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Fighting Corruption on the Transdnistrian Border: Lessons from Failed and New Successful Anti-Corruption Programmes

  • Black Sea Regional Studies
  • Published:
Transition Studies Review

Abstract

In 2007, both Moldovan and Ukrainian authorities took firm steps to reduce corruption along the Transdnistrian border. This paper—aimed mainly at anti-corruption practitioners and scholars in public administration—discusses the background and underlying principles guiding the anti-corruption work being adopted by both governments in order to facilitate discussion about optimal anti-corruption programme design. This paper presents a set of tools used during the planning phase of the anti-corruption programme—outlining the methodology used to assess the extent of corruption on the Transdnistrian border, the problems of legislative transplants, a “contract test” for defining corruption offenses, a method of risk analysis, and a model of optimal anti-corruption programme organizational design.

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Notes

  1. These data, like other data such as Transparency International’s cross-country index of corruption perceptions represent a computed summary measure from several perceptions surveys. While the World Bank estimates use more complicated statistical procedures, these numbers still only represent levels of corruption as perceived by survey respondents. See Kaufmann et al. (2006) for more on the methodology. See Galtung and Stamford (2003) for more on the strengths and weaknesses of various empirical methods of measuring corruption.

  2. As a contribution to the anti-corruption literature, the material in this paper naturally does not represent all the considerations of the Transdnistrian programme or suggests that the advisors slavishly followed theory in designing the programme.

  3. Due to the difficulty in estimating the volume or value of this trade, such traffic is not considered in this paper.

  4. Many transliterations of Transdnistria are widely used, including Transnistria, Transdniestria and Pridnestovia (as this area is sometimes referred to as the Pridnestovian Moldovan Republic or PMR).

  5. The CISR (2003) estimates that, given the economic sanctions being imposed on Transdnistria, up to 50% of officially reported GDP is involved in the black market. In 2005, according to the same source, GDP in the region was $500 million.

  6. These schemes are both variegated and often complex. One example of such a scheme is the illegal transport of goods to duty-free zones in Moldova were these products are labeled as duty-free production and then re-exported to their original country of origin (often Ukraine)! The EUBAM website (http://www.eubam.org) provides this and other information.

  7. For an unbiased and highly readable analysis of Transniestrian situation (and the possible responses by the EU and the EUBAM, see International Crisis Group (2006). See Almond (2006) for another critique of the media assertions of high rates of criminality and smuggling in the Transdnistrian region.

  8. The canonical definition of corruption involves the “use of public power by a government official for a private gain”. A defence of this definition is presented later in this paper.

  9. In practice, several other government departments may be present at the border, including health and sanitary inspections and veterinary services.

  10. Several USAID financed reports attempt to assess the level of corruption in Ukraine (Spector et al. 2005; Black and Blue 2005) As the report authors are known experts in the anti-corruption field, the abstract, generalized and highly jargon-laid nature of these reports can probably be attributed to the funder (USAID) See SIGMA (2006) for a comprehensive governance assessment. SPAI (2002) provides an assessment of Moldova’s anti-corruption programme.

  11. According to a survey taken in 2003 under the Partnership for a Transparent Society Program, 75% of respondents believed corruption to be very widespread in the Ukrainian central government, while 62% indicated they had actual personal encounters with corrupt officials over the previous 5 years. This corresponds roughly with perceptions surveys from other EU countries. For example, Rudzitis (2002) cites survey evidence showing that 73% of survey respondents thought the Lithuanian customs service was dishonest but only 5% having actually paid a bribe to the survice. Kouzmina (2006) provides data from the Russian Federation showing that customs clearance delays are roughly on par with those of Ukraine and Moldova.

  12. These data contrast resoundingly with data from most Central and Eastern European countries. For example, in recent data looking at corruption perceptions in Romania, the largest number of respondents (66%) thought that in the customs service, “all or almost all officials in the agency are corrupt”—as opposed to 55% for police and 54% for the health service.

  13. See World Bank (2005) for estimates for the bribe tax in Ukraine.

  14. The higher level of bribes for Moldova, which is a much poorer country than Ukraine, may seem unusual at first. However, the higher level is due to the much larger absolute level of imports into Moldova from Ukraine. As a check, the estimated levels of corruption affecting Moldova and Ukraine were compared with other corruption estimates related the level of overall corruption to GDP—see Carasciuc (2004) for Moldova and Gorodnichenko and Peter (2006) for Ukraine.

  15. The calculation involves the most basic math. A probability (p) of an event, such as someone paying a border guard officer to allow an illegal crossing across a green border can be estimated, however, rudely. The estimated amount of money involved in a corrupt transaction can be denoted as X, multiplied by the probability of the occurrence p results in a risk of a single unreported event as pX. For the reader with a background in mathematics, the computation of the total yearly risk is equal to the probability of an occurrence of corruption at any particular site is Σ j Σ i (p i X i ) where i = number of sites and j = the number of time periods or trails.

  16. For a similarly minded (though more technically complicated) calculation of the size of bribery in Ukraine, see Gorodnichenko and Peter (2006) who estimate the total value of bribery in Ukraine at between 460 and 580 million USD.

  17. The relationship between corruption and contraband is complicated—with several officials noting that no direct evidence of corruption related to contraband can be found: http://www.rferl.org/featuresarticle/2005/10/05f3742a-1c2d-4e1a-a57f-0e9780549795.html.

  18. Heroin Market value figure: United Nations 2005. World Drug Report. Vienna: Office on Drugs and Crime, June 2005, p. 132, http://www.unodc.org/unodc/en/world_drug_report.html.

  19. Sources about contraband in Moldova provide much less reliable results. According to the UNODC (2005), roughly 0.1% of the Moldovan population uses cocaine (as opposed to 0.8% of the Ukrainian population) Given a population base of 4.5 million people, the average estimated number of people, using cocaine equals 45,000 individuals.

  20. The economic distortion caused by a bribe tax naturally depends on the level of other taxes in the economy. The estimate provided in the text signifies that as the effective overall tax rate on Moldovan enterprises increases from 20 to 25%, the long-run value of goods and services produced in the economy is expected to fall by 20%. Because this is not a treatise in introductory macroeconomics, we do not specify further how these results are calculated.

  21. Rose-Ackermann (1999) represents a useful vade-mecum for the economic rationale behind corruption.

  22. These normal consumer goods are contrasted with contraband goods. The previously given formula—Σ j Σ i (p i X i ) where i = number of sites and j = the number of time periods or trails—can be used as a micro-economic check on this, fundamentally macroeconomic estimate.

  23. The bribe tax, and the undervaluation estimate, assumes that the civil servant knows the true value of goods. Such an assumption is obvious because if the civil servant did not know the true value, he or she would have accepted the value claimed by the trader and no need for a bribe would arise.

  24. Indeed, the social harm is higher and can be calculated roughly as the value of earning lost for lives taken by guns and drug addiction.

  25. Indeed, the National Security and Defense Council of Ukraine has elaborated an Action Plan with monitoring mechanisms, actions to prevent corruption focused on the finance of political activity and the approximation of legislation to EU standards (which in this case revolves around compliance with the OECD and CoE conventions).

  26. For the reader unfamiliar with administrative procedure, national laws passed by the parliament—and in some countries by Presidential degree—often give general instructions. Departments are subsequently responsible to devising internal regulations aimed at implementing these broad legislative projects.

  27. Unlike other expert reports, this report will try to avoid to the extent possible a discussion of regulations—preferring to focus on actual work practices for two reasons. First, as noted by a recent OECD evaluation, “while Ukraine has a rich array of legal instruments and broad strategic documents, efficient coordination, implementation and enforcement remain insufficient” (2) Second, specific regulatory deficiencies and recommendations for improvement are being made directly with the counterpart agencies.

  28. A number of authors bemoan the lack of success in anti-corruption work. See Kaufmann (2006) for an empirical treatment of the anti-corruption industry’s progress.

  29. Michael and Bowser (2005) cover the problems with the OECD’s work in the area as part of its Anti-Corruption Network for Transition Economies. Most advisors in the region have indicated that the OECD’s working methods, in the cover of the Network, have resulted in expensive and ineffective assessment. The work of the Network will certainly either be devolved to SIGMA (also in the OECD), to the EU or discontinued.

  30. EU Member States in adopting the acquis communautaire, ratify legislation aimed at fighting corruption. However, the acquis only requires EU Member States to ratify the OECD Convention on Bribery of Foreign Officials in International Business Transactions and the Council of Europe Conventions (ETS 173 and ETS 174 which establish criminal and civil liability for corruption offences).

  31. While the adoption of the criminal sanctions embodied in the OECD Convention may negatively impact on Ukraine and Moldova’s ability to detect and prosecute corruption cases, the existence of the Convention itself will certainly help both governments fight corruption. Under the OECD, businessmen from OECD countries who bribe Ukrainian or Moldovan officials are committing a crime in their home countries.

  32. The weaknesses in the judicial systems of both countries is covered in the literature previously cited.

  33. In most EU countries, the accuser of a corruption offense has the burden of proof. In the UK, the burden of proof is reversed—namely the civil servant has the duty to show he or she did not participate in corruption. While the reversal of the burden of proof for allegations of administrative corruption are not appropriate to Ukraine and Moldova, the UK experience shows that reducing the required standard of proof may serve to deter corruption.

  34. See Michael (2004b) for a further description of the audit culture and its impacts on public sector service delivery.

  35. Foreign aid to Moldova and Ukraine aimed at fighting corruption will significantly distort the incentives for right-regulating against corruption as both governments will be paid to implement a number of punitive measures against corruption which will make the programme benefit in the short-term higher than the cost imposed by efficiency reducing regulation.

  36. For an easy to understand instruction sheet for implementing a risk analysis approach in customs, see World Bank (2005).

  37. Current data, based on 100% inspection is probably unreliable due to poor inspection quality concomitant with large-scale checking.

  38. For more on this approach, see UN (2004).

  39. While not discussed in this article, the careful reader will immediate observe that a hazard function for corruption for each civil servant can be roughly estimated by the sum of the expected risks of legal infraction multiplied by the rent (or bXt as discussed previously).

  40. Because of the increasing adoption of New Public Management concepts in government, public audit is seen like private audit. In a private company, an audit department must frequently show that its activities result in a greater cost reduction or reduction in business risks than the audit ties up in staff and other costs. In the same way, an internal audit in a public sector organization should aim at creating more public value than it costs to conduct the audit.

  41. See Anderson and Gray (2006) for an overview of the successes and failures of anti-corruption over the last 10 years.

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Authors and Affiliations

  1. Linacre College, Oxford, UK

    Bryane Michael

  2. EU Border Assistance Mission to Moldova and Ukraine, Odesa, Ukraine

    Mariya Polner

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  1. Bryane Michael
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  2. Mariya Polner
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Correspondence to Bryane Michael.

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Michael, B., Polner, M. Fighting Corruption on the Transdnistrian Border: Lessons from Failed and New Successful Anti-Corruption Programmes. Transit Stud Rev 15, 524–541 (2008). https://doi.org/10.1007/s11300-008-0029-y

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