ECONOMY

More punishment, less bait will reduce corruption the world over

Corruption has many faces and forms, could be on high or low level, concern big or small amounts of money, but the outcome is always the same: It causes great damage to the economy and mainly hurts the poorer classes, directly or indirectly, says Vinay Bhargava, the director of international affairs and operations at the World Bank in an interview with Kathimerini. How do you define corruption? There are two definitions for corruption. The general definition is the abuse of public office for personal benefit. The emphasis is on the word «abuse.» There is also the legal definition concerning specific unlawful acts as determined by the penal code in each country. One of them, though not the only one, is bribery. This usually takes place in public offices. Nevertheless in recent years we have had corruption in the private sector, too, mainly in very large enterprises, which is a new form. Is this a new phenomenon or just one that existed before and simply attracts more interest now? I would say both are true to a certain degree. At any rate, this is a phenomenon taking a new intensity nowadays with the role of multinational enterprises. The definitions you have mentioned make no distinction between the size of the object and corruption. For instance, we have small incidents of corruption, a small gift to a low-level employee to accelerate a procedure but which touches on every citizen, and we have the corruption of top-level government officials or ministers, as in the purchase of arms or a very big public project. Which one is worse for the economy and the society? We do have small and big corruption. The minor corruption in bureaucracy is the sum that citizens are asked to pay to get something they are not normally entitled to or something they are entitled to get but the authorities unjustifiably delay. The bigger form of corruption, found in politics, has major elements at stake such as contracts, where there may be international links. Both forms affect society negatively but in different ways. In any case it is the general public and mainly the poorer classes that are hurt either directly, through bureaucratic corruption, or indirectly, through political corruption that results, again, in depriving citizens of social benefits even if that is not immediately discerned. In earlier times people used to take corruption for granted. They now better realize its consequences for economic and social development, institutions and so on, which is a good sign in terms of changing the situation. What is worrying is that corruption exists in all countries, even the most developed ones, according to surveys. Recently, for instance, opinion polls showed that even in Norway people are protesting the phenomenon of corruption, particularly in the domain of health services. How can we measure the extent and the intensity of corruption phenomena? There are some subjective indices, for example measuring whether citizens believe there is any corruption or not. There is indeed an issue and we are making significant efforts to improve our knowledge on that. For example, Transparency International now publishes the Transparency Barometer, where citizens are not asked whether they believe that bribing is needed, but whether they have really ever needed to do it, and then they are asked about the amount of money they have given. Of course, there always is a statistical error here, as in some countries citizens feel more free to respond honestly to such issues than in other countries. Certainly, though, the methods available for measuring the problem are being improved. What could be done to combat corruption? This always depends on the circumstances in each country. One must appreciate the local conditions. When corruption comes from the top and the institutions that have to combat it are not strong, then there is not much we can do. The international community’s only option is to depart and work no more in such a country, but it cannot intervene any further. But when there are people in governments and agencies who honestly want to combat corruption, then there are chances to improve things with the cooperation of the international community. Suppose a country’s government has the political will to combat bureaucratic corruption. Where should it start from? The most important step is to analyze the situation; make it understood why and where there is corruption and what its form is, so that it can be targeted. We often talk about the so-called «corruption equation» which has the following form: Corruption = monopoly + discretion – (accountability + transparency). This means that corruption is as big as the monopoly and discretionary decision-making power of an agency, while it decreases as the staff’s accountability and transparency of activity grows. Another point is the relation between risk and benefit for employees involved in corruption cases. If the risk of punishment and the penalties to be imposed are smaller than the benefit obtained, then obviously many people will get involved in corruption. Usually employees who get bribed will offer their superiors a share of it to reduce the risk of getting caught and punished. Corruption is like a system with many branches. Therefore a government must find ways to increase the risk of punishment and reduce the benefits of those involved. Is there an estimate as to the damage to the economy? The effect of corruption is that public works are completed at greater costs, so with the same money we have fewer projects and therefore more expensive public utilities and less competitive economy. It is estimated that in some countries corruption reduces a country’s gross domestic product by 3 to 5 percent. Since 1999 Greece has entered the club of donor countries. Local agencies often fear the wasting of assistance by corruption channels in recipient countries. What is the World Bank’s advice in such conditions? The first step is to participate in the planning and monitoring of the project, to ensure that it satisfies the people’s needs and not those who implement them. Targets must be clearly set, and if they are met then you can assume corruption is limited. Also important is the monitoring of funding, procurements etc. There must be transparency down to the lowest possible level, so that everyone knows what happened and how it must function. Finally, independent auditors must be allowed, like non-governmental organizations.