Why Corruption is Highly Criminal and Corrupt Persons are just Lousy Thieves

by Dr. Ulrich F. H. Andree, Business Integrity Officer

at Transparency International - Mongolia 


1.   Corruption as a Global and Timeless Phenomenon

At the beginning a simple question: What do the threatening climate change, the ongoing destruction of natural resources, the irrevocable disappearance of many animal and plant species, the population explosion in many parts of the world and the associated migration have in common with corruption? - Well, these all are global problems.

And what else do these phenomena have in common? - Well, they all can only be fought globally. Because in all these cases world-wide corruption is "sitting at the table" and hinders or even prevents powerful effective actions at all levels and in all sectors of the countries affected and within the apparently more or less helpless international community.

Corruption is similar to cancerous tumors, which continue to spread in the body of a society and lead to their progressive decline, if these can not be identified early enough, fought and finally destroyed. For this there are enough historical examples from all cultures and countries of the world that show the destructive power and devastating impact of corruption - and incidentally, this is even the original meaning of the Latin word "corrumpere".

However, nonetheless corruption is as old as humankind - and a "constant and reliable companion" in all cultures where the greed for power, money, reputation and other personal benefits is overwhelming: Be it bureaucratic corruption in ancient Egypt, Babylonia or China, be it political vote buying in ancient Greece, be it financing "bread and games" for the Roman rabble, be it the "dark Middle Ages" with its pronounced favoritism/nepotism and dependence on state potentates of private court- and war-financiers, be it the pompous-, power- and money-obsessed Renaissance, be it the decadent "Ancien Régime" in France or the declining British Empire - there are plenty of impressive examples of corruption from all these eras.

Already in the Old Testament of the Christian Bible, namely in Ex. 23.8, probably written down around 2500 BC. there is to find an impressive warning concerning in general, corruption and, in particular, judicial corruption: "Do not take bribes from the processing for it clouds the judgement and seduces the worthy honorable men to twist the law. God is a god of justice."

For several decades, the phenomenon of corruption has received much increased attention worldwide again. Above all, this is reflected in its thorough scientific research, in national and international education campaigns, anti-corruption laws and control measures, in the creation of globally active, institutionalized anti-corruption movements such as TI and GI (Global Integrity) and similar initiatives.

What are the main reasons for this? - Obviously - and that can not be stressed enough - the "globalization" that began in the 1980s and the triumphant advance of the so-called "neo-liberalism" as well as the downfall of communist and socialist states, which started at the beginning of the 1990s, play the all-important role.

2.   Full of Opaque and Contradictionary Complexity: How to Nail Jelly to a Wall?

At first some facts: The monetary scale of global corruption is gigantic and almost takes one's breath away! According to recent estimates, the volume is about $ 2 trillion ( $ 2,000,000,000,000) - a 12-zero number. Unfortunately, how this number has been determined methodically can not be retraced from the source used.

However, if one assumes a high "dark figure" in the area of corruption of ninety percent - just like the most famous German expert in corruption, prosecuting attorney Wolfgang Schaupensteiner, does -, then the estimated sum is unlikely to be more than the "tip of the iceberg", in which only about eight percent is known to be visible. Therefore, if one adds up the mentioned volume of corruption, the unimaginable sum of 18 trillion $ (18,000,000,000,000) results!

But why is corruption considered so extraordinarily damaging to all areas of social life? After all, have not all participants - naively asked - a benefit of it? And furthermore, is not corruption "tolerable" in many cultures of the world and an essential part of the usual "business models" that are very "helpful" for the effective and successful pursuit of one's own plans? Does not "the result justifies the means", as the Renaissance philosopher Niccolò Macchiavelli has formulated cold and cynical to enforce ruthless the interests of his Florentine prince, Lorenzo di Piero de' Medici?

And additionally, going much more further, one could argue that even in the animal and plant kingdoms a "certain variety of corruption" in the broadest interpretation of the word can be observed: the symbiosis. The symbiosis (Greek means: σύν βίος, living together) refers to the interaction of two or more different species, combined with a mutual advantage in terms of biological fitness, probability of survival or improved metabolism. Therefore, both organisms benefit from this relationship. And is that not even the case concerning corruption?

At this point the definition of corruption from Transparency International (TI), however, must come into play which means short and sweet: "The abuse of entrusted power for private gain".

Although there is still a very personal win-/win-situation for both the bribed and the briber, this is not according to TI's corruption definition, which explicitly emphasizes the abuse of entrusted power only for personal gain. Thus, misuse regularly leads to financial or non-material damage among the persons, groups or organizations officially represented by the corrupt authorized signatories (eg employees of the public sector, private companies, NPO's and NGO's).

Therefore, from total societal and welfare-economic point of view, only a win-/loss-situation can arise for one of the represented persons or organizations. If we transfer this relation back to the symbiosis model, we speak in this case of parasitism (Greek means: παρά σιτεῖσθαι, feeding at the sam time) where only one species benefits while the other species is damaged and even perishes.

3.   The "Principal-Agent-Theory" as One Plausible Explanatory Approach

All these considerations profoundly have been discussed in the social sciences in the so-called "principal-agent-theory" since the beginning of the 1970s in the last century. What means this theory in brief?

3.1   The "Principal-Agent-Approach"

The "principal-agent problem", in political science and economics also known as "agency dilemma" or the "agency problem" occurs when one person or entity (the agent) is able to make decisions on behalf of, or that affect another person or entity: the principal. This dilemma exists in situations where agents are motivated to act in their own best interests (eg personal income, influence or reputation maximization), which are contrary to those of their principals - even known as "moral hazard". This term outlines a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It arises when both the parties only have incomplete information about each other.

Common examples of this relationship include corporate management (agent) and shareholders (principal), politicians (agent) and voters (principal), or brokers (agent) and markets (buyers and sellers, principals). These situations can happen in almost any context where one party is being paid by another to do something where the agent has a small or non existent share in the outcome.

The problem arises when the two parties have different interests and asymmetric information (the agent having more information), such that the principal cannot directly ensure that the agent is always acting in the principal's best interest, particularly when activities that are useful to the principal are costly to the agent, and where elements of what the agent does are costly for the principal to observe. Often, the principal may be sufficiently concerned at the possibility of being exploited by the agent that they choose not to enter into the transaction at all, when it would have been mutually beneficial: a suboptimal outcome that can lower welfare overall. The deviation from the principal's interest by the agent is called "agency costs".

Various mechanisms have been proposed to align the interests of the agent with those of the principal which can be subsumized in three groups: the setting of positive and negative incentives for the agent, the persuasion of the agent in direction of observing the interests of the principal and by principal's instructions to the agent, as far as there are hierarchical instruction-bounded relationships. So employers (principals) may use piece rates/ commissions, profit sharing, efficiency wages, performance measurement (including financial statements), professional up-and-coming promises, the threat of sanctions of termination of employment to align employees (agents) interests with their own. But in any case, the principal incurs additional "monitoring costs".

3.2    The Extension of the "Principal-Agent-Approach"

From the above can be read out, however, that the orginal principal-agent theory is not able to explain satisfactorily the usual corruption mechanisms and the underlying understanding of corruption in this context. Hence, the scientific neo-institutional economics has expanded the "principal-agent-model" to include a third important stakeholder: the client - sometimes even called the second principal. With this we will take a look upon the relations and potentially corrupt constellations between the client, the principal and the agent, and will call this the "principal-agent-client-model" respectively the "multi-stakeholder-problem".

For explanation a short example: The principal-agent-client-model of corruption is similar to the interaction between the government and its bureaucracy, the elected politicians and powerful interest groups (lobbyists). The principal (the government) employs the agent (politicians), who in turn interacts with the client (interest groups). Usually, the agent put his own interest ahead of the principal's interest - with the consequence that the principal always had to monitor the agent's actions. The principal exchanges information with the agent, who in turn exchanges information with the client. Furthermore, the client provides the principal with information, some of which concerns the agent. This relationship is referred to as an "iron triangle".

Within the principle-agent-client-model, corruption can occur when the client pays a monetary bribe to the agent. Now the agent has the option of either accepting the bribe or rejecting it. His decision is influenced by weighing the payoffs associated with accepting the bribe against payoffs associated with rejecting the bribe. The game would end if the agent rejects the bribe. However, the agent usually accepts it, because he gains nothing from rejecting it. If the agent agrees, he is concerned with being caught by the principal. Ideally, the agent wants the corrupt act to go undetected - but this must not always be the case. Keyword: lobbyism. Lobbyism often is viewed as a sort of "legalized corruption": it is well known and nevertheless it counts as widely "accepted" - more or less depending on the degree of "social-cultural tolerance" of such practices.

Frequently, however, corrupt behavior of the agents does not only take place with implicit toleration on the part of the public or private principal, that wants to do good business with their clients (eg, public administration, private enterprises, NGOs) as much as possble, but is deliberately covered and sometimes financed from special "black coffers". Obviously, such permanent corrupt structures are usually inconceivable without the existence of an "informal corruption network" which is coordinating, regulating and protecting the agreements and actions among all persons involved. The main mechanisms for building stable structures are to create confidence and action within the participants, to build a system of reciprocity, to bring about a degree of normalization in the sense of organizational institutionalization and to enforce obligatory behavioral norms for corrupt action.

4.   Corruption is not the Same as Corruption

As already indicated, corruption is a multi-facetted dazzling phenomenon that is still extremely controversially discussed in terms of its maifestations and its financial as well as its socio-cultural dimensions. Hence it would be usefull, to reproduce some classification attempts on how to qualify its aspects according to different criteria.


4.1    "Black, White" and "Grey" Corruption

Arnold Heidenheimer, a well-known German corruption expert, distinguishes the corruption into a "black", a "white" and a "gray" one. - Well, what means this? In his argument, he assumed that different layers of society sometimes perceive certain phenomena in different ways. As a result, black corruption belongs to the group of criminal behavior that is condemned and punished by most people, regardless of their social class. The white corruption means the exact opposite: Although it is formally perceived as corruption, it is largely tolerated by all sections of the population and therefore should not be punished. In the case of gray corruption, on the other hand, the opinions of the society are very different - both in terms of their criminal nature and their punishment.

A second, less-known approach of Heidenheimer focuses on the position of public servants in terms of benefits from their public office, their "marketable" economic benefits, and the harm done to the public interest by the corrupt conduct of the employees.

4.2    "Grass-Feeding" and "Carnivorous" Corruption

With regard to the differentiating factor "level of intrinsic and external initiative of the participants", often a distinction is made between "grass-feeding" (passive) and "carnivorous (active) corruption". The former mentioned refers primarily to public servants who accept bribes when offered to them (reactive), while the second one involves employees who claim bribes (proactively) before acting. These issues appear stereotyped repeatedly in crime films when it is about corrupt police officers or other public officials.

Related to this is the distinction between extortionate and commercial corruption. In the first case usually must be exert a certain degree of pressure on the bribe-payer, while in the second case the involved parties voluntarily, on an equal footing and to the fullest benefit for their own, make corresponding corruption arrangements.

4.3    "Low, Medium" and "High Level" Corruption

Another distinction concerns the scope, the impact and the relevant layers of the population. As a result, corruption can be detected at "low, medium" and "high levels". In order to classify one of these groups properly, it is usually necessary to include additional assessment criteria in relation to the extent of corruption, but these should as a rule be qualified on a situation-specific basis and should be seen and appreciated contextually.

For example, corruption at a low level includes kickbacks to start and speed up government action of any kind or to circumvent improper payments. In most cases, it has little effects on the functioning of the state and the society living therein. On the other hand, corruption at a medium level causes far greater damage both in terms of its financial scope and its effects on state and society: at state and private level economic welfare losses are usually more severe, the more widespread the mid-level corruption is.

For high-level corruption, the World Bank im 2000 gave the following definition: "... shaping and influencing the formulation of rules of the game by companies through covert payments to civil servants and politicians." This not only implies to better influence political and administrative decision-making, but also involves the deliberate manipulation of ongoing legislative procedures and the intentional initiation of new legislation for the sole benefit of certain powerful stakeholders (eg sole proprietorships, business associations, organized crime). Often the ministerial bureaucracy, the lobbyists (payed politicians) and the specialized professionals of the affected companies sit together at the table in the law formulation in a decidedly "friendly consensus" - not infrequently to the expressed detriment of the general public, citizens, consumers or other socially affected people.

An extension of this distinction has been introduced by the American scientist Rasma Karklings which is particularly relevant to the post-communist transition countries of Central and Eastern Europe: This was about the self-serving sales of public assets by civil servants of the old administration whose deals were part of the so-called "nomenclature-privatization" and that were usually accompanied by significant bribes by the buyers or by their own purchases at throwaway prices.

4.4    Bribery and Corruption

A further distinction can be made between bribery and corruption: As already mentioned, corruption can also occur in the context of unfair business or administrative relations - without any material or financial benefit being involved. The embezzlement of public funds by civil servants, for example, is also one of them. In the case of bribery, however, there are always material or financial benefits for the bribed - whether they come from private sector or from public administration.

One of the most difficult questions that keeps cropping up in the field and that is often hard to be answered is the one concerning bribes and gifts to corrupt practices or not. With regard to the classification as "harmless" or "questionable", a huge gray area opens up, which not only has to be seen very strongly by personal attitudes and assessments but also in a socio-cultural and situation-specific context.

In many Asian cultures, for example, a present not only is not considered as a bribe - yes, beyond this its rejection as a supposed bribe may be extremely insulting to the gift bearer, even meaning the greatest misfortune of "losing the face." Here, above all, Europeans must be careful not to succumb to Western-style "cultural imperialism" that does not or hardly accepts the customs and habits of other cultures concerning business deals - even if it initially seems very strange. There is no doubt that this requires a lot of empathy and tact.

As an aid in everyday business life, you should get as much clarity as possible about the following facts:

  • The intention of the gift giver: Is a compensation explicitly or tacitly expected?
  • The expectations of the gift recipient: Does the recipient believe that something in return is expected from him?
  • The time of giving: Is the gift delivery in any temporal relation to a business activity before, during or after its completion?
  • The value of the gift: Is the gift in adequate financial proportion to the business transaction?
  • The classification of the gift delivery according to the respective country-specific legal requirements: Is gift delivery consistent with any existing state laws and regulations - both in terms of reason, nature and amount?
  • The perceived social acceptance of gift giving: Is the acceptance of gifts tolerated by society as a whole and by the public - not least against the background of different cultures?

4.5    Institutionalized and Economic Corruption

Another differentiating feature concerning corruption is the distinction between institutionalized and economic criminality. While the former is commonly related to the public sector, the latter is used mainly in relation to private sector corrupt practices. The distinction refers above all to the "freedom of choice" - an option that citizens usually do not have in dealing with the public sector, because here the state acts as a kind of monopolist and arbitrator towards them. By contrast, if citizens are dissatisfied with the business conduct of private companies - for whatever reason - they can move away to other companies as it could be the case in well functioning competitive economies.

4.6    Organized Crime and Corruption

Finally, a distinction can be made between organized crime and corruption, although they are fundamentally interdependent. Without well-designed and far-reaching networks of relationships and corruption networks into the public administration that are linked and maintained to corrupt officials at all levels and concerning a broad variety of functions, organized crime would nearly not be as powerful as it is in many countries around the world.

It should be noted that organized crime does not always have to operate outside existing laws. This applies in particular to white-collar crime, which, for example in the context of tax avoidance and money laundering, the approval of sensitive exports or imports (eg military equipment, protected animal species, cultural-historical artifacts), the granting of regulatory approvals of all kinds, regularly is depend to the close cooperation with corrupt Government officials.

5.   Ethno-Cultural, Religious and Group-Related Reasons as Societal Explanation

As the CPI shows, the Germanic- and Nordic-born countries (especially Scandinavia) of Europe are regularly in the first places in terms of the extent of corruption. The main reasons for this are based above all on their ethno-historical, Germanic-/Nordic-tribal development, in which the community, the common goods and collective actions on a consensus-oriented basis played an outstanding role. After the Lutheran Reformation in the early 16th century which was not least a reaction to the widespread corruption in the Catholic Church (eg office purchase, indulgence, nepotism) and which was followed by most Germanic and Nordic states, then the religious component of the so-called "protestant ethics" was added, because Protestantism - at least tendencially - was founded on renunciation, equity, sense of duty, diligence, integrity - formimg the indispensable basis for a "godly life". Not only did corruption not have any place within this society, but it was almost branded a "sin" that did not only exclude offender from "eternal bliss" in the hereafter but also from participation in the religious and social community in this world.

In contrast, the Romance-born countries of Europe have a higher degree of susceptibility to corruption. This also can be traced back to their ethno-cultural roots because in these countries preference is given to the individualistic way of life, personal self-interest and well-being. The commitment to common goods and collective actions here traditionally played only a minor role. Again, religious orientation plays an important role again because in these countries the Catholic faith prevails. Thus, research argues that generally hierarchical religions - such as the Catholic, the Greece and Russian Orthodox and the Muslim, for example - are more prone to corruption than others.

Another ethno-cultural explanation for corruption is the traditional attitude towards family, kinship, certain ethnic groups (eg ethnic groups, tribes, minorities), society and the state. It should be noted that the prevailing attitudes towards the own family, clan, tribe and ethnicity often are correlating with the confidence, people have in the state and its authorities, so that a more or less direct relationship to the legitimacy of the state and society can usually be established here. For example, nepotism and the related networks based on it are of particular importance in states in which large sections of the population distrust the state. This is often the case in Arab, Asian and African countries, where there are traditionally very close relationships with the "extended family" - however one wants to define them.

Finally, two ethno-culturally influenced concepts are to be presented, which have greater scope even from their dissemination: the Russian "Blat" and the Chinese "Guanxi".

The "Blat"-concept was "cultivated" especially in the communist era. Blat (блат) can be characterized as the informal diversion of official flows of goods to meet personal needs. Access to scarce goods and services was opened with the help of contacts. There was a reciprocal relationship between donors and recipients of favors based on mutual trust. For example, the concise definition of Blat's expert Alena Ledeneva is: "The use of personal networks and informal contacts to obtain goods and services in short supply and find a way around formal procedures". This means, in addition, access to scarce goods and services through Blat-relationships, to enable, for example, the receipt of higher-quality products or an influence on (governmental) decisions (eg: request for a larger apartment, a car, a telephone line and connection, etc.). Thus, Blat was primarily a concept that works on the basis of direct and indirect "nature exchange".

"Guanxi" (Chinese: 关系) is one of the most powerful forces in Chinese culture. Though the direct translation of "guanxi" is "relationships", the concept as it is used and applied in the Chinese cultural context is much richer and encompassing.

Guanxi does express the relationship of one person to another, or one party to another. However, more importantly the term also expresses an obligation of one party to another, built over time by the reciprocity of social exchanges and favours. If one has guanxi with another, one will be quick to do a favour, act on another’s behalf and depending on the depth of the relationship. By establishing this type of relationship with somebody, the other party is implicitly agreeing also to be available to reciprocate when the need arises. In such a way guanxi can be considered as a type of currency that can be saved and spent between the two parties. Like money, it is a resource that also can be exhausted, so that one must be sensitive not to overextend the guanxi that has been established.

The exchange of favours does not have to be in like kind. But failures in reciprocating favours in this type of relationship is equivalent to not paying a financial obligation. If one cannot accommodate a specific request, one must find another way to make compensations, perhaps by sending along a small gift to let the party know that you are sorry because you could not help and that you still want to maintain the relationship. Hence, if a person involved is feeling too indebted to another, that person may bring a gift to bring the relationship back into balance.

The reciprocal nature of guanxi and its implied obligations is the main reason why Chinese are reticent to engage in deeper relationships with people they do not know. To begin such a relationship may put somebody in a compromising position from which it is difficult to withdraw. Additionally, to establish guanxi with someone who later proves "unworthy" will also tarnish that party’s reputation, so the Chinese would rather not begin a relationship with someone they do not know. Finally, in establishing guanxi, a certain person or party could calculate in advance what they hope to gain from the relationship, to insure they are not contributing effort or services without gaining something in return.

6.   Why Corruption is Worldwide a Very Serious Danger

Corruption acts as a creeping poison, which at first hardly noticeable, but then later on exerts more destructive effects on individuals, groups, organizations and the entire society. With regard to the Corruption Perception Index (CPI), anually published by TI, it is obiously that there are existing significant differences in the susceptibility to corruption of all covered states, at least in part due to their respective ethno-cultural situation and religious orientation.

But one should not be hasty with rash conclusions! Therefore, the following remarks should always be made with caution, because they take into account only a few facets of modern, complex societies. Other contextual and situation-specific aspects usually also play a role: such as the level of per capita income, the income distribution, the functioning of democracy, the extent of press freedom, the general level of trust in the state and society, the quality of governance and many other criteria relevant to evaluation.

6.1    Paralysis of the Whole Society

There are many ways in which corruption can affect the damage to society and the state. One of the most important is its devastating impact on the living and working conditions of normal citizens.

Corruption not only diverts public funds destinated for all citizens or certain categories of beneficiaries into "private pockets", but moreover, many developing and emerging countries are at risk of being excluded from contributions from public and private foreign donor agencies in future. From this fact, however, the poorest citizens of a country usually have to suffer additionally. This is a perfidious and extremely inhumane form of theft, committed by those who have been "ex officio" entrusted with the care of their citizens. To make matters worse, these are not just "individual perpetrators", but often widespread corruption networks that are tolerated or even covered by the highest authorities. They are simple lousy thiefs!

Another consequence is the fact that the society is increasingly divided both "vertically" and "horizontally". From the vertical point of view, this implies that the gap between the "upper class" or "elites" and ordinary and poor citizens is permanently widening: The gap between "these up there - those down here" seems to be almost unbridgeable. But the horizontal drift within the poorer population is also growing, because on the one hand, there are citizens who can and may want to pay bribes and, on the other hand, citizens who are not capable of doing so.

According to various scientific studies (eg IWF, 1998), a rising level of corruption leads both to greater income inequality and to increasing poverty, which in turn affects developing and emerging countries in particular. It should be added that many citizens accept high income differentials as long as they are based on performance, but not if they are based on personal relationships and bribery, in which the qualification and achievement motivation play no or only a minor role.

All of this ultimately leads to growing mistrust and spreading uncertainty among the citizens, with the result that people are increasingly withdrawing into their privacy, are showing little interest in political engagement and are preferring to accept injustice rather than the state to appeal to a "corrupt judiciary". As a result, the so-called "social capital" is dwindling, which is very essential for social cohesion within a community or society and thus for the survivability of a state

This cohesion is based on three important foundations: At first these are the "bonds" that society has: Usually people have contact with each other and are organized - spontaneously, personally or whatever. Linked to this are the "norms": These are the rules of life and behavior patterns that have developed from the bonds and keep the society together. The third foundation is the necessary "trust": Without confidence that all fellows obey the rules, bonds are not sustainable. If one of the three basics fails or is too low, the whole society threatens to tilt into imbalance and that can definitely be dangerous and finally can lead to the breakup of society or state - commonly labled as "failed states" (such as for example Somalia, Jemen, Afghanistan).

Following the collapse of the communist states of the Eastern Bloc, the lack of a broad bourgeoisie has created a new, prosperous layer of the bourgeoisie, the so-called "oligarchs," who have often swindled their wealth through corruption, wasting state assets and similar practices. In a certain sense, they replaced the communist "nomenklatura" and "apparatchiks" with all their privileges - yes, it is not uncommon that this are the same people who recently belonged to the communist elite, and who now set the tone again. They, too, have robbed their wealth through corruption, through old political rifts and through abuses of their offices, while for a large part of the population the economic situation has hardly improved, has not improved, or has even deteriorated. - In a nutshell: they are also brash and lousy thieves towards their own people!

As already mentioned above, corruption and its variants have many faces. It plays a role especially in those areas where large sums of money are involved and which generate a high profit for all participants. These include, for example,

  • drug trafficking (eg to the European States and to North America or somewhere else),
  • trafficking in human beings (eg forced laborers, cheap household staff members, prostitutes),
  • weapons trade (eg illegal arms smuggling in voltage and war zones, black market trade concerning weapons),
  • the construction sector (eg approval, supervision and final inspection of construction works as well as regular security checks),
  • the awarding of public (investment-)contracts (eg public tenders and procurements of equipment and consumables of any kind),
  • the granting of important state permits (eg licenses for a wide variety of projects, granting of mining and mining rights, deforestration permits),
  • the monitoring of legal requirements (eg safety, health and workplace regulations and the like, ban on child labor).

Let us take as an example the environmental protection and building permits. Every year, illegally forested areas are cut down because corrupt officials do not pay attention to compulsory compliance with existing legal regulations or handle them with tricks. Worldwide awareness regularly reaches the "corrupt wheeling and deeling" of public officials in charge of building permits whenever blocks of flats, department stores, schools, or other public facilities collapse as a result of tolerated or even deliberately covered and falsified erroneous calculations or inferior building materials. These disasters can happen just like that, but also as a result of (light) earthquakes or other natural catastrophes such as floods, fires, storms and the like. Only with such events, then, the devastating consequences of corrupt machinations are literally visible.

In doing so, those involved in corruption consciously accept the violation of elementary human rights and the threat of human lives, which goes far beyond purely financial losses. Therefore, in some countries, corrupt public officials - guilty of violating one or several of the above mentioned examples or other criminal offenses - may even face the death penalty in the worst case scenario. They are not only simple lousy thiefs but also most heavy criminals who, out of pure greed, accept the misfortune and even the death of innocent people without any compassion!

However, since the beginning of the 21st century, public interest has also increasingly focused on corruption in the private enterprise sector. Just think of the corruption scandals of the energy company Enron and the telephone trust Worldcom in the USA, of the Italian food company Parmalat, of the Australian grain company AWB (Australian Wheat Board) and of the technology group Siemens and the automotive group Volkswagen in Germany.

All these serious cases of corruption, which have been routinely endorsed or even promoted by management, have permanently damaged people's trust in the integrity of private companies. Some experts even suggest that the global financial crisis of 2008 is linked to this, although, according to recognized evidence, it is primarily due to fraudulent practices in the banking sector. Finally it should be noted, however, that here and there greed has always been the driving force that has led people to subordinate their decency, integrity and personal morality to this antisocial and extremely socially harmful "principle of action".


6.2    Accelerated Destruction of Natural Resources

Corruption in environmental protection, like no other man-made cause, contributes to or even destroys the natural foundations of life for humans, animals and plants. However, the simple fact is: The earth can exist without humankind, but not humankind without its natural foundations and resources of life!

This not only includes - just to name a few - ensuring clean water and unpolluted air, ensuring an environmentally sound energy supply, the sparing use and conservation of natural resources, but also the moral obligation of the whole humankind to preserve biodiversity in order to maintain worldwide animal and plant protection.

As already mentioned, environmental protection is one of the most urgent tasks that only effectively can be tackled and resolved at the international level. Here, corrupt behavior on the part of the responsible public servants develops particularly devastating effects. This is especially true for two reasons affecting primarily developing and emerging countries:

On the one hand, these countries are often significant suppliers of raw materials, whose sale secures the public revenues urgently required. But on the other hand, it is not so well with "official" environmental protection regulations and environmental protection requirements - especially not at all if those involved in the extraction and sale of raw materials can also increase their personal benefits by accepting bribes from domestic and foreign mining companies. It is estimated that around half of the global supply of wood comes from the semi-legal or illegal logging of the largest global timber suppliers, such as Brazil, Indonesia and Russia - which at the same time is both an impressive and depressing fact.

Anf furthermore, there are hardly any effective instruments to monitor gapless compliance with international agreements and standards - especially if at national or regional level corresponding supervisory bodies are scarce or non-existent or if these - which is not that rare - make "common cause" with the beneficiaries.

According to a report by the United Nations Office on Drugs and Crime (UNODC), environmental corruption includes in particular: "Practices such as money-embezzlement during the implementation of environmental programs, large-scale corruption in the licensing and exploitation of natural resources, and minor bribery of law enforcement officers". And these offenses play mainly in the areas: forestry, oil production, trade in endangered species and disposal of hazardous waste.

Even in the case of environmental protection, we can therefore conclude that corrupt behavior not only leads to financial damage to the state and its citizens - what the little evil would be. At the same time, humankind will be robbed of its livelihood and quality of life, and future generations will be deprived of rich biodiversity forever. This is theft against the whole humankind and therefore especially heinous - because irreparable!

6.3    Negative Impacts on the Economy

In hardly any other area the effects of corruption and corrupt behavior have been more intensively researched than in the economy, and there is hardly any other field of corruption research in which opinions about the positive or negative effects have been discussed more controversially than here.

For example, recently various economists had put forward the thesis that corruption would increase economic growth because corresponding smelters would serve as "accelerators" for investments. However, this claim was refuted by the American scientist Paolo Mauro in a sensational analysis published in 1995. He found out the opposite: as a result, subjectively perceived high "levels of corruption" above all deterred potential investors concerning to invest in the respective countries - which was particularly important for foreign investors. These consequences were then confirmed later on by further appropriate scientific investigations.

In addition, a high level of corruption may make it difficult or even impossible for certain countries to join international or supranational organizations, such as the European Union (EU), although this usually entails high economic benefits. Even if they already members, the level of corruption prevailing there can lead to a cut-back or even complete deleting of the financial resources granted from the EU, as that was the case in the EU-states Bulgaria, Romania and the Czech Republic. And furthermore, these countries were denied accession to the so-called "Schengen zone", a region of 26 European countries without internal border controls, because other member states feared that the high vulnerability to corruption of the border police and customs officials would encourage the illegal immigration of refugees from war regions and countries of political tension.

Corruption also is a serious problem within older EU states. For example, TI in a report published in 2012 - titled "Money, Politics, Power - Corruption Risks in Europe" - pointed out that corruption also contributed a significant role to the crisis of the Euro zone in 2010, in which case Greece besides other south-western countries was the main offender.

But the financial dimension of corruption within the EU-states is also considerable! In its first anti-corruption report of February 2014, the EU estimated the total volume at around 120 billion Euro - a figure that was probably just a fraction of the actual volume as the iceberg-comparison shows.

The lost revenue for the state, and thus for the citizens, is mainly a consequence of reduced income and corporate taxes, which in particular in tax systems with progressive tax rates encourage tax officials to act corruptly. Since the consideration of tax-relevant facts are often left to the discretion of tax officials, the risk of improper consideration in favor of the taxpayer and thus in the public servants' participation in the avoided payments for their own benefit is relatively high. This is one of the main reasons why many developing countries and emerging economies prefer flat-rated taxes for the abovementioned charges - even though in these cases an unfair, deliberate reduction of the taxable base can not be completely ruled out.

The influence of corruption on competition is also quite significant. For example, if corrupt public officials receive kickbacks in privatization, public procurement, large-scale investment projects, and the like, this will not only lead to higher prices and costs for the contracting authorities, but also to a decline in market competition. because other competitive or even more powerful competitors are excluded from the outset. Depending on the volume of the contract, this can lead to considerable financial disadvantages for the public sector and thus to welfare-economic losses and, moreover, it usually encourages the formation of monopolies and cartels to a great extent.

Serious negative consequences for the development and the overall prosperity of a country usually result from the fact that widespread, socially accepted corruption leads to a so-called "brain drain" of highly qualified and motivated people. That is because these achievers in such systems are often denied access to appropriate occupational positions by favoritism and nepotism, so that they are forced to emigrate. What this means for the medium- to long-term growth and development capacity of a country - especially of developing and emerging countries - knows anyone who has followed the flight of "human capital" from many countries in the Middle East. For example, in droves professors, doctors, engineers, teachers, and other intellectual achievers out of Iran, Iraq, Lebanon, Syria, and other corrupt affected states have emigrated to European, American, and Asian countries. By that the social leadership elite of these emigration countries now is permanently absent, which ultimately leads to large growth and wellfare losses.

Another serious problem caused by corruption is the massive "capital flight" abroad. In order for the bribes cannot be discovered, which public employees and private individuals receive from illicit schemings, these often are transferred by means of "straw men" and "letterbox companies" into so-called "tax havens" and invested there profitably. As controversial as these capital outflows may be, it leads to wasting domestic capital markets and reduces the supply of domestic capital urgently needed, such as for public and private investments. Whether one gets on here with a "general amnesty", however, is legally and morally discussed very controversial, after all, because it is money that has been acquired unlawfully. But maybe it would be better - only exceptionally, only for one time and only for pure benefit considerations - "to swallow the toad".

In terms of damage to a country's economy, too, corruption goes far beyond mere financial losses: it undermines mutual trust between business partners, hinders free competition and promotes the creation of monopolies and cartels and, most importantly: It triggers the permanent emigration of the integrity and performance-oriented social leadership elite. Again, this is a particularly perfidious form of theft because corrupt actors sustainably hinder and prevent the economic development of their own country simultaniously stealing its future viability.!

6.4    Undermining the Political and Legal System

It is no secret that corruption, in all its manifestations, can have many negative effects on political systems, governments and its administrations of any color. This does not only apply directly to democracies, autocracies, military or dynastic authoria regimes and other forms of government around the globe, but also encompasses the entire private sector in a wider sense.

The most common means of exerting influence is the bribery of politicians and powerful senior officials, who are then expected to pay special attention to the interests of the bribe granting groups. For this purpose, the term "pork-barreling" has become common, in which parlamentarians either give unjustified financial advantages to the interest groups supporting them for re-election or to persuade voters at all to choose them as new candidates.

This brings us back to the problem of widespread "lobbyism", which was already mentioned above. In many Western democracies, "lobbying" is quite legal and even institutionally organized. But there are certainly many deterrent examples of illegal, abusive influence on political decision-making through "lobbying". What standards should be set to differentiate the legal from the illegal lobbyism? - Here again, TI's definition of corruption gives at least a preliminary answer.

In so far as lobbying relates to charitable, agreeable or other socially recognized and beneficial activities, and also to the financing of organizations pursuing these objectives (eg global environmental and species protection, promotion of "fair" trade between indusrialized and developing countries, privately organized support to the general education and vocational training, charitable tasks) is transparent or even subject to self-imposed publication obligations, usually one can talk about legal lobbying. Illegal lobbying, however, occurs regularly when such activities serve primarily to enforce one's own financial interests (for example, arms export-friendly legislation, export subsidies for raw materials such as wood, ores, fossil fuels, unjustified tax exemptions for investors) and also seeks funding to disguise in public.

Another difficult problem is the financing of political parties by powerful, financially strong interest-groups. Regularly they try to influence the political decision-making in their own interest by granting generous donations to these. This practice affects not only the developing and emerging countries where it would most likely be suspected, but equally the Western democracies, in which corresponding scandals of "political party donation" repeatedly come to the light of the public, such as in Germany, France and Italy. - And this, although there are already strict conditions regarding the donors and the amount of their donations. Obviously, the temptations just seemed too big - and at least in Germany, this fact has led to a further tightening of the party financing law.

Another consequence of corruption in the political sphere is the impairment of equal opportunities and competition among the political parties in the election campaign. Thus, manipulating votes and buying votes not only falsify the will of the voters, but also contribute to drive citizens right into the arms of right-wing as well as left-wing politicians, who promise to change this state of affairs - but then generally can not hold it. In the end, almost always the civic, moderate middle-class loses and thus in democratic states the democracy as the best form of government is the real victim.

In addition, the increasing feeling of powerlessness of the citizen and his growing loss of confidence in his state generally can lead to a dwindling of the belief in the rule of law, the ability to function, and finally the legitimacy of the political system. The political frustration caused by this can manifest itself in various ways: renouncing the active and passive participation in political will-formation processes on the one hand, or questioning the legitimacy of the entire system as such, on the other hand, which can manifest itself in certain cases in open resistance and mass riots. This mechanism is not only evident in many developing and emerging countries, but similarly in developed ones, so that the Secretary General of the Council of Europe in January 2013 declared that "corruption is the single greatest threat to Europe today".

In summary, it can be stated that the "collateral damage" of political corruption on the political, legal and value system of a country outweighs the financial one by far. Because of the broad societal reach, corruption acts as a "fire-accelerant" and helps to rob the states concerned of their legitimacy, to deprive citizens of their confidence in the functioning of political decision-making processes and to destroy their belief in the rule of law of state action. Thus, corrupt politicians and high officials are increasingly removing from their own country the common foundations that are essential for the rule of law and social coexistence, and without which the political system is doomed in the long run. In doing so, they not only steal from their citizens the trust in their country but ultimately seal their own downfall with their greed for power and money!

6.5    Endangering Internal and External Security

In order to carry out properly its tasks, besides other things a state usually needs sufficient financial resources to ensure the internal and external security of its citizens. This concerns both the physical equipment of the police and the armed forces, as well as the satisfactory training and payment of those there engaged. Here the empirically secured relationship applies: the stronger a state is, the lower the level of corruption and vice versa.

There are plenty of examples around the world that show how and to what extent corrupt officials and military members of weak states sell weapons and entire weapon systems to authoritarian and oppressive regimes, to organized criminality, and even to terrorists. The example can also be turned around: it then shows the extent to which police and military personnel in fragile states are susceptible to corruption.

The best known of all is the sale of nuclear material from former Soviet stocks. After the demise of the Eastern Bloc countries and the subsequent "power vacuum", corrupt officials and military personnel from these countries took advantage of the opportunity to shift weapons against "hard cash" to all sorts of war and civil war countries. From the simple Kalashnikov to high-tech anti-aircraft missile systems, everything could be gotten on this huge arms market - if only the price was right.

Of particular concern, however, was and still is the uncontrolled shift of nuclear material for bomb constructions, which finally brought the international community to the scene. While their intervention has improved the collection and control of nuclear stocks, there is still a large amount of fissile material in the very opaque, illegal, international arms markets around the globe, waiting for interested buyers.

But the lucrative trade in weapons and advanced weapons systems is not limited to the weak states. For example, politicians and armaments merchants in Western countries are repeatedly involved in illegal and semi-legal arms deals - simply because profits are highest here and trade bears only little risks - apart from the risk of being discovered.

In the area of internal and external security, the collateral damage of corruption is particularly obvious and intense. The illegal and sometimes highly sensitive sale of certain weapons and weapons systems in war and civil war countries around the world robs not only the living population of their last livelihoods, extends their suffering and consolidates the prevailing despotic regimes there. Through the irresponsible sale of weapons and weapons systems, the corrupt actors involved are stealing from their own citizens their domestic and external security and thus in addition, they help ensure that, for example, religious terrorism, organized crime such as international drug trafficking, human trafficking and civil wars all over the world can leave their bloody traces unchecked anywhere in the world.

6.6    Impairments at the International Level

The negative effects of corruption at the international level range from more or less pronounced individual or group crime to organized crime "on a very great scale" aready mentioned earlier. While in the first case mainly public officials are bribed at lower levels, such as the shift of in the West stolen cars into the Central and Eastern European countries, in the latter one almost always higher officials are deeply involved. This applies, inter alia, to major public or private investment projects, government procurements, construction projects usually involving high-level political and administrative decision-makers.

Unfortunately, in some cases, countries with a relatively low level of corruption sometimes operate by "double moral standards" - especially if they have intensive economic relations with countries with a high risk of corruption, or if they depend on certain raw materials and energy resources needed for economy. Here again the principle applies: "The result justifies the means." But that should be the exception.

Rather, in particularly serious cases, it is quite customary as an "ultima ratio" to grant visa bans on an international level and to freeze bank deposits of corrupt politicians and civil servants. However, these measures are almost always answered with appropriate countermeasures - which is not unusual at all. As a rule, this not only leads to a general deterioration of the bilateral or multilateral relations between the countries concerned, but can also provoke an unwanted "swinging-up process", which does nothing in the cause and cannot solve the problems but only damages all affected countries.

At an international level, corruption is also an omnipresent problem in other areas, which at first glance are not directly related to economic interests: This is, for example, about major sporting events such as football World Cups, Olympics, Formula One races and similar, as well as other international important events with signifcant image-promoting effects such as world exhibitions, notable international conferences and the like. Nevertheless, it should not be ignored that even in these cases most significant commercial interests are involved, be it on the part of the sporting decision makers, be it on the part of the sponsors, be it the organizers or other political interest groups: Just think of the 2016 Olympics in Rio de Janeiro and the FIFA World Cup 2018 in Russia and 2022 in Qatar, which were and are accompanied by huge corruption scandals.

Nevertheless, there are also other views - sometimes even represented by well-known scientists - who argue that corruption is to be looked at solely from the purposive-rational and functional side and that moral considerations are left out completely. Here, in their opinion, corruption "under certain conditions" could be a means of opening up pragmatic and prosperous ways, namely if focussed on weak or badly functioning states. And a look at reality would show that there are indeed practical examples for both the "pros" and the "contras".

This also would apply to the attitude of citizens towards corrupt politicians, based on a 2007 scientific survey: The voters would not only support corrupt politicians in so-called weak states, if they only perceive their specific interests, but remarkably, a similar attitude of citizens will also be evident in the so-called strong countries - especially when correspondingly known corrupt candidates have the reputation of being an "energetic actor" rather than a "petty-bourgeois, risk-averse functionary". However, this finding is always to be seen against the background that this is the choice of two "suboptimal candidates" that means the choice between the greater and lesser evil. If there had been a dynamic and non-corrupt candidate in addition, the survey results would certainly have been different. And in practice, there are recent examples that prove the opposite. One only must think of the election of French President Emanuelle Macron, who has left his scandal-ridden competitors far behind.

Even if the previous argumentation for a "tolerated" or even "appropriate" level of corruption should not be wiped out of the table for moral reasons alone, the negative effects far outweigh even from an economic point of view. Corruption always constitutes an unjustified personal enrichment to the detriment of society and ultimately leads to loss of wellfare for the general public, and those who take part in it also steal from their fellow citizens financial ressources they are entitled to.

But obviously such an argument would by no means cover the extremely damaging effects of corruption on state and social conditions, which are in the first place constitutive for the economic prosperity of a country. And that is why the moral, social and societal dimension of corruption must always be taken into consideration, which is directly affected by it!

7.   Summary and Conclusions

Corruption is similar to cancerous tumors and a creeping poison which, in the medium and long term, are destroying the whole of society and the state, causing not only substantial financial and welfare losses, but also a plethora of serious collateral damages ranging from environmental destruction, threats to internal and external security, emigration of skilled labor to less corrupt countries, to the global proliferation of nameless misery of individuals as a result of the sweeping trafficking in drugs, weapons, humans, and the like. Therefore, corruption always has a moral component and can not be grasped without it in its immense destructive power - even if here sometimes different ("academic") views are represented.

Certain developments observed around the world have brought corruption into the spotlight again: globalization and neo-liberalism. Both involve more or less unhindered, free movement of goods, services and capital, which, at best, should not be monitored by national or international agreements or controls, or should be monitored only on an unavoidably minimal basis.

In addition, in the lost communist states of the Eastern Bloc and in formerly Maoist China capitalist systems now have been established in which the pre-capitalist traditional corruption structures and corresponding behaviors such as "blat" and "guanxi" have been successfully adapted and integrated in all areas of economy and is a "natural part" of it nowadays. This fact alone, because of the immense population of these countries, has ensured that corrupt practices of various kinds have experienced an unexpected "renaissance" to some extent, so that the effective fight against it always seems hopeless. And what about the many states of Africa and Latin America where corruption rules in every conceivable form and everywhere, threatening to annihilate entire states.

Even if the fight against corruption seems at first glance desperatel there are also successes: The people of Brazil, for example, has achieved in chasing its President Dillma Rousseff out of office because of serious allegations of corruption. And in Africa, Robert Mugabe, President of Simbabwe - not least due to pressure from the population - also resigned due to severe allegations of corruption at the end of last year.

The choice of means in the fight against corruption mainly depends on the areas in which it takes place. Generally considered the most effective remedy is: transparency, transparency and again transparency! As the thieves shy away from the light, corrupt people or interest groups fear away from the public eye. However, so that this instrument can develop its full power, an independent, free press, unhindered access to relevant information and investigative journalism are essentially. But this is not necessarily the best way to do it, especially in developing and emerging countries, where authoritarian or even repressive regimes often are in power.

The most effective way to combat corruption usually can be found in the public sector, as such offenses can be prosecuted or punished either by disciplinary or even criminal law. In addition, all developed countries and an increasing number of developing and emerging countries now have special anti-corruption-units, ranging from individual so-called "anti-corruption officers" to entire "anti-corruption-divisions" and "-departments". The disciplinary or criminal sanctioning of corruption offenses can be very drastic in individual cases, ranging from the payment of fines, the imposition of official complaints and barricades, imprisonment up to the final removal from public service and the loss of all pensions - and sometimes even to the death penalty. Thus, the sanctioning instruments already has a deterrent potential that, for several reasons, cannot be found in the private sector.

However, the tasks of public and state anti-corruption-authorities are not only limited to discovering and prosecuting corruption cases. They are, by their very nature, primarily information, start-up and counseling services to all those public servants who have the "uneasy feeling" that they have come into contact with corrupt practices in their day-to-day work. Thus, these authorities fulfill tasks that prevent corruption, for example by formulating certain rules of behavior, codes of conduct, and the like, such as accepting gifts or inviting for business dinners.

These functions gives them a certain "pioneering role" for private enterprises that are not or only maginally subject to any state-issued anit-corruption laws legal or company commitments with regard to deal with corruption. Therefore, detailed and problem-focussed informations of private companies regarding the harmful effects of corruption on them and their business policy are particularly urgent. Whether one gets on here with legal requirements or rather voluntary self-commitments, can hardly be answered in advance. However, the fact is that an ever-increasing number of companies are entering into corresponding "business integrity commitments" and are also setting up special contact units for cases of suspected corruption.

Concerning the fight against corruption in the private and business sector TI has published a guideline over "Business Principles for Countering Bribery" in 2008, especially focussed on small and medium enterprises (SMEs) which contents very good practical instructions for this target group: The booklet includes guidance on how to define good business principles and formulate anti-corruption objectives, how to develop a mitigation program, how to describe the most common manifestations of corporate corruption, and how to meet implementation needs at the entrepreneurial, organizational and employee levels. The booklet closes with the necessary communication and, of course, internal control, leading to a view of ongoing monitoring and continuous improvement of relevant processes.

The question of the extent to which private companies integrate self-imposed codes of conduct into their strategic business policy cannot be seen at last in the context of the already mentioned ethno-cultural background in which they operate. Here well-meaning appeals to the moral obligation have little meaning, as long as they have not been convinced of the manifest material disadvantages corruption usually causes. And there is, as we have seen, quite a lot!

Finally, let's talk briefly about the role of "civil society" that it could play in combating corruption. What means civil society? This term commonly is the aggregate of non-governmental organizations and institutions that manifest interests and will of citizens. Civil society includes the family and the private sphere, referred to as the "third sector" of society, distinct from government and business. These include, for example, associations, foundations, non-profit limited liability companies, self-help groups, health care facilities, consumer organizations, environmental protection groups or citizens' initiatives, which regularly contribute to shaping a country in the sense of a responsible, democratic civil society.

As mentioned earlier, civil society can put considerable pressure on governments, administrations and private companies, thereby contributing to positive changes in society. An important basis for this, however, is that in the countries concerned citizens are also guaranteed their civil rights and thus the development of a civil society is possible in the first place. These include - inter alia - the right to general, free and secret elections, a free, independent press, the freedom of speech and assembly, the right to strike and the right to peaceful demonstrations and the like.

As the common citizen often himself is affected by the negative effects of corruption in the state and private companies, in whatever form, under the aforementioned conditions the civil society will actively campaign for a change in the unsatisfactory conditions and thus put pressure on the anti-corruption measures of the entire society increase significantly. This trend may be delayed, but it cannot be stopped. So probably the former American President Abraham Lincoln is right: "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."



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