Corruption Education: Causes of Corruption

As a sequel to my previous column on SMEs and Corruption, I would like to further pursue the discussion on this social ill.

In the training against corruption for SMEs handled by the Asian Institute of Management, I learned that many indeed of our Small and Medium Enterprises have become prone if not vulnerable to corrupt practices. If extortion or bribes are not asked of them to have their papers or transactions processed, they themselves offer a “token” amount to ensure that their needed permits are moved and acted upon.

Why do the SMEs become susceptible to this practice? What causes them to succumb to under-the-table deals?

As mentioned, time is one of the elements that causes one to take shorter ways. And if having to pay a facilitator to get all your papers in order in the needed moment, then perhaps it becomes worth the investment to commission a facilitator. Now I am using the word “facilitator” and not “fixer”.  

Facilitators are legitimate aides from an agency whose main job is to facilitate transactions. They fall in line for you, list the requirements and even pay what is needed for you with a corresponding agency fee. These agencies from where the facilitators come from are legitimate, registered businesses who are recognized and who pay taxes. They will require a service fee depending on the complicacy of the transaction and they can give an official receipt for the contracted price.

The fixer could be any Tom, Dick and Harry who also falls in line and works your documents for you, asking for a fee every step of the way. He or she is not registered, and does not pay taxes. Their cost for services vary depending on who they also know in the “inside” and how many and how much each person in the line may also secretly require. The fixer’s credentials are dubious that is why you still end up waiting for instead of leaving them with your documents. They may cut the waiting time but you run the risk of losing your papers as you watch them pass your paper from one window to another or from one hand to another.

The climate that promotes corruption according to Robert Kiltgard, an anti-corruption guru is when there is a monopoly over a good or service. There is no competition. Thus people are forced to simply take the service of a single provider (as in some school textbooks and uniforms), there is discretion or the person in authority has full rule over who can or cannot receive the goods or services, and the same person is not audited or is not accountable to anyone so he can call the shots in everything. There are no controls.

According to the manual of the Asian Institute of Management, “Against Corruption,” In this kind of situation, the environment of business is threatened by “unclear, complex and frenquently changing laws and regulations” as what is happening in some processes where the requirements change once all the items in their “list of requirement to process a permit…” is complied. 

The book further states that the “lack of transparency and accountability” or the lack of a body to evaluate or to set a criteria to identify corrupt transactions or the people inciting such practice slackens if not diminishes the accountability of the unnecessary “delayer”. No clear rules to punish are in place. There is usually a way out.

Low wages of public employees is also put to blame for the weakness to corrupt acts, though this is not an excuse. Inadequate, inconsistent and unfair enforcement of laws and regulations also allow for more room to exercise fraud in the lower echelons to which our SME processors are most likely to encounter.

In order to counter malicious deals, the SMEs are encouraged to improve on their products and their reputation.Having products with a competitive advantage can open the business to be part of the supply chain that can permeate a monopoly.  

SMEs should NOT succumb to bribes. Once a bribe is given, it is expected in the next turn. The savings incurred in keeping the business in ethical standards can be imputed into the business itself.  

SMEs should hire and retain principled employees. It is noted that businesses who have ethical values also have employees with high morale. A good reputation increases the economic value of the company. Being a business of good reputation also secures its protection against ill solicitations. (FREEMAN)