Understanding Corruption

How Corruption Works in Practice

Robert Barrington, Elizabeth David-Barrett, Sam Power, Dan Hough

• Publisher: Agenda Publishing
• Year: 2022
• ISBN:
  9781788214469
• Topic: Politics & International Relations
• Subtopic: Political Corruption & Misconduct
• Index: Politics & International Relations

Corruption takes many different forms and the systems that enable it are complex and challenging. To best understand corruption, one needs to examine how it operates in practice. Understanding Corruption tells the story of how corruption happens in the real world, illustrated through detailed case studies of the many different types of corruption that span the globe. Each case study follows a tried and tested analytical approach that provides key insights into the workings of corruption and the measures best used to tackle it. The case studies examined include examples of corporate bribery, political corruption, facilitation payments, cronyism, state capture, kleptocracy, asset recovery, offshore secrecy, reputation laundering and unexplained wealth, and actors include businesses, governments, politicians, governing bodies and public servants.

1

Corruption in theory and practice

Dan Hough

Fashions change: the hula hoop, the lava lamp and the Rubik’s Cube were once the height of coolness. No longer. Some things, however, never seem to go out of fashion. They have an appeal that keeps them relevant. This can be the enduring attraction of popular brands or it can centre on the deeper drivers of human behaviour. Amidst all the ups and downs of life there is still plenty of continuity.

Corruption is a perfect example of that sort of continuity. Types of corrupt practice change, the mechanisms that individuals use when engaging in corruption evolve (at times breathtakingly quickly) and the challenge of working out how to counteract corruption becomes ever more complex. Yet even if the nature, extent, scope and opportunity to be corrupt inevitably wax and wane over time, the corrupt temptation remains an underlying constant.

The extent and scope of academic analysis of corruption has not always been quite so constant. Ancient philosophers such as Plato and Aristotle may well have recognized corruption and indeed condemned it, but for significant periods of time corruption did not really feature on the radars of too many social scientists (Buchan & Hill 2014). It was acknowledged to exist, but a variety of factors prompted scholars to generally look elsewhere for their objects of study. There are plenty of understandable reasons for that. Corruption remains a classic “contested concept”; we know it when we see it, but pinning down its key attributes remains tricky (Philp 1997; Gardiner 2002). Corruption is virtually impossible to meaningfully measure (Heywood 2015). Corruption is generally a clandestine process that subsequently makes both quantitative and qualitative analysis tricky; what data should we use and how do we ask questions of those who are potentially involved in the process?

All that having been said, the last half century has seen academia wake up to the corruption challenge and indeed start to confront those issues. Corruption may well be hard to define, but so are concepts such as democracy, freedom, justice and a range of other ideas that occupy social scientists’ thinking. Grey areas notwithstanding, corruption remains in essence the deliberate abuse of entrusted power for private gain (Nye 1967). No definition ever incorporates every potentially corrupt act, but this one is still a perfectly acceptable place to start.

Aggregate indices that purport to measure perceptions of corruption have come in for a veritable barrage of criticism (Heywood & Rose 2014; Hough 2016), but clever measures over and beyond those are now in ever more plentiful supply. Attempts to measure experiences (as opposed to perceptions) of corruption have come to the fore, attempts to focus on specific types of corruption have proliferated and there is a growing world of often nuanced proxy indicators out there. They range from public expenditure tracking surveys, often known as PETS, first trialled in Ugandan schools (Reinikka & Svensson 2005) to budgetary monitoring in the Chinese provinces (Stromseth et al. 2017).

The broader methodological challenge of researching an ill-defined and clandestine activity naturally remains and some scholars have been positively scathing in pinpointing some of the deficits of corruption research out there (Heywood 2017). They are right to draw our attention to the problems. But, as many of those researchers would be the first to acknowledge, that is not a recipe for inaction. Doing some research is much more preferable to doing no research at all.

The uptick in modern interest in corruption began when developmental economists started trying to seriously analyse corruption in the 1960s (Leff 1964; Leys 1965; Nye 1967). Anthropologists soon entered the fray, as did a number of pioneering political scientists (Scott 1969; Heidenheimer 1978; Rose-Ackerman 1978). As we moved into the twenty-first century, corruption became more or less mainstream across the whole swathe of disciplines that come under the rubric of social science. The number of publications proliferated and any newcomer to the discipline now may well struggle to know where to start in making sense of it. Corruption research is most certainly now in plentiful supply.

What (might) work and what (probably) will not

Yet nagging questions still clearly remain. First, in real-world terms there is a need to be clear about what works in fighting corruption and how we know that it works. That is not as easy to do as it may sound. There is no anti-corruption toolbox out there for politicians to simply dip their hands into when they want to solve a given problem. Anti-corruption initiatives come in a plethora of different shapes and sizes; some are direct while many others are a more subtle and indirect. All will take time to have an effect. Indeed, the nature of that effect may also be far from constant. What appears to bring about positive change in one setting may have no discernible impact in another. In a third jurisdiction it may even prompt negative policy outcomes. Work on the differential impact of electoral systems on corruption is an excellent example of this (Persson, Tabellini & Trebbi 2003; Kunicova & Rose-Ackerman 2005). If anti-corruption were easy there would be no need for books like this one.

Claims by politicians that they will end or eradicate corruption are also generally unhelpful. They are patently not going to be able to do that so we need other ways of assessing progress. We argue in this book that it is only by establishing what it is that we should be seeking – level playing fields for business; robust integrity standards in public life – that we can then move on to understand what has genuinely worked. Making goals specific and providing information to assess whether they have been achieved lies at the root of assessing whether a given regime is genuinely serious about the anti-corruption undertaking.

One step towards realizing aims like these is to ensure that the best academic research feeds into the thinking of practitioners. While there is certainly evidence that that does happen, it is still not always clear that the world of theoretical reflection interacts particularly well with that of public policy. Some practitioners are certainly interested in learning from academic insight, but the two worlds only infrequently work productively together to face down real-world challenges. There are potentially four conclusions that can be drawn from this and they can be seen in Table 1.1.

Table 1.1 Academic research on corruption and public policy outcomes

	Theoretically robust	Theoretically problematic
More practical application	(a) Specific policy proposals come out of theoretically nuanced research	(c) Theoretical problems lead to policy initiatives that do not work
Less practical application	(b) Theoretical rigour hard to translate into real-world policy initiatives that generate positive outcomes	(d) Theoretical problems (often implicitly) acknowledged and work largely ignored

Three of those four outcomes should lead us to be rather downbeat about how the world of academia contributes to the world of public policy provision.

First, as is noted in the bottom left quadrant of Table 1.1 (theoretically robust but with less practical application), much of the research that exists is built on widely accepted theoretical assumptions but it remains practically very challenging to translate into policy proposals that have clearly visible, positive outcomes. Modelling corrupt practice remains a growth enterprise and scholars working in that tradition have conducted some fabulous pieces of research that illustrate how, why and where corruption happens. Learning practical lessons from them about prevention or cure is nonetheless far from easy. For example, Fisman and Miguel’s analysis (2007) reveals how more or less corrupt cultures travel when related to the parking practices of United Nations diplomats; while Cohn et al. (2019) demonstrate that people are keener on “doing the right thing” in terms of returning lost wallets if there is more rather than less money in there. But how does that translate into anti-corruption policy prescriptions? That is not an easy question to answer.

There is another interpretation of that same dilemma. If one assumes that academic research does have something to offer to public policy, then it may well be that the issue is more that policy makers are not particularly receptive to it. The research may be theoretically coherent but it just never gets onto the desks of the relevant movers and shakers. Significant attempts have been made to try to do something about this (Anti-Corruption Evidence Programme 2021), but the nagging doubts still remain; boffins in ivory towers think a lot but either they do not really appreciate the challenges of getting public policy right or policy makers simply do not have enough hours in the day to look in depth at what the academics are doing.

Second, a less generous reading of academic work on corruption is that the research that is produced is theoretically problematic, which points to the upper right of the quadrant in Table 1.1 (theoretically problematic but adopted for practical application). If practitioners implement proscriptions that are built on rocky theoretical foundations, then it will inevitably lead to policy applications that simply do not work. Within academia there has been plenty of debate on precisely this issue. The dominance of the rational choice paradigm (Rose-Ackerman 1999; Rose-Ackerman & Palifka 2016) has often led to nicely coherent research designs, but there have certainly been times when the nuances that complicate real-world life have not been suitably acknowledged. Bo Rothstein and his team of scholars in Sweden (Persson, Rothstein & Teorell 2013) have talked of a significant “mis-characterisation” of the problem, while Heather Marquette and Caryn Peiffer (2015) have highlighted how different theoretical horses are needed for different real-world courses. Alina Mungiu-Pippidi (2015) has also impressively highlighted how this theoretical confusion has led to misunderstandings about how best to try to move from high to (relatively) low corruption settings. Not everyone, in other words, should strive to be Denmark – they are not like Denmark, and will never become Denmark, so applying the solutions that had worked for Denmark is likely to be a lost cause (Mungiu-Pippidi 2014). In this reading of problematic theory leading to flawed policy, academic work still has much to do in producing material that can make a real-world difference.

Third, there is a notion that goes over and beyond the “theoretically problematic = flawed practical outcomes” suggestion. As is noted in the lower right quadrant of Table 1.1 (theoretically problematic and with less practical application), if academic work is regarded as theoretically problematic it may simply not be taken seriously at all.

The evidence for this does not seem as widespread as cynics might assume. Regardless of what practitioners think of academics, there is clear evidence that practitioners are at least tentatively willing to listen to academics if they think good practical ideas might be the end point. That the ideas could end up being damp squibs is one thing, but international organizations such as the World Bank and International Monetary Fund (IMF) certainly do engage with academic practice, just as many other organizations do. If an organization is serious about addressing corruption, then, to greater or lesser extent, it does generally tend to be open to ideas that might help to fight it. Politics can certainly trump what would be best practice, and where the interests of those in power clash with what would help in fighting corruption, we will not see much headway. But one thing is clear: there are undoubtedly more organizations that are willing to listen than there were half a century ago.

From academia to public policy

The remaining quadrant of Table 1.1 (theoretically robust with practical application) is nonetheless where real progress can be made. Theoretically nuanced research that is rooted in context can and does come up with specific policy proposals that have the potential to make a difference. We know, for example, that where the rule of law is strong, where the media is (relatively) free and where public institutions are robust, research that is situated in the rational choice paradigm can make a difference. The widely acknowledged success of Hong Kong’s anti-corruption commission is an excellent example of this (Quah 1994). The need to sharpen up legal frameworks, play with the cost–benefit thinking of potentially corrupt actors and hardwire transparency and accountability into the way the public sector works can all be done by buying into assumptions that underpin rational choice thinking.

In places where the key drivers of effective governance are either patchy or bordering on non-existent, different approaches work. Mushtaq Khan, for example, has cleverly illustrated how “traditional” approaches to tackling corruption may well have destabilizing influences in places such as South Korea and China (Khan 2006). Khan is not making a play for corruption as a facilitator of more effective public policy, but he is raising awareness that dogmatically translating the assumptions that underpin much anti-corruption thinking into different contex...