Approaches to anti-corruption

Before I write about the Integrity story, allow me to express my deep sadness about the passing of Marc Yang. Marc was one of the ‘three kings’ who encouraged me to create ECCP Cebu 25 years ago. Without Marc, Justin Uy and Benson Dakay, it would not have happened. With Marc’s personal engagement in guiding us and encouraging others to join us, ECCP Cebu would not be what it is today.

Thank you Marc for what you have done for us; we will not forget you!!

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There is a widespread consensus that incentives for citizens, business people, politicians and public servants must be created that discourage bribery. It should be turned from a high profile and low risk strategy to a risky activity that promises only little gain. But what are the risks that corrupt actors are exposed to? And how can we modify them? There is little doubt that severe penalties and high risk of detection are crucial.

 But can such an approach be successful when prosecutors are not independent, judges poorly paid, lobbyists masters of camouflage, businesspeople in search of legal loopholes and politicians willing to offer benefits for a price?

Given the difficulties of fighting corruption, the chances for good governance frequently appear rather poor, particularly when observing how costly it may be to pay high salaries in the public sector and maintain necessary control mechanisms.

There is a strong correlation between poverty and corruption. Rich countries such as Luxembourg, Norway, Denmark, Germany or the US perform much better than poor countries like Zimbabwe, Afghanistan or Myanmar. However, countries endowed with raw materials such as Saudi Arabia, Equatorial Guinea and Russia are rich but marked by higher levels of corruption. Other countries like Chile, Jordan or Botswana are rather poor but still successful in containing corruption. Can they teach us a lesson?

Data on convictions related to fraud are also illustrative (even when recognizing that definitions and aggregation may differ from one country to another). More convictions suggest that a higher level of deterrence is achieved. However, Chile is different: The number of convictions there is rather small relative to the country’s success in containing corruption.

The principle of the ‘invisible foot’ (other than the well-known invisible hand) may give rise to hope. Actors who are willing to engage in corruption often end up being the victims of betrayal. They may fail to profit from bribery and lose their reputation for honest business. Abstaining from corruption may then be motivated by self-interest. Temptations to give or take bribes may be rejected not due to moral concern but because of the inherent uncertainty that surrounds such deals.

We in the Integrity Initiative start convincing companies and government officials to sign an Integrity Pledge and to commit to a number of actions that will ensure ethical ways of doing business and dealing with government. Lately, we are realizing that the employment of Compliance Officers is super important. Subjecting individual decisions to peer review is a standard organizational method. However, having a second, independent person supervise important decisions is thought to ensure that a control mechanism is in place. Bribing to, it seems, is more demanding than bribing just one decision maker.

In conclusion, we have to realize that corruption is not only reduced by deterrence such as provided by a strict criminal code and a high risk of detection. It is also undermined by the risk that bribes may not be reciprocated.

Why is Chile successful in fighting corruption? One explanation might be its described policy of penalizing bribe-giving but not bribe taking which makes it attractive to take bribes without reciprocating them!

What do you think? Send me your views at [email protected]