Global Corruption: an Untamed Hydra Laurence Cockcroft

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 21 rary 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 23 commercial 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.

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