Thursday, August 6, 2009

How Political Corruption Works

Former Rep. William Jefferson, a US democrat, accepted more than USD400,000 in bribes and millions more in exchange for brokering business deals in Africa. Jefferson hid his bribes by funneling money disguised as consulting fees through sham companies controlled by his wife and brother. His name does not appear in the deals to avoid implications of impropriety. His defense argues that Jefferson was acting as a private business consultant and that his actions do not constitute bribery. (It's perception! and more on the Jefferson case.) Jefferson’s political-business wiles are common practice in many developing countries.

How Political Corruption Works (In The Simplest Case)

03-Political-biz corruption cartoon copy

(The individual drawings are courtesy of www.clipartguide.com)

  1. The morally grey company identifies a potential business project and some of the key constraints to securing the deal.
  2. The company approaches its friendly politician and makes a verbal financial deal with him in exchange for his help.
  3. The morally grey company pays off the politician through his stooge company and bogusly writes it off as a marketing expense. In exchange for the money the stooge company fabricates a bill for the provision of marketing consultancy services. Payment is made either in part or in full depending on their arrangement.
  4. The politician either personally approaches the relevant personnel in his government to contact the foreign counterpart or uses his rookie to avoid direct association.
  5. The stooge company then pays off the politician and possibly the key decision makers (most likely in cash to avoid a paper trail) if necessary.
  6. The politician’s contact, if not himself, will then approach the key government official in the foreign country and persuade him/her to remove all bureaucratic obstacles so that the business deal goes through for the morally grey company. That could be quite a complicated process depending on the foreign country’s political system and legislation. Hence, more money might need to change hands in order for the morally grey company to succeed in getting the project.
  7. If the foreign politician’s wrangling succeeds, the morally grey company signs a legitimate contract with the final customer.

The Optimal Environment for the Morally Grey

Politician-corporate back scratching occurs everywhere. Morally grey power brokers and their corporate counterparts thrive best when:

:: The Political Environment is Controlled

01-Political bedroom-02b copy copy

:: The Legal System is Weak

01-Political bedroom-03b copy

:: Socioeconomic Conditions Support Corruption

02-Social system copy-a

All drawings provided by courtesy of www.clipartguide.com

Saturday, August 1, 2009

What’s the Big Deal About Corruption Anyway?

Life is hard and everyone needs money to pay bills, buy cars and big houses, pamper themselves with luxuries, pay for their kids, save for the future etc. But all that is hard work and money’s not always easy to come by.

thief-0060-0808-1917-5840 So what’s the big deal if an extra bit (actually, a large amount preferably) comes our way? And from the donor's point of view, it’s not a big deal to pay a bit to get things done exactly the way he/she wants especially if the potential rewards are much greater than the cost of bribery.

Societies with a Moral Vacuum thief-0060-0808-1917-5815

That, however, is from an individual’s perspective. But what if everyone thought and behaved like that? If left unchecked, corruption will spread like a virus to all segments of the population. Entrepreneurs, accountants, lawyers, doctors, judges, the police, politicians, real estate agents, thief-0060-0808-1917-5833 bankers, priests, mothers, fathers, siblings, relatives, neighbours etc will all be on the take. Sounds exaggerated? Actually, no not really if you think about it.

We are all human and hence not infallible to the temptations that would bring a more comfortable lifestyle. All the more so if the Joneses' are oozing with material comforts. It just takes a few unscrupulous individuals and long periods of legal abuse and social neglect to corrode ethical standards for corruption to spread. Over time, corruption will become a way of life. It’s not impossible to corrupt entire societies.

Costs Increase

But then what? Nobody will do anything even if it’s their rightful paying job without an extra hand out. Now why would anyone want to pay extra to get things done? Public services are paid for thief-0060-0505-2712-4824 out of our taxes. So why pay the civil servant extra to expedite the administrative process? Judges, public prosecutors and the police are suppose to provide a public service in the form of maintaining law and order. Why pay more to get them to deliberately remove themselves as obstacles to serving law and order? Politicians are elected representatives of the people. Why should ordinary citizens have to pay them in dark alleys (actually these days payment is more likely to take place in plush hotels over a glass of bubbly) to do their job rather than only serving special interest groups for their private gains?

What about corporate corruption then? If businesses have to thief-0060-0808-1917-5844 start paying all round for “special commissions,” “brokerage fees” or “marketing expenses” the cost of doing business will rise. In order to maintain profit margins, there has to be a pass through effect. And consumers will end up paying more for products and services. Prices of everything tainted by corruption ie. cars, houses, education, healthcare, luxuries, food etc will go up and up. So how good is that? Not. We’ll be right back at the beginning of this blog.

Standards Deteriorate, the Incentive to Cheat Increases

thief-0511-0907-2019-1729 Corrupt practices are based on an informal “verbal contract” between the giver and the receiver. So what if you had to go in for a major health operation? You’ve paid the receptionist extra to be sure you get the room you want, you’ve paid the surgeon extra to encourage him to show up for the operation, you’ve paid off the nurses to remember to check in on you…. How do you know if they really will do as agreed? And who will you complain to if after such hefty expenses they don’t deliver on their word? At the very best you can try to lodge a police complaint but you will be guilty of bribery if you’re lucky; if, however, you are unlucky you’ll have to bribe the police officer to lodge your report thereby adding to your escalating costs and you might still be found guilty of corruption. At worse nobody shows up in the operating theatre and you die an unfortunate death having been financially cheated at the same time. Hmmm…….. such pessimism, yes? An exaggeration and an impossibility? No.

Nothing Functions As It’s Suppose To

If nobody can be trusted to do the job that they are employed for, nothing will function smoothly without money changing hands. Customers won’t trust businesses and service providers, suppliers won’t trust businesses, consumers and businesses don’t trust the government, politicians and the legal system. The government doesn’t trust itself……. The ethical conduct required to ensure a civil society functions for the benefit of society as a whole will break down.

Corruption, corporate tax evasion, money laundering, illegal organ sales by priests, ministers falsely making expense claims will have negative feedback effects in the human ecosystem.

Tax Collection Evaporates, Public Services deteriorate

taxes-0041-0701-2317-1629 Besides being costly for individuals eventually all these financial leakages will just slip through the taxman’s fingers. Government coffers will begin to look emptier. It’d be great if we could all pay less taxes (and none is even better) but like it or not public services still need to be paid for. So don’t expect much improvement in public health, education, transport, law and order (haha) etc. So as we grow older, we had best stash away enough to ensure we can pay comfortably for our golden years ‘cos the country may no longer be able to afford quality services for the public.

If we can not envisage the impact of our individual actions on society we might wake up many years down the line asking ourselves whatever happened to professionalism, standards and good governance? If there was ever any that must have happened a long time ago and would have faded away from memory. We might not recognise them then.

Thursday, July 23, 2009

Who’s Corrupt?

344731-Girl_1-full Girl : Dad, are you corrupt?

Father : No. The government is corrupt, the politicians and the police are corrupt. I’m not corrupt.

Girl : But I heard you ask the salesman to give you $100,000 to get your company to agree to the deal.

Father : That’s business. I’m a businessman.

Girl : Oh…. When is a businessman corrupt then? 344732-Fizzout-full

Father : A businessman is corrupt if he asks the salesman for $200,000 and didn’t get his company to agree to the deal.

Girl : Isn’t that..... stealing?

Father : No, no. Stealing is when you take the $200,000 without asking.

Girl : So what’s business?

Father : Business is about making as much money as possible for yourself.

Girl : So why don’t you just print your own money?

Father : Oh, the neighbours are already doing that in their backyard. But that’s cheating. And cheating is wrong!

Tuesday, July 21, 2009

Wot a Tough Life

Wot a tough life-02a copy


: I see you joined the police force for a bit of quick money. But you don’t exactly look like you’re living it up.



: I’m on the traffic beat.



: So? That’s perfect! There’re hundreds of traffic offenders every day and lots of ways to break the law. You even get to name your price! What’s your problem?


: Everyone’s so corrupt these days it’s disgusting. I have to pretend to issue a ticket to book an offender. But before I can even put my pen down and stick my hand out, my partner’s already pocketed the money for himself. And I wasted my life for this?

……*@#! I hate whiners **