Successful Approaches to Tackle Petty Corruption

Transparency International Anti-Corruption Helpdesk Answer Successful approaches to tackle petty corruption Author(s): [Marie Chêne, [email protected]] Date: 18 July 2019 Petty bribery refers to small bribes paid by citizens to public officials to speed up bureaucratic processes or access public services they are entitled to. Although it typically involves small amounts of money, petty corruption has a far-reaching impact on citizens and companies and a corrosive long-term effect on sustainable economic growth, the overall governance environment, the government’s ability to collect taxes and the rule of law. Successful approaches to tackle petty corruption involve using a combination of measures aimed at reducing red tape, enforcing effective sanctions, reforming the public sector, and promoting detection and reporting through the use of new technologies. To be successful, such approaches need to be supported by a strong political will. © 2019 Transparency International. All rights reserved. This document should not be considered as representative of the Commission or Transparency International’s official position. Neither the European Commission,Transparency International nor any person acting on behalf of the Commission is responsible for the use which might be made of the following information. This Anti-Corruption Helpdesk is operated by Transparency International and funded by the European Union. Query Is there any paper or study that documents effective methods to counter petty corruption? Contents Main points 1. Not so petty: the impact of petty bribery — The impact of petty bribery is not 2. Approaches to counter petty bribery petty. It affects citizens in their daily 3. References interactions with the state, with Not so petty: the impact of potential dramatic consequences on petty bribery their standards of living and well- being. Petty corruption refers to “everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens — It has a corrosive impact on growth, who often are trying to access basic goods or business operations, tax revenues, the services in places like hospitals, schools, police departments and other agencies” (Transparency governance and regulatory International 2009). While petty corruption typically involves small amounts of money, its aggregated environment of a country, the financial and societal costs are far from negligible. legitimacy of state institutions and the Petty bribery is costly for individuals and rule of law. Most importantly, it affects households, especially the poor citizens in their daily interactions with According to some estimates, including the state. Transparency International’s Global Corruption Barometer (GCB), petty corruption could affect as many as one in four people around the world, — Successful approaches to counter nearly two billion people (Klarity Blog 2018). In Asia Pacific alone, 2017 GCB data suggests that petty corruption include a close to 900 million people paid a bribe to access combination of measures aimed at public services. In Vietnam, 65 per cent of the respondents reported paying a bribe to access reducing red tape, prosecuting corrupt public services. The country also had the second highest bribery rates of all the countries surveyed officials and reforming the public for public schools (57 per cent) and healthcare sector. Such approaches need to be (59 per cent), suggesting serious corruption risks when people try to access these basic services supported by a strong political will. (Transparency International 2017). New technologies also offer interesting 2 Transparency International Anti-Corruption Helpdesk Successful approaches to tackle petty corruption Corruption in health is all the more detrimental as it It is also an inefficient strategy in the longer term to can have life and death consequences for citizens. circumvent red tape and cumbersome bureaucratic A 2015 study conducted in Africa shows that processes. A few studies show that corruption corruption is a reason for patients to postpone their tends to increase the time managers spend on first visit to healthcare providers, with devastating dealing with red tape. This is partly because consequences in terms of the timeliness of cancer companies known to pay bribes are likely to spend diagnosis (Mostert et al. 2015). more time negotiating with corrupt bureaucrats and companies that have paid bribes before tend to be The cost of small and repeated bribes is the primary targets (Fisman and Svensson 2007). considerable when aggregated on a national or global scale. Furthermore, as petty bribery typically As for firms’ productivity, some authors argue that occurs at the point of service delivery, it directly the cost of red tape may be over-estimated. A affects citizens’ access to public services and 2010 World Bank study compared the impact of undermines citizens’ standards of living. There is facilitations payments and the effect of red tape evidence too that petty bribery hurts the poor most (referred to as “time tax”). The study finds that red as they are more reliant on public services (Klarity tape seems to have an insignificant impact on 2018). In addition, petty bribery represents a firms’ productivity compared to the “bribe tax” (De higher share of their income. For example, Rosa, Gooroochurn and Görg 2010). evidence from Mexico estimates that Mexican households with the lowest income spent up to 30 Petty bribery, including facilitation payments, is also per cent of their monthly income on bribes, while likely to deteriorate the company’s internal structure Mexican households with an average income by undermining ethical standards, behaviours and spent only 14 per cent on bribes. Similar patterns attitudes as well as the governance structure were observed in the Western Balkans (Bohorquez (PricewaterhouseCooper 2008). and Devrim 2012). Petty bribery undermines the quality of the Petty bribery has a detrimental impact on regulatory environment and the efficiency of economic growth and business operations the state apparatus Although some authors have argued that petty Petty bribery has a longer term detrimental effect bribery, including facilitation payments can “grease on the quality of a country’s governance and the wheels” of the economy and reduce the regulatory environment as it creates incentives for transaction costs generated by red tape and corrupt bureaucrats to create more regulations, cumbersome bureaucratic requirements, there is a restrictions and red tape to increase the broad consensus that petty corruption is costly for opportunities to extract bribes from citizens and companies legally and reputationally risky in the companies (Chêne 2013). Petty bribery is likely to long term, undermining firms’ growth and create a vicious circle whereby corrupt bureaucrats productivity, and that it is economically inefficient have few incentives to tackle red tape and (Chêne 2013). bureaucratic inefficiencies that provide them with opportunities to extract bribes. Therefore, Evidence from Africa suggests that the aggregated facilitation payments are likely to incentivise cost of petty bribery could cost companies the corrupt officials to create artificial barriers instead equivalent of 2.5 to 4.5 per cent of their sales. This of reducing excessive red tape, fuelling could represent as much as 20 per cent of labour inefficiencies and bureaucratic burden costs for average manufacturing companies and (Dzhumashev 2008). more than communications (telephone, fax, internet) and transportation (excluding fuel) costs Petty bribery erodes public trust in (Clarke 2008). A 2008 PricewaterhouseCoopers institutions and the rule of law survey of 390 senior executives in 14 countries, confirms that companies pay a high cost for As petty corruption affects citizens in their daily corruption in terms of market distortion, interactions with public services, it erodes public reputational damages and legal risks. trust in institutions and political processes, 3 Transparency International Anti-Corruption Helpdesk Successful approaches to tackle petty corruption undermining the legitimacy of state institutions, with a corrosive effect on democratic processes Approaches to tackle petty and the rule of law. This has been confirmed by a bribery study looking at the correlation between perceptions of corruption and trust in government institutions in Mexico (Morris and Klesner 2006). The Georgia example: a combination Such a lack of confidence in public institutions can of frontal approaches supported by have dramatic consequences, as illustrated by the strong political will 2014 Ebola crisis. In Sierra Leone and Liberia, it has been argued that, as petty bribery fuelled Countries like Georgia have been largely credited distrust in health services, it contributed to the to have succeeded in eradicating petty corruption spread of the disease as patients avoided seeking with strong political will and concerted government medical attention from health institutions they did action in the aftermath of the 2003 Rose not trust (Steiner 2017; Mackey et al. 2016). Revolution. This has been achieved in a relatively short period of time through a combination of anti- Corruption also has a corrosive effect on the rule corruption measures, including the prosecution of of law. Irrespective of whether they are big or small high-level senior officials, police reform, the or whether they are aimed at easing bureaucratic liberalisation of the business environment,

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