TYPES OF CORRUPTION

1) Administrative "Petty" Corruption

It is the most common kind of corruption, well known to all who live in corrupt countries, north and south, east and west, is administrative corruption – payments made to influence the administration of existing rules and regulations. “Petty Corruption” (the term was created along the analogy of “petty crime” by George Moody-Stuart of Transparency International UK) is, as described by Inge Amundsen of The Christopher Michelsen Institute (Norway), as: corruption in the public administration, at the implementation end of politics. Petty corruption has also been called “low level” or “street level” to name the kind of corruption that citizens will experience daily, at times, in their encounter with public administration and services like hospitals, schools, local licensing authorities, police, taxing authorities and so on.The consequences of bureaucratic or petty corruption are severe. Bureaucratic corruption is a predicament to private business as well as to any citizen’s everyday dealings with state officials. It excludes many people from public services and increases their cost, it obstructs, impedes and skews public spending, it makes markets irrational, and it makes the public administration and the entire political system illegitimate in the eyes of the population. The word “petty”, if we are not careful, may lead us to undervalue this kind of bureaucratic corruption. There are three important elements to bureaucratic corruption that make it very important, however: • The sums of money, even when paid in small amounts for bureaucratic corruption, can be enormous when aggregated. Shakedowns by the police, or by those operating protection rackets with the knowledge of the police, on small shop-keepers, on small taxi drivers, on trucks taking produce to market can mount up into very large sums of money. When the added levies on various forms of licenses are added to this, the amounts are seriously significant. While one shop-keeper has paid perhaps only 50c a day, the take from all shop-keepers in one town in one month, will likely be larger than the salaries of the police stationed in that town. When this is multiplied by all the towns, and all the months in a year, we are dealing with a shadow economy that is very large indeed.

• The poor are the worst hit by bureaucratic corruption. If the ordinary cost of getting your child into school, or getting attention in the clinic, or getting connected to a water pipe is difficult for a poor person to pay, it then becomes impossible for a poor person to pay when the cost has been jacked up illegally. The end result, then, is that the child does not get into school, the sick person is untreated, and the family continues to collect open dirty water. It is not a question for most poor people of clever budgeting, or of deciding between different options – poor people have no extra disposable income when illegitimate fees are imposed, and simply cannot pay.

• Bureaucratic corruption does not stop at the person who is paid off. Illegal and illegitimate levies often support the power structures up the chain of command in a “pyramid of upward extraction”. Thus not only does the individual policeman receive income, but also a proportion of what he receives is passed on to his boss, and his boss, and his boss. This has a number of results: firstly this means that the income of senior staff in the government bureaucracy is augmented by petty corruption, and that any cancellation of that income will be strongly resisted by powerful people; secondly such income may sometimes be used to augment the budget of the institution over and above what it receives from the treasury – and so the cancellation of such income would mean that such income had to be found elsewhere; thirdly the collection of such petty levies is not simply at the discretion of the individual policeman, or tax collector, or clinic worker, or school-teacher – that person may have strong pressures on them from their bosses to collect such fees. The collection of such fees may be a necessary part of what is expected from anyone who holds that job. The cycle may have started long ago with the lower level official “buying” his job from his boss, with the understanding that a portion of the illegal fees are siphoned upwards, and that this is not to be disclosed.

Petty corruption thus is not so petty when we consider the huge amounts that are manipulated in aggregate, the way that it underpins the effective take home pay of government officials, the way that it establishes a patronage network in which job security rests on a willingness to continue corrupt practices, and to keep quiet about them.

CORRUPTION AWARENESS FORUM

2)Grand Corruption

The term “Grand Corruption” was also created by George Moody-Stuart of TI UK and refers, in the words of Inge Amundsen, to: Political or grand corruption takes place at the highest levels of political authority. It is when the politicians and political decision makers, who are entitled to formulate, establish, and implement the laws in the name of the people are themselves corrupt. (...) Political decision makers use the political power that they are armed with to sustain their power, status and wealth. It is when policy formulation and legislation is tailored to benefit politicians and legislators.

The important thing about political or grand corruption is that, in many cases, no one is breaking the law – what they are doing is controlling or making the law for their own purposes. It reveals therefore a breakdown in the usual checks and balances of a good governance system. Political or grand corruption allows an individual or a group of individuals to formulate and pass laws to their own advantage without any system of checks and balances to impede them. It also allows them to disregard laws that might exist. “Conflict of interest” as an important principle, is therefore disregarded. Political corruption can skew and distort political institutions, the rules of procedure, and the ways in which decisions are made (the adjacent box about the USA illustrates this).

It results in very far reaching problems for the economies of most countries because what would normally be decisions that are made to benefit the state are made to benefit an individual or group of individuals. The cost of a particular commodity is increased because an individual is given the monopoly rights to import it, or trade in it, or export it. Extra levies are legally enforced on important products which, of course, change the market situation of that product.

In many cases corruption is assumed to be a result of people breaking the law or going outside the law to carry out their corrupt practices. Political or grand corruption is when those in charge of making laws and policies are themselves corrupt and are able to legally enforce laws and policies that are in their own narrow interests and against the interests of the state and its citizens. This is not necessarily known by the citizens – the costs of products and services are accepted as a fact of life without realizing that specific decisions have been made by self-interested individuals. This means that any popular attempts to limit such corruption may have to start with educating the public about the processes by which the injurious laws and policies are made.

It also means that the corruption goes to the center of the political establishment. We are not talking about a few powerful people doing something that they know they should not do, and who disobey accepted standards and rules. We are dealing with something systematic and intentional. As Inge Amundsen says. Widespread and systematic political corruption may be a basic mode of operation of certain regimes. corruption is one of the mechanisms through which authoritarian power holders enrich themselves. it is a deliberately applied practice. It can go to such lengths, as in Zaire under Mobuto, as to question the usually considered basis for a state to exist

We are used to a state whose minimal functions are to preserve boundaries, uphold public order and security, collect taxes, and provide services to the people. Depending on the nature of the leadership we can find states as extreme as Zaire under Mobuto through to states in which a relatively few politically well-connected and influential individuals are able to extract from the state more than their fair share through controlling the ways in which laws and policies are made.

Transparency International has recently provided a league table of the really large offenders in this realm of grand corruption: it estimates the amount stolen from the state by a number of ex-Presidents.

3) State Capture

“State capture” is a term that has been coined by the World Bank in its book “Anti-corruption in Transition – a contribution to the policy debate”38 and it refers to situations in which commercial interests have become so powerful vis-à-vis the state they are able to make sure laws and policies are tailored to fit their interests. The state is no longer in charge of itself, but it has become subordinate to the interests of commercial concerns.

The World Bank, while suggesting that commercial concerns are the main actors in capturing the state, is well aware that others may also work in the same way: Who can capture the state? Often the “captors” are individuals, groups, or firms from the private sector seeking rents or other advantages from the state. Yet any actors with access to public officials and the capacity to provide private benefits to these officials in order to obtain advantages in the governing process can be seen as potential captors. Indeed public officials, themselves, can capture the state if they abuse their authority to help institutions and laws primarily to further their own private financial interests at the expense of the broader public interest, through identifying and indeed measuring such conflicts of interest are nearly impossible in the context of the transition. (...) Different forms of state capture as distinguished by different types of captors (e.g. private firms, politicians, ethnic groups, the military) and different state institutions involved (e.g. the executive branch, the legislature, the judiciary, or regulatory bodies) will undoubtedly have their own unique dynamics and consequences. Therefore state capture itself should be unbundled to reveal a wide range of different relationships.

The Bank’s explanation leaves out one group that is increasingly interested in capturing power for itself by perverting the processes of state decision making – and that is organised crime. Organised crime can easily be in working relations with businesses, ethnic groups, businesses, and the other actors mentioned, but at the end of the day they want to pervert the state to enable them to make money, to establish control of lucrative sectors for themselves alone, and to make sure that they are immune from prosecution. Harald Mathisen of the Christopher Michelsen Institute in Norway has examined this in Albania, for instance: