Political Corruption and Governance

Series Editors Dan Hough University of Sussex Brighton, UK

Paul M. Heywood University of Nottingham Nottingham, UK This series aims to analyse the nature and scope of, as well as possible remedies for, political corruption. The rise to prominence over the last 20 years of corruption-related problems and of the ‘good governance’ agenda as the principal means to tackle them has led to the development of a plethora of (national and international) policy proposals, international agreements and anti-corruption programmes and initiatives. National governments, international organisations and NGOs all now claim to take very seriously the need to tackle issues of corruption. It is thus unsurprising that over couple of decades, a signifcant body of work with a wide and varied focus has been published in academic journals and in international discussion papers. This series seeks to provide a forum through which to address this growing body of literature. It invites not just in-depth single country analyses of corruption and attempts to com- bat it, but also comparative studies that explore the experiences of different states (or regions) in dealing with different types of corruption. We also invite monographs that take an overtly thematic focus, analysing trends and developments in one type of corruption across either time or space, as well as theoretically informed analysis of discrete events.

More information about this series at http://www.palgrave.com/gp/series/14545 Richard Rose · Caryn Peiffer Bad Governance and Corruption Richard Rose Caryn Peiffer Centre for the Study of Public Policy School for Policy Studies University of Strathclyde University of Bristol Glasgow, UK Bristol, UK

Political Corruption and Governance ISBN 978-3-319-92845-6 ISBN 978-3-319-92846-3 (eBook) https://doi.org/10.1007/978-3-319-92846-3

Library of Congress Control Number: 2018943674

© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer International Publishing AG, part of Springer Nature 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microflms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affliations.

Cover image: © MartinPrague/iStock/Getty Images Plus Cover design by Akihiro Nakayama

Printed on acid-free paper

This Palgrave Macmillan imprint is published by the registered company Springer International Publishing AG part of Springer Nature The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface: Why This Book Is Important

Governance is a recurring word in the discussion of public policy because it describes the relationship between governors and governed, an inevi- table feature of every political system. The quality of governance varies greatly between political systems, but the attention given to good and bad governance is unbalanced. A Google search fnds 47 million references to good governance and fewer than 7 million to bad governance. However, more societies are subject to bad governance than to good governance, and corruption is a major cause. The introduction of elections in formerly undemocratic regimes has not guaranteed that a country enjoys good governance, and bad governance can be found not only in developing countries but also in parts of Europe and Northern America too. Corruption takes many forms. The United Nations Convention Against Corruption casts a wide net in describing ‘the scourge of corruption’. It includes not only the payment of bribes, the most common form of corruption, but also the tolerance of organized crime, dealing in drugs, money laundering, and handling stolen assets. Since the Convention was published in 2005, a total of 175 member states have signed it, including many where corruption is a signifcant feature of governance. They could do so without censure for their national prac- tices because the Convention lacks the means of effective enforcement. Consistent with the UN’s respect for national sovereignty, member states are asked to consider adopting good governance laws insofar as they are

v vi Preface: Why This Book Is Important in keeping with their national constitutions. Even if a constitution rhe- torically endorses normative standards of good governance, the practice can still be corrupt. This book is about the experience of ordinary people with governance when they come into contact with offcials delivering public policies at the grass roots of their society. The services delivered include both the ‘good’ goods of public policy such as education and health care, and the necessary but not always welcome services of the police and offcials issu- ing documents such as identity cards and driving licences. The view of government at the grass roots is very different from that at the top of government. In the words of a Chinese proverb: The mountains are high and the emperor is far away. Our approach is unique because we analyze empirical evidence from sample surveys asking more than 175,000 people about their experience of governance. The surveys are not confned to countries with good governance nor do they concentrate exclusively on badly governed countries. They cover a cross-section of the world’s population in 125 countries of Africa, Asia, the Middle East, Europe and North and South America. For billions of people, corruption is not just a subject for academic scrutiny but a familiar experience of what happens when they meet public offcials face to face. Globally, an estimated 1.8 billion people annually pay a bribe to get a public service that they are entitled to receive, such as health care, or to avoid onerous regulations requiring such things as a permit to make a living as a street trader. The number of people experi- encing bribery each year is so large because many of the countries viewed as practising good governance, such as the Scandinavian states, have only a few percent of the world’s population. Conversely, corruption is high in the world’s most populous countries. In India, an estimated 807 million people are caught up in bribery each year, and in the People’s Republic of China, 290 million. The 10 countries contributing the larg- est number of bribe payers to the global total include undemocratic countries such as Russia, as well as countries that hold free or partly free elections such as Mexico and India. The impact of corruption on societies is bad because a signifcant amount of money that should be spent on national development is diverted into the pockets of politicians and public employees delivering services. In the words of UN Secretary-General Kof Annan when endorsing the UN’s 2005 Convention Against Corruption: Preface: Why This Book Is IMPORTANT vii

This evil phenomenon is found in all countries but it is in the developing world that its effects are most destructive. Corruption hurts the poor disproportionately by diverting funds intended for development, under- mining a government’s ability to provide basic services, feeding inequality and injustice and discouraging foreign aid and investment. Because corruption is good for public offcials who pocket bribes, bad governance can be maintained indefnitely when the people who beneft most also have the most political power.

The impact of corruption on governance depends on the behaviour of politicians and public offcials. The frst chapter distinguishes between the narrow formal defnition of corruption and the much broader informal defnition. Formal standards are set out in laws that specify the bureaucratic procedures that public offcials ought to follow, such as treating all citizens impartially. Bad governance is the consequence of public offcials breaking laws by such actions as demanding a bribe to deliver a service that a person is entitled to receive free. Informal standards of how politicians ought to behave are held in the minds of voters, for example that politicians should not use their public offce to accu- mulate private wealth or make misleading promises in pursuit of win- ning elections. Whereas formal standards are enforced in courts of law, informal standards are enforced in the court of public opinion. When the behaviour of offceholders meets both standards, good governance is the result. When one standard is violated and the other is not, the quality of governance is in dispute. When both standards are violated, governance is doubly corrupt. Many people are more concerned with getting what they want from governance than with whether public offcials adhere to formal standards. This is particularly the case for people who depend on public services because they lack the money to buy private health care or education. Chapter 2 shows how people satisfce, that is, getting what they want by the book, by hook or by crook. In the frst instance, offcials satisfy claimants by following standards of impartiality set out in bureaucratic rules. When this does not happen, people may get what they want by pulling hooks, using personal connections to get around indifferent or slow-moving public offcials. If that does not work, the crooked alter- native is to pay a bribe to get what you want. Many social science theories offer explanations for the chief infuences on whether people get what they want by the book or by other means. viii Preface: Why This Book Is Important

The most familiar measures of corruption, such as the Corruption Perceptions Index (CPI) of Transparency International and the World Bank Governance Index, characterize national political systems as a whole. They do so on the basis of expert perceptions of the extent to which there is big bucks corruption in the award of multi-million or billion dollar contracts for infrastructure projects such as building roads, drilling for oil, or the purchase of expensive military aircraft. The benef- ciaries are a relatively few big businesses, since only such companies have the capital to invest in producing these goods and services. They also have ample funds to pay large bribes to obtain contracts from a relatively small number of high-ranking government offcials. Describing a country as corrupt or as an exemplar of good government implies that bad or good governance is pervasive in its political system. However, no country is perfectly free of corruption or corrupt in everything its public offcials do. The CPI rating emphasizes differences in the degree of good or bad governance; on its 100-point scale the best-governed countries are rated at 90 and the worst at 10. The median country has a rating of 38. Because governance involves many different activities, a political system can be bad in some parts while good in others. In the United States and in Europe, a city can have corrupt police who accept bribes from drug dealers while teachers offer a high quality of public education in keeping with formal standards. There are big differences in corruption between governments within continents as well as between continents, including countries at similar levels of economic development. The third chapter tests statistically major theoreti- cal explanations of why national levels of corruption differ. Major causes are differences in historical legacies, the extent of contemporary democracy, and foreign aid money that can be diverted to the private beneft of public offcials. Within a national political system, services differ in the opportunities that they offer offcials to demand bribes. This is especially true of grass-roots services that are delivered retail by face-to-face encounters between low-level public offcials and ordinary citizens wanting their services. A police offcer can turn a blind eye to a motoring offence in exchange for cash in hand, but a post offce clerk cannot ensure the prompt delivery of a parcel to a distant city if offered money under the counter. Citizens likewise differ in whether they have contact with public services, thus becoming vulnerable to corruption. Older women, for example, are more likely to make use of health services than are young Preface: Why This Book Is IMPORTANT ix men. The global evidence presented in Chapter 4 shows that on aver- age 17% report paying a bribe for the use of a public service in the past year; 57% receive services by the book; and 26% are not at risk because they have not had any contact with public services in the past 12 months. Since the incidence of bribery varies between services, people who use several public services may have a mixture of experiences, sometimes paying a bribe and sometimes not. The extent to which people experience the effects of bad governance varies both within countries and between countries. Social scientists explain differences between individuals by reference to their socio-economic characteristics, their attitudes, and their experiences, while accounting for cross-national differences by reference to national context. The two approaches are combined in statistical analysis in Chapter 5. The results show that differences in historical legacies and contemporary con- texts are just as important as differences between individuals in determin- ing bribe-paying for public services. Since there are big differences in the extent to which people contact services, we also test whether differences in the life cycle and in gender infuence the likelihood of individuals paying a bribe. Whereas an ordinary person can argue that their personal indiscre- tions are a private matter, it is much harder for public offcials to sepa- rate private and public behaviour. Moreover, even if their behaviour is not illegal, it can still be judged as falling short of informal standards that public opinion uses to assess the behaviour of politicians. In many long-established democratic countries, the payment of bribes is much less common than the incidence of politicians behaving badly. Hence, in Chapter 6, we report the results of a specially designed survey that asked people in Britain, France and Spain their perceptions of politicians behaving badly. It found that only a minority of citizens think most politicians behave disreputably in their private lives or take money for doing favours. The most common form of bad behaviour reported is that of politicians saying one thing to get elected and doing the opposite once in offce. Bad governance challenges standards of how citizens ought to behave, such as voting in elections and trusting their political institutions. Instead of mobilizing people to be good citizens, corruption may demobi- lise people, discouraging them from voting and encouraging distrust in governors. In Chapter 7 we test the impact of corruption on citizen- ship by analyzing nationwide sample surveys in Africa, Latin America x Preface: Why This Book Is Important and formerly Communist countries of Eastern Europe and the Soviet Union. Exposure to corruption has little effect on whether people vote; the major infuences are social characteristics such as age and education. Ordinary people are not dupes or fools. If people see their government as corrupt, they are more likely to distrust their governors. If people see their politicians breaking informal standards, especially making promises to win votes that they abandon once in offce, they are much more inclined to distrust their governors. The theory of open governance is that making transparent what happens in the corridors of power will reduce formal and informal corruption. Public offcials will avoid seeking bribes for fear of being subject to legal sanctions, and politicians will avoid behaving badly for fear of being indicted in the media and convicted in the court of public opinion. For this to happen, there must be stakeholders with the institutions and incentives to hold politicians to account for their actions. In democratic political systems, journalists and opposition politicians are free to do so and law enforcement offcials are prepared to live up to their name rather than serve the interests of corrupt policymakers. However, where corruption is relatively high, civil society institutions tend to be kept weak by governors, and both law enforcement institutions and their offcials are part of a system of corruption. The evidence presented in Chapter 8 shows that opening up governance to popular scrutiny is unlikely to break a vicious equilibrium of bad governance. In countries with high levels of corruption, people know from their own experience what bad governors are doing, but they are also hesitant to challenge powerful rul- ers to stop abusing their offces for private gain. Our study diagnosing the causes of corruption concludes with a chapter recommending ways of reducing corruption. It cautions against recommendations for the adoption of best-practice anti-corruption policies that ignore the historical legacies and contemporary institutions that are maintaining systems of bad governance. It also cautions against one-size-fts-all remedies that do not recognize differences between big- bucks corruption in the purchase of military aircraft and petty bribes that ordinary people pay to local offcials. Because corruption varies greatly between public services, reducing corruption requires making changes in how services are delivered at the grass roots of government, and not just changing leaders and institutions at the top. Nine principles identify actions that governors can take if they have the political incentives and will to do so. The principles do not require Preface: Why This Book Is IMPORTANT xi a change in the hearts and minds of public offcials. They require such things as applying the common-sense principle that people will have no need to pay bribes to public offcials if their posts are abolished. Face-to- face contacts between claimants and offcials can be eliminated by intro- ducing computers that enable individuals to get what they want by flling in online forms that follow procedures consistent with good governance. Onerous laws and regulations requiring permits and licences that give offcials opportunities to collect ‘rents’ (that is, bribes) can be repealed. Such actions not only reduce opportunities for bribery but also increase the effciency and ease of using public services. Even though the piece- meal reform of particular services will not deliver good governance in its entirety, at a minimum it can reduce the impact of bad governance on citizens. Because governance is of immediate concern to large audiences out- side the academic world, we have written this book in language that can be understood by readers engaged in the political process as well as by social scientists. We give examples of corrupt activities in order to put fesh on the bare bones of numbers and abstract concepts. We also pay attention to the fuzziness of standards that are used in formal and informal descriptions of corruption. We present the results of statistical data analysis in clear text, tables and graphics. Since this book is not a Ph.D. thesis, we dispense with a lengthy review of the vast literature of aspects of corruption. We do not need to go into great technical detail comparing different ways in which surveys ask questions about corruption, because we have covered this topic thoroughly in our 2015 book with Palgrave Macmillan, Paying Bribes for Public Services. In researching and writing this book we have drawn on our experience of dealing with governance in Africa, Asia, Latin America and post-Com- munist Europe, as well as in Western Europe and the United States. Richard Rose has been asked to pay a bribe by an urban American politi- cian who dishonestly wanted money in exchange for votes that the poli- tician couldn’t deliver, and offered a bribe in an East European country to co-operate in politically framed research. Caryn Peiffer has had to pay bribes for services in Indonesia and southern Africa. Both have had experience in getting things done in all kinds of places ranging from up the Amazon, to Belfast, southern India, Moscow and Sicily. The fall of the Berlin Wall in 1989 stimulated Richard Rose to design survey questionnaires collecting empirical data about how ordinary people cope with systems of bad governance in conditions of high xii Preface: Why This Book Is Important uncertainty and risk in 17 countries of Central and Eastern Europe and successor states of the Soviet Union. Since 1998 Rose has been a pro bono member of the Research Advisory Committee of the Transparency International Secretariat in Berlin, advising on the design of its survey work. Caryn Peiffer draws on feldwork in Botswana and Zambia per- formed as part of research for a Ph.D. thesis at Claremont Graduate School. Subsequently, Peiffer has done research on problems of governance in Uganda, South Africa, Indonesia and Papua New Guinea and lectured for the Afrobarometer. The preparation of this book has been made possible by a fve-year grant from the British Economic & Social Research Council to examine the global experience of corruption (ES/I03482X/1). Supplementary sup- port for the study of Politicians Behaving Badly has come from Bernhard Wessels of the Democracy Programme of the Wissenschaftszentrum Berlin and from a European Union grant on open governance to the Italian research institute RISSC (the Research Centre on Security and Crime), Padua. Papers about corruption have been presented at seminars and conferences in London, Oxford, Sussex, Berlin, Brussels, Cape Town, Gothenburg, Oslo, Paris, Venice, Warsaw and Washington. We owe particular thanks to the Global Corruption Barometer team at the Berlin Secretariat of Transparency under the leadership of Dr. Robin Hodess and to Coralie Pring, Manager of TI’s massive data bases. Ohna Robertson was prompt and accurate in going through the many revisions of the text, tables and fgures in this book and Karen Anderson’s copyediting helped make this book clearer for the general reader.

Glasgow, UK Richard Rose Bristol, UK Caryn Peiffer About the Book

More than 1.8 billion people pay the price of bad government each year: a bribe to a public offcial. This is because bad governance is much more widespread than good governance, and corruption is a major cause. In developing countries it affects social services such as health care and education, and such law enforcement institutions as the police. When public offcials do not act as bureaucrats delivering services by the book, people can try to get them by hook or by crook. In Western democracies, people normally get what they want through processes of good governance. Corruption also takes the form of violating informal standards. Politicians mislead voters, saying one thing to get elected and doing the opposite once in offce. Large businesses exploit loopholes in laws to avoid paying billions in taxes and make extra charges in contracts for military equip- ment and building infrastructure. The book’s analysis draws on unique evidence: a data base of sample surveys of 175,000 people in 125 countries in Africa, Asia, the Middle East, Europe and North and South America.

xiii Contents

1 Setting Standards for Good and Bad Governance 1 1 What Corruption Is About 2 2 Countries Mix Good and Bad Governance 10 3 Evidence of Corrupt Governance 15 References 18

2 Getting What You Want from Governance 21 1 Satisfcing by the Book, by Hook or by Crook 22 2 The Health of the Body Politic 28 3 Comparing Explanations of Corruption 32 References 36

3 Exploiting National Government 39 1 Corruption at the Top 40 2 Measuring National Corruption 44 3 Explaining National Differences in Corruption 50 References 58

4 Exploiting People at the Grass Roots 61 1 How People See Public Institutions 62 2 How Public Services Differ 65 3 Contact Varies by Service 68 4 Experience of Bribery Varies Too 71 References 81

xv xvi Contents

5 Explaining Who Pays Grass-Roots Bribes 83 1 Theories of Who Pays Bribes 84 2 Both Levels Matter 87 3 Differences Between Services 93 References 104

6 Politicians Behaving Badly 107 1 Tolerated and Shameful Behaviour 109 2 The Extent of Bad Behaviour 114 3 Punishment in the Court of Public Opinion 121 References 125

7 The Impact of Corruption on Citizens 127 1 Theories of the Impact of Corruption 129 2 Corruption Has Little Impact on Voting 132 3 Corruption Gives a Big Boost to Distrust 136 References 143

8 Making Government Transparent 145 1 Conditions for Transparency 147 2 Stakeholders in Open Data 151 References 164

9 Reducing Corruption 167 1 Changing Institutions 169 2 Targeting Vulnerable Services 174 3 Changing Services at the Grass Roots 177 4 Implications for Better Governance 183 References 185

Appendix 187

Index 197 About the Authors

Professor Richard Rose is a pioneer in the comparative study of public policy through quantitative and qualitative analysis. He has given seminars in 45 countries across Europe, North and South America, Africa and Asia, and his writings have been translated into 18 languages. He is a Fellow of the British Academy and founder-director of the Centre for the Study of Public Policy. Dr. Caryn Peiffer researches problems of governance in developing countries across Africa and Asia, using quantitative, qualitative and exper- imental methods. She is a Lecturer in International Public Policy and Governance at the School for Policy Studies, University of Bristol, UK.

xvii List of Figures

Chapter 2 Fig. 1 Global consensus bribery is wrong 27 Chapter 3 Fig. 1 Big variations in corruption within every continent 47 Chapter 4 Fig. 1 Perceptions of corruption in institutions 64 Fig. 2 Contact with services high in every continent 69 Fig. 3 Bribery varies between and within continents 72 Fig. 4 Consistent payers of bribes the exception 75 Chapter 5 Fig. 1 Impact of signifcant infuences on paying bribe 92 Chapter 8 Fig. 1 Why corruption not reported 161 Appendix Fig. A.1 Percentage paying bribe by country 188

xix List of Tables

Chapter 1 Table 1 Combining legal and informal standards of corruption 6 Table 2 Corruption surveys analyzed in this book 17 Chapter 2 Table 1 Getting things done by hook or by crook 26 Chapter 3 Table 1 Contextual infuences on national corruption (dependent variable: National Corruption Perceptions’ Index ordinary least squares regression) 54 Chapter 4 Table 1 Contact varies by public service 70 Table 2 Bribery for services after controlling for contact 74 Chapter 5 Table 1 Combined individual and institutional infuences on bribery 88 Table 2 Comparing infuences on contact and bribery by service 98 Table 3 Heckman analysis of infuences on contact and bribery 100 Chapter 6 Table 1 Popular perceptions of Politicians Behaving Badly 116 Table 2 Partisan infuences on perceptions of politicians 120 Table 3 Punishments for bad behaviour 122 Table 4 Punishments if politicians say one thing, do another 124

xxi xxii List of Tables

Chapter 7 Table 1 Corruption has little impact on going to vote 133 Table 2 Corruption increases distrust in government 137 Table 3 Breaking informal standards in Western Europe 141 Appendix Table A.1 Chapters 3, 5 and 7: Aggregate measures of national context 191 Table A.2 Chapter 5: Individual measures 192 Table A.3 Chapter 7: Afrobarometer variables 193 Table A.4 Chapter 7: LAPOP variables 194 Table A.5 Chapter 7: EBRD variables 195 Table A.6 Conventions in reporting data 196