COMMENT

The roots of corruption and how to sever them

TOM ELLIS

TAGS: Interview, Corruption

Clientelism, an unstable legal framework, a lack of equality before the law, a sense of impunity, a lack of leadership with integrity and a high degree of social tolerance are the main reasons behind rampant corruption in Greece, according to Transparency International Chairman Jose Carlos Ugaz.

In an interview with Kathimerini, Ugaz spoke of the “widespread” corruption in Greek society, noting however that the level of bribery is waning due to the lingering economic crisis – with the exception of the health sector, “where corruption and bribery are still significant.”

The remarks of the Peruvian official are very timely given Tuesday night's Greek parliamentary debate on corruption. It is certainly worth paying attention to his proposals for a more ethical Greece: promoting the rule of law, creating better citizens by cultivating a new value system and new behavioral patterns – a venture that can only start from the younger generations.

How is corruption assessed by Transparency International?

Corruption is one of the biggest problems of our times. Corruption has historically been at the root of economic crises, inequality, displacement of people from their land, and conflict, among many others. People die because of corruption when poverty is increased or when the medicines they are provided with are expired or of a substandard quality thanks to corrupt health authorities or when a bribe helps a businessman avoid safety measures and a building collapses killing hundreds of people. Corruption denies education, health, access to clean water and housing to the world's poorest.

Today, we have awareness like never before about the negative effects of corruption. People all over the world, from Guatemala to Malaysia to Moldova, have taken to the streets saying enough is enough, often inspired by the grand corruption scandals that hurt thousands or millions of individuals due to the magnitude of the money involved and the impact on human rights. These are cases like the corruption around the Brazilian oil giant Petrobras or the 1MDB scandal in Malaysia. Grand corruption involves powerful people stealing enormous amounts of money and affecting large parts of the population. But people are getting tired and that is why they are raising their voices.

The international community is also taking note. A recognition of this is the fact that the Sustainable Development Goals, which outline the world’s development ambitions for the coming 15 years, include a goal on good governance with a target to reduce corruption and bribery. This is a good sign, but now it’s time for words to be turned into action. Around the world we need strong institutions that can deliver social and legal justice.

In Greece, progress is being made in reducing impunity for corruption. There is a declared level of commitment by the present government to fight corruption. Emphasis is being put on enforcing the law. But that is only one side of the coin. The other one is prevention. More needs to be done to put measures in place to prevent corruption from occurring in the first place.

How widespread and deep is the problem worldwide?

Unfortunately there is no single country that is free of corruption. Transparency International’s own Corruption Perceptions Index and other international corruption measurements show that corruption is widespread; however, there are big differences between countries and also within countries. Usually the Scandinavian countries, some of the Western European democracies and New Zealand and Canada appear as relatively clean countries on indices. However, they are by far not free of the problem. Even if corruption is not frequent within their borders, there are examples of companies from those countries bribing their way into business when doing deals in the global south.

For example, Denmark, which comes at the top of the Corruption Perceptions Index [which ranks countries from 0 for “highly corrupt” to 100 for “very clean”], only amended its tax code to deny deduction for bribes and facilitation payments as of January 1, 2014, and is among the worst performers among developed countries when it comes to enforcing foreign bribery laws. Moreover, Maersk, one of the world’s largest shipping companies, is one of the international companies being investigated for possibly paying bribes in the Petrobras scandal. Another Danish company, IT provider Atea, is facing allegations of bribery (this time at home). Thirteen people were arrested last summer, including one member of the national police. The company admitted having lied on their international performance reports. So not all is rosy even in Denmark.

In Greece corruption is mainly widespread in the form of tax evasion. The level of bribery is dropping off due to the economic crisis with the exception of the health sector, where corruption and bribery are still significant.

Corruption is worse in countries with weak institutions. When one looks at the extreme, for example countries in a state of civil war or conflict, institutions are weak. The watchdog agencies cannot perform their job, and the lack of resources or professional public servants create incentives for corruption. That is the case in countries like Afghanistan, Iraq, Somalia etc. The same happens under authoritarian regimes, where the will of a few individuals has control over the rest of the state institutions, therefore suppressing the possibility of a free media, opposition parties and other institutions to monitor and watch the way the public money is spent. This is the case in places such as Venezuela and Nicaragua.

What is happening in the European Union and other advanced nations such as the US?

The European Union loses close to 1 trillion euros a year to corruption, according to a new European Parliament study. This is a massive amount. Yet, as previously mentioned, the individual member states are very diverse when it comes to corruption, as is demonstrated by the Corruption Perceptions Index: Denmark comes out on top with a score of 91 out of 100 while Bulgaria does the worst with a score of only 41 out of 100. The United States scores 76 while Greece scores 46. Greece’s score has improved considerably in the past three years yet it still ranks fourth from the bottom in the EU and second from the bottom in the eurozone.

Because of this diversity it is difficult to make direct comparisons between the EU and the US as a whole. Yet there are two things that I think are of great importance that I would like to emphasize: 1. Influence of money in politics: One can see powerful economic groups and individuals lobby over policymaking without being held accountable. This can lead politicians in office to steer away from good government. Their decisions can benefit those who fund them and then public interest comes second. 2. Every year as much as US$2 trillion in dirty money is laundered through the global financial system, much of it by hiding the real owners of companies. Yet many countries and states do not maintain corporate registries of beneficial ownership information.

What is the situation in Greece?

Corruption remains a major challenge in Greece, which is a result of a crisis of values across all sectors of society that preceded the economic crisis. There are a few basic elements which summarize the current situation in Greece, as it is going through a severe recession for the seventh consecutive year: The unstable political environment with frequent government changes leads to constant changes in legislation, taxation measures etc. As a consequence, this instability also affects initiatives against corruption. The lack of integrity in leadership, which is instead driven by the politics of clientelism, is also a problem. Nepotism is a key issue in the political class, across current and past administrations. The legal framework leaves a lot of room for interpretation and thus the law it is not implemented in a unified manner. This creates the impression that there is no punishment for those who are involved in corruption. Law enforcement is weak and the rendering of justice by the courts unacceptably long. A number of grand corruption schemes have come to light in recent years involving billions of euros in the defense sector, the media, the insurance sector, as well as the financial sector. Here we do see some encouraging signs toward the more effective handling of grand corruption cases by courts. Greek society is considered to be highly tolerant toward corruption.
 
Is it only among the affluent or is it more widespread?

Corruption in Greece is widespread and can be found among all sectors of society. Research by Transparency International’s national chapter in Greece indicates that people with higher social status and education levels are not immune to corruption.

Have you seen any improvement or deterioration during the crisis years?

Between 2012 and 2015 Greece’s score on the Corruption Perception Index improved by 10 positions, which shows considerable progress. Transparency International mainly attributes this positive change to the following facts: The recent government has been very vocal about the necessity and their determination to tackle corruption. The prime minister himself, as well as many of the ministers, at least verbally, have taken a strong stance on this issue, something that was not the case in the past. Although it was mainly because of financial reasons, as the state was in desperate need to collect money from tax evasion and other financial crimes, there were legal prosecutions against various offenders. The decision to impose capital controls in all financial transactions in the country has also played an important role in the restraint of money laundering. As the recession continues, the financial activity in all fields has shrunk and so has corruption. In addition, the recession has also affected the capacity of citizens to pay small bribes.

What are the main issues the country has to deal with and what is the best way to do so?

Corruption is the result of a major crisis of values. This is reflected in leadership with no vision or integrity, corrupt politicians, bureaucracy, and the lack of trust toward democratic institutions. Key institutional pillars of the country need to function properly.

The remedy is twofold: 1. Establish the rule of law. Here we have already seen some progress. 2. Create better citizens. Prevention measures aiming at cultivating new behaviors and instilling lost values in the younger generations. For this, we need visionary leadership, not only political, but in all sectors of society.

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