Corruption Basics

Abstract

This chapter runs through some key concepts and explains the choice of sectors as the unit of analysis, as well as explaining how to identify and to rank core issues.

Definition

Corruption is an umbrella term that is wildly overused, often to the point of being a synonym for everything that is bad about a country, an organisation, a company, a person. This generic (mis-)use of the word is obviously not helpful.

The most widely used simple definition, ‘the abuse of entrusted power for private gain’ (usually attributed to the World Bank and/or Transparency International), is good enough for people who are not anti-corruption professionals, even if much debated in academic circles. This definition applies whether your organisation is the perpetrator or the victim; whether one or more people in your organisation are using their positions either to enrich themselves or to benefit others at the expense of the organisation or the people it serves; and whether one or more people in the organisations you interact with—customers, regulators, government, suppliers—are abusing their position to extract gain from your organisation.

The ‘abuse of power’ definition is deliberately broad, acknowledging that the corruption might be entirely in the private sector or the public sector, or between public and private. For example, the role of the private sector in corruption is ambiguous and at times contradictory. As one anti-corruption expert puts it: ‘The private sector cannot be generally treated either as a victim of corruption or as a perpetrator. It can be one or the other or both, depending on sectors and countries. The private sector is often a victim of some types of corruption and is often vocal against it, and at other times it is primarily a beneficiary, and drives corruption through links with bureaucrats and politicians’ (Khan et al. 2016).¹

Delving Below Generalities

Corruption as a general term may have been overused, but on the other hand, it’s perfectly reasonable that corruption be the umbrella term for a set of items that are taxonomically in the same domain but differ in their specifics. To take an ornithology example, both condors and wrens are birds, but no one would have any difficulty distinguishing between them. Alternatively, to use the ‘corruption is a cancer’ analogy as frequently applied to corruption, cancer always describes abnormal and un-controlled cell growth, but encompasses well over a hundred different types (Heywood 2018: 6).

Instead, there has been a tendency in discussions about corruption to develop binary distinctions (grand/petty, political/administrative, systemic/sporadic, individual/institutional, extortive/transactive, need/greed). The World Bank (2023) gives a three-part taxonomy:

Corruption comes in different forms. It might impact service delivery, such as when an official asks for bribes to perform routine services. Corruption might unfairly determine the winners of government contracts, with awards favouring friends, relatives, or business associates of government officials. Or it might come in the form of state capture, distorting how institutions work and who controls them, a form of corruption that is often the costliest in terms of overall economic impact. Each type of corruption is important and tackling all of them is critical to achieving progress and sustainable change.

In this book and in our general approach, we believe that corruption can best be addressed, and acted upon, when the types of corruption are defined issue by issue. An ‘issue’ is a specific problem, not a broad category like grand/petty, political/bureaucratic, institutional/individual and so forth. We try to be specific about the corruption type so that you can start to direct remedial actions against it. So, ‘corruption due to a non-meritocratic civil service’ would not be a useful corruption type because it is so broad. Similarly, ‘collusion’ is not a helpful description of a corruption type because it is so general.

In contrast, we break down corruption into more detailed and therefore more manageable manifestations. How do we do this? First, we separate corruption issues that are different from one sector to another by treating each sector differently. For example, in police organisations, there can be corruption issues at a high political level, such as allowing organised crime in specific areas or ensuring that independent oversight is permanently weak; corruption in the management of the police service, such as improperly promoting some officers or permitting poorly performing officers to stay in lucrative positions; corruption and lack of integrity in personal behaviour, such as evidence tampering or demanding illegal fines and so on. Similar differentiation exists in every sector: thus, the corrupt police behaviour examples above are quite different from pharmaceutical-related corruption types within the health sector, which again are different phenomena from the corruption related to passing school exams within the education sector.

Second, although some of the corruption issues are clearly sector-specific, as discussed above, others that seem to be generic also have significant differences from one sector to another—for example, the corrupt diversion of salaries en route from a government ministry to its employees, or promotions that are driven by corrupt payments not by merit. Whilst these are certainly widespread phenomena, not specific to any sector, the modalities by which the specific instance of corruption takes place and is facilitated are usually very different from one sector to another. The needed reforms are similarly likely to be different from one sector to another. Our experience is that this is true for all the ‘generic’ types of corruption, whether it be corruptly influencing policy, favouritism in appointments and promotions, small-scale facilitation payments and so forth.

Later, in Chap. 4, we provide more detail on how specific corruption issues in any particular context are identified, prioritised and evaluated.

The Unit of Analysis

This book is about addressing and/or preventing specific corruption issues that impact the performance of an organisation in any given sector. Whether the issue is a cabal of people in the human resources division who are corruptly putting poorly qualified people into key roles, or the falsification of water contamination data so as to avoid remedial expense or regulatory penalties, we can make progress by focusing at this level of detail in order to manage, or prevent, or minimise, or even solve their effects on performance. The unit of analysis is therefore the given sector in which particular corruption issues are impacting performance.

Working at this detailed level is NOT the norm. In most of what you read about corruption, the standard unit of analysis is the nation-state. This national focus—reflected in corruption indices that rank countries globally and recommended steps for change in country x or y—makes some sense for politicians, for political economists and for those challenging the status quo, like Transparency International, given a state’s dual claim to sovereignty and legitimate authority. But such a macro-level focus is of little or no use to those working in, or leading, organisations who desire to reduce the constraints that specific corruption issues may be placing on their performance.

The marked contrast between a national-level focus and our proposed sector-based focus when addressing corruption is illustrated in the two diagrams below. An influential framework for anti-corruption, Transparency International’s National Integrity System (NIS) approach reflects a belief that corruption can best be tackled in a holistic and systemic way. Figure 2.1 shows all the 13 key national institutions elements identified by TI as ‘pillars’ that together underpin this anti-corruption approach.

Fig. 2.1

The pillars of a National Integrity System. Excerpted from Transparency International 2011, ‘National Integrity System background rationale and methodology’. At https://www.transparency.org/files/content/nis/NIS_Background_Methodology_EN.pdf

The NIS entities are overwhelmingly public sector ones; just one pillar marked ‘Business’ connects directly with the private sector. As we discuss in Chap. 4, this public sector focus does not offer a realistic reflection of how today’s world works. Furthermore, the private sector, if given the right incentives, is also where much of the ability to take remedial action resides.

Figure 2.2, on the other hand, demonstrates how using a Sector approach to the unit of analysis leads to a quite different, and we think more useful, ecosystem. Clearly, a sector approach is ‘one level down’ from the national approach, which improves the ability to make a difference. Secondly, though still complex, all the elements are interrelated through sharing the same professional domain; in Fig. 2.2 we show in the first column the various different entities that comprise a typical sector. Then, in the second column, we give specific examples of each type of entity in the ecosystem from one particular sector, health.

Fig. 2.2

Possible units of analysis when addressing corruption sectorally

The unit of analysis remains always within the sector, increasing in scale from individual hospital processes, such as the provision of excessive medical care as a way to benefit health providers or the corruption within an individual hospital, up to health corruption issues that prevail internationally, such as excessive drug prices.

In recent correspondence with Professor Michael Johnston, one of the most respected members of the world anti-corruption community, about organisations taking action against corruption he reinforced this point:

Telling people to forget about whole-country measurements and rankings, and instead to focus on sectors and specific problems within them, is essential advice. My experience with a variety of audiences is that you can’t tell people that sort of thing too often as, without constant prodding and reminders, they’ll drift back toward more-corruption-vs-less-corruption-full-stop, and toward trying to bite off the entire problem at once rather th’n breaking it down in […] sectoral and operational ways.

Identifying Core Issues: The Merits of Peer Voting

Experts in anti-corruption have, ironically, strengthened the over-emphasis of corruption at nation-state level by amalgamating all forms of corruption into a single value that can then be measured within a jurisdiction. The best-known of these is Transparency International’s Corruption Perception Index, or CPI. A discussion on the validity of such single measures is beyond the scope of this book; suffice to say, there are huge and ongoing arguments within the anti-corruption world on the merits or otherwise of such indicators (for an accessible overview of some of the key issues, see Mungiu-Pippidi and Fazekas 2020). If you plan to use this book to improve the performance of your organisation, please stop thinking NOW about single, country-focused indicators of corruption!

For our purposes, the measurement tool that we recommend that you use as a base tool is peer voting ranking the relative importance of specific corruption issues using the collated perspectives of people working in or with an organisation. To do so, we list the more significant corruption issues that we think may be impacting performance and then ask the assembled group to rank them. Many different rankings can be done. Which are the issues that are most impacting performance? Which are the issues that are most damaging to the morale and reputation of the organisation? Which are the issues that can most easily be solved? With only limited resources, what is the rank order of the issues worth working on. In environments where the political risk is high, which are the issues that will be worthwhile, yet also safe, to work on?

Our experience is that it is realistic, and even invigorating, to involve groups of staff and practitioners in such peer voting exercises. Below you will see one such application. The sector in question was defence—both the military and the Defence Ministry—and the country was Taiwan. The opinion group was 100 Taiwanese military Colonels plus a sample of the top leadership of the military and the Defence Ministry of Taiwan. There were 29 defence corruption issues that were being ranked by this group for the damage they were doing to Taiwan’s defence capabilities. As can be seen, secret budgets followed by concerns about single sourcing in procurement, emerged at the two top risks and provided a potential focus for targeted action. Further detail on the peer voting approach is provided in Chap. 5 (Fig. 2.3).

Fig. 2.3

Quantification of corruption issue importance. Example from Taiwan of peer voting to identify the top ten defence corruption risks. Transparency International. From Pyman 2021 Curbing Corruption in Defence and the Military. https://curbingcorruption.com/wp-content/uploads/2021/06/210618-Curbing-corruption-in-Defence-Military.pdf