 2005 in the Mensalao scandal. Obasanjo
took a positive step in establishing an effec-
the United States and the European Union tive Ecomomic and Financial Crimes Com-
launched the Global Principles on Business mission, but neutralized the progressive
Ethics program, which includes “zero toler- moves he had made by engaging later in the
ance of corruption.” The principles will be widespread bribing of Congress to secure a
promoted through an international forum constitutional amendment enabling him to
on ethical conduct for the aerospace and de- stand for a third term.
fense industry. For a sector that has rivaled In China, beginning with the 1949 revo-
construction at the top of the list in terms lution, the Communist Party has struggled
of corruption, this is a welcome develop- with little success to curb corruption from
ment. Initiatives such as these—where the leadership to the party base—waging
governments, civil society, and corporations four consecutive campaigns. The first, in
actively collaborate in adhering to ethical 1951, found no fewer than 1.3 million party
practices—hold considerable promise, but members (one third of the total) to have
they alone cannot roll back corruption been guilty of graft. The most recent cam-
where it is deeply embedded at the paign was launched by Premier Hu Jintao
national level. five years ago and struck at the top. In No-
Over the last decade, the reform of vember 2006, the chairman of the China
national corruption has proved elusive. In Construction Bank, Zheng Enzhao, was im-
recognition of the new international push prisoned for 15 years for accepting bribes of
for clean government (and the success of the $500,000. In the same year, Chen Liangyu,
populist campaign strategy of using govern- party secretary for Shanghai and senior
ment corruption to impugn incumbents), Politburo member, was dismissed for being
several regimes have come to power with a part of a network which misappropriated
mandate to address the issue. These have one-third ($700 million) of the Shanghai
Global Corruption: An Untamed Hydra 25Social Security Fund for personal investment dent that the most devout societies are not
in property. In 2007, Zheng Xiayou, direc- immune to widespread corruption. Indeed,
tor of China’s Food and Drug Administra- Hindu and Buddhist scriptures have very
tion was executed for sanctioning the pro- little to say about the topic, while the
duction of counterfeit drugs in return for Catholic Church has long tolerated the prac-
bribes totalling $800,000. Despite these ex- tice and even encouraged it in the form of
amples, the Chinese press continues to pub- indulgences. Only Islam and Confucianism,
lish reports of large- and small-scale corrup- religions concerned with the governance of
tion cases on a virtually daily basis. Beijing society and moral philosophy, have clear
still has a long way to go. In December anti-corruption messages. But, on the
2009, a national audit found that Chinese ground, pervasive corruption in China and
officials had misused or embezzled some across much of the Muslim world illustrates
$35 billion of government money. that even the best intentions are no match
for the temptations of profit and power,
Social Values especially when governments and elites are
In light of this persistent, pervasive corrup- engaged in these practices. Ideals are all
tion, some reformers have asked whether well and good, but the vacuums that remain
nations’ unique social and cultural values within and between the world’s major faiths
are responsible for undermining efforts at have left space open to a highly pragmatic
reform. One school of thought holds that interpretation of corruption as an inevitable
corruption is simply the norm in many part of the real world.
societies—particularly where poverty is However, this apparent tolerance has its
pervasive. The Swedish sociologist Gunnar limits. The mother of a baby whose life is
Myrdal, for example, explored the origins of in danger certainly would not find it “cul-
corruption in India in the 1960s and con- turally acceptable” to be asked to pay a
cluded that it represented a heightened form bribe of $10 for treatment at a local hospital
of reciprocal systems present in rural society in Uganda. Nor would a street vendor in
that had been distorted as rapid urbaniza- Mumbai find it acceptable that an arbitrary
tion and a new form of politics emerged tax is suddenly levied by city authorities,
after independence. requiring him to bribe officials or risk los-
But theories such as these discount ing his only means of income. These highly
countries that have moved from being rela- individual injustices provide the fuel for
tively corruption-free to ones plagued by those politicians who run on anti-corruption
graft. Indeed, experience has shown that tickets (even in societies where the problem
ethical values change—particularly when an is endemic), and provide a modicum of
example is set at the highest echelons—and hope for governments and non-governmen-
that the unacceptable can become accept- tal organizations committed to fighting
able. Other scholars have wondered whether corruption.
secularism and lax moral values are to blame
in creating this slippery slope. But religion Taking it to the Streets
has not been shown to stem corruption. If The problem for reformers, however, is
one were to overlay a map of TI’s most cor- that one can’t stem the tide simply by put-
rupt countries with that of the most reli- ting a finger in the dyke. Take the example
gious nations, it would illustrate alarming of the street vendor in Mumbai: what’s to
parallelism. Without falling into the trap of stop even the most upstanding policeman
confusing correlation with causality, it’s evi- from shaking him down for a bribe today,
26 WORLD POLICY JOURNAL • SPRING 2010when the policeman knows that even if difficult task. But the clearly daunting scale
he refrains, a colleague certainly will try of this undertaking should not divert inter-
tomorrow—and that his job security is con- national efforts to address corruption, espe-
tingent upon stuffing the pockets of those cially as concerted actions can promote
higher up the chain of command. As such, the achievement of more specific goals at
the main weakness in reform programs is the national level.
that they have been largely piecemeal in
their approach and have not recognized the A Forward Agenda
relationships between the various forms of We now find ourselves at a unique position,
corruption and the interwoven nature of in- a crossroads of sorts for reformers, where it
stitutionalized graft. is possible to move either backwards or for-
An effective anti-corruption campaign wards. The general good that can be done
must be holistic and should include, at a by chipping away at corruption is now a
minimum: stricter laws on
campaign finance and political
fundraising; a strict clamp-
down on all forms of petty
corruption generated by the
delivery of public services (po-
lice protection, health care,
“ This agenda is a tall order and
might only be implemented
by a quasi-authoritarian
tax authorities); a focused cam-
paign against organized crime;
a root-and-branch reform of the procure-
regime, such as Singapore.
ment system that ensures transparency and a
role for civil society; a reform of land alloca-
”
given, but the difficulty in creating graft-
free societies and the hypercompetitive
global environment makes the practice of
tion and tenure systems; the establishment doing so much more problematic. While
of effective judicial dispute resolution; the Western leaders insist on the necessity of
full disclosure of the value of natural re- leveling the playing field, making the world
sources and the terms of extraction contracts a more transparent place, and removing the
granted by the state; tougher audits of pri- impediments to development and prosperity
vatized companies, clarifying the role of in- for so many of the world’s poverty-stricken,
vestors; the careful monitoring of banks to it would be worthwhile to recognize that
ensure that the flight of ill-won capital is corruption also negatively affects the resolu-
minimized; and active participation in the tion of the major global problems that are
repatriation of assets stolen from a country likely to dominate the near future: climate
and held overseas. change, a continuing energy crisis, the need
This agenda is a tall order and, even in to prevent the collapse of failing or failed
the best case scenario, would constitute an states, and the challenges of post-war
enormous political hurdle—perhaps one reconstruction.
that might only be implemented under a Each of these pressing concerns is made
quasi-authoritarian regime such as that of worse by corruption. Climate change has
Singapore, which has achieved remarkable been intensified by the deforestation of Cen-
success in fighting corruption and now tral African and Latin American rainforests,
ranks as the third-least corrupt nation in and by unregulated industrial pollution—
the world. Achieving even a measure of both frequently sanctioned by officials
these gains in a democracy is a far more prepared to turn their heads in return for
Global Corruption: An Untamed Hydra 27bribes. Likewise, the increasing global fected by the policies (or lack thereof) of
consumption of fossil fuels has created an emerging nations that struggle with graft.
intense competition for resources in politi- One condition for success will be the sincere
cally fragile nations where governments adoption of anti-corruption agendas by the
and individuals expect large pay-offs, par- BRIC countries, as their share of world trade
ticularly in Central Asia and Africa. It’s no and investment expands. Meanwhile, West-
surprise then, that these oil- and resource- ern democracies in Europe and North Amer-
rich states appear (like Angola, Turk- ica can no longer pretend that their prac-
menistan, and Congo, to name just a few) tices and their corporations are immune to
at the bottom of TI’s most-corrupt states list, the temptations of illegitimate and easy
and find themselves consumed by restive profits.
populations, disease, and violence. And in The cancer of corruption, once thought
these and a host of other cases, corruption to be in remission, is growing again. But
has often led to one dominant ethnic or the global recognition of the severity of the
social group emerging to seize control of disease is still lacking, as is an understand-
lucrative resources, leaving millions of dis- ing of the price of failure. This must come
enfranchised as victims, their hopes and first, as the cure will not come easily and
aspirations for the rebuilding of their requires a commitment from all parties.
nations, societies, and the lives of their But the cost of doing nothing is far greater:
families sabotaged. corruption will go unchallenged, the gains
If any global anti-corruption agenda is made will be lost, billions will remain
to be sustained, the international communi- trapped in a cycle of poverty, and our ability
ty must recognize that the momentum to address the pressing needs of this new
needs to be maintained and that the collec-
tive challenges of tomorrow are deeply af-
century will be fatally undermined. •
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