Case Study Bribery and Corruption in the Public Sector

Question: Describe about an essay "Bribery and corruption in the public sector, is endemic and unavoidable in all societies"? Answer: Introduction The word corruption is a multifaceted and a complex phenomenon. Its origination is rooted in bureaucratic and political institutions. Bribe on the other hand is one of the major components of Corruption. Both corruption and bribery is detrimental to the society and country as whole. The evolution of corruption acts like a hindrance to development of any country. Corruption enables a government to interfere in fields in which they are not needed and as a result the ability to implement policies in areas like environmental regulation, safety regulation, macroeconomic stabilization or other important issues, in which they are relevant is undermined and this proves to be bad for the country. Since corruption covers a wide range of human nature and actions, it is necessary to define corruption and its tool, bribery to understand its effect on the economy as a whole. The word corruption actually means utterly broken first used by Aristotle. In laymans language it means double-dealing or fraudulence exercised by those in power (it can be an elected politician or civil servant or any one in power). We would like to stick to a more clear and distinct definition of Corruption- the abuse of public office for private gain. Corruption in the public sector occurs when a private agent abuses the public official by bribing. Even if bribing is absent, then nepotism or patronage comes in the form of corruption. Corruption that includes bribery, extortion and embezzlement has different forms. Like, Petty Corruption, Grand Corruption, Systematic Corruption, Systematic corruption. Bribery can be defined as the act of influencing the actions of an official in the private agents favor by offering gift or money of dishonest nature. The Blacks Law Dictionary describes bribery as the offering, giving, soliciting or receiving of any valuable item that alters the behavior of the recipient in favor of the one who bribes. Bribery can be in the form of tips, valuable gifts, perk, discount, lucrative contract, donation, unethical promotion etc. For eg. a local train passenger can bribe the ticket checker for travelling without a ticket or an individual can bribe a public official to speed up the work that was pending for months. (Steinberg, 2001) Now that the idea about corruption and bribery found a clear vision in the essay, we now move forward to evaluate its impact on the public sector. Emergence of corruption bribery: To understand the idea of Corruption within government, we need to know what happens in this government and how corruption has link to this. Now, government/public sector is a system whose objective is to improve the lives of the citizens by utilizing the public funds and provide services in the field of administration, defence, public roads, bridges, infrastructures, primary schools, healthcare system without a thought of profit maximization. Now this very definition gives rise to what is called corruption. When the government officials are left with public funds to improve the lives of the common people, it is when the idea of fund laundering creeps into their minds. This gives rise to corruption. For example, a fund allotted to a municipality for the reconstruction of a dilapidated road is tactfully channelized by a government official into their personal accounts and thus money laundering. Bribery being the major tool of corruption evolves within the government sector where the officials may seek bribes for government contracts, government benefits like access to pension or unemployment relief, lower taxes, issuance of exclusive licenses, ignoring illegal activities such as drug dealing or to favor legal proceedings. The different forms of corruption and bribery puts forward a question, can corruption be eradicated in all societies. Answer lies in the concept of corruption being endemic. This means that corruption in the public sector is systematic in nature. Corruption thus, is in the hands of the public agents residing within the system. The paper on Corruption Techniques in public procurement with examples from Hungary dealt with the different techniques of corruption that were used for public procurement. A standard public procurement is said to be good and coordinated if transparency, fair competition and accountability complement each other. A series of interview with the public procurement practitioner revealed information about the corruption techniques and as casted by the Hungarian media includes defining unnecessary needs, tailoring eligibility criteria, using complex contract, selective information provision, unfair scoring and many more, tarnished the image of the public procurement scenario in Hungary. This paper concluded that more than 1500 court cases of Hungary involved the public procurement corruption. (Fazekas, TTth King, n.d.) This paper gave us a view that corruption within the public sector is endemic in nature and such occurrence is prevalent in most countries. Causes Of Corruption Need For A Reform The causes of corruption within the system comes from the concept of dysfunctional government where the public sector employee is discouraged to work productively because of certain factors that include low and diminishing civil service remunerations, deprivation of promotion and lack of other aspects of expansion in work. (Google Books, 2015) The need for a regulatory framework depends on the understanding of the adverse effect of corruption and bribery. Tanzi (1998) sums up the effects as Reduces investment, as a result growth gets reduced. Increases public investment because public projects are easier to manipulate and channelize funds. Declines tax revenue due to corrupt tax and customs administration. Reduces FDI Reduces the real allocation to public projects which deprives the citizen from raising their standard of living, A regression analysis by Mauro (1998) shows that countries with improved corruption index from 6 to 8 (0 is the most corrupt and 10 being the least) will showcase a 4 percentage point rise in its investment rate and a half percentage point increase in its annual rate of per capita GDP growth. Thus a regulatory framework is necessary to stop corruption hindering the path of development. (Iadb.org, 2015). A Regulatory Framework Corruption in the public sector is pervasive in nature and fighting it is a long term process. However proper implementation of anti corruption programme is required can help to reduce corruption. There is a growing awareness among most of the countries to check corruption by sound governance which plays a pivotal role. 15 OECD (Organization of Economic Co-operation and Development) members invited to exchange their view on tackling corruption, came to the conclusion that law enforcement, investigation and control measures are some of the corruption preventing mechanism(Oecd.org, 2015). In the US, the Department of Justice has galvanized its anti corruption committee. The US government strongly enforces its anti corruption legislative framework including the Foreign Corrupt Practices Act (FCPA) which prohibits money laundering, abuse of office, extortion and bribery. The American Anti-Corruption Act depicts three outcomes: Elimination of Political Bribery Increase transparency and stop secret money Establishing citizen funded elections to enable each voter a voice. (Bryancave.com, 2015) The UK has put forward a more intense anti corruption act called the UK Bribery Act, 2010 which promises to strengthen the position of the UK on bribery and corruption and also looks into the aspect of global anti-bribery legislation. The Act includes: All bribery. No exception to facilitation payments. Corporate offense to fail to prevent bribery. Offense not only to offer but to accept bribe. With such promising role of the several anti corruption laws in the US and the UK, it will be possible to deal corruption globally and enhance growth and development in any economy.('The Bribery Act 2010', 2011). Conclusion: Corruption and bribery might seem to be endemic in and its effect cannot be overlooked. From the economics point of view, corruption may not affect the short run efficiency of it means only a transfer of economics rent from a private agent to a government employee. In the long run, in the presence of bribe the public official tend to change the pattern of their work which include speeding up work, accepting contracts put up for bid and also changes the method of awarding a contract. Politically viewing, the creation and allocation of rents by unfair means helps to catapult the political purposes by rewarding supporters, buying opponents, assembling funds for elections etc. This results in a barrier to capital accumulation and growth for the economy. (Martinez-Vazquez, Arze del Granado Boex, 2007) Countries are realizing their role to prevent corruption and bribery at an alarming rate. So the anti corruption programs must be implemented judiciously in all countries to help an economy grow. The pattern of corruption can be altered only by altering the structure of power accumulated in the hands of corrupted officials. This is possible by a better functioning of a sound government. (Johnston, 2010) Corruption in the public sector erupts within the system giving rise to several hindrances to the growth and development of the economy. Thus Corruption is unavoidable in all societies. And there is an urgent need to stop corruption and bribery, in order to make lives of the citizens easier. (Andersson Bergman, 2009) References: Andersson, S., Bergman, T. (2009). Controlling Corruption in the Public Sector. Scandinavian Political Studies, 32(1), 45-70. doi:10.1111/j.1467-9477.2008.00222.x Bryancave.com,. (2015). Bryan Cave | Services | Global Anti-Corruption/Foreign Corrupt Practices Act Team. Retrieved 4 February 2015, from https://www.bryancave.com/gact/ Fazekas, M., TTth, I., King, L. Corruption Manual for Beginners: 'Corruption Techniques' in Public Procurement with Examples from Hungary. SSRN Journal. doi:10.2139/ssrn.2333354 Google Books, (2015). Public Sector Corruption an International Survey of Prevention Measures. Retrieved 4 February 2015, from https://books.google.co.in/books?id=3Km3s7ikN84Cprintsec=frontcoverdq=corruption+in+the+public+sectorhl=ensa=Xei=FtrRVMHPAdbz8gWe_YDABQredir_esc=y#v=onepageq=corruption%20in%20the%20public%20sectorf=false Iadb.org, (2015). The Fight Against Corruption: A World Bank Perspective. Retrieved 4 February 2015, from https://www.iadb.org/regions/re2/consultative _group/groups/transparency_workshop6.htm Johnston, M. (2010). Public sector corruption. London: SAGE. Martinez-Vazquez, J., Arze del Granado, J., Boex, J. (2007). Fighting corruption in the public sector. Amsterdam: Elsevier. Oecd.org,. (2015). Fighting corruption in the public sector - OECD. Retrieved 4 February 2015, from https://www.oecd.org/corruption/ethics/ Steinberg, F. (2001). Helping Countries Combat Corruption Progress at the World Bank since 1997.Habitat International, 25(4), 617-618. doi:10.1016/s0197-3975(00)00039-4 The Bribery Act 2010. (2011). Structural Survey, 29(1). doi:10.1108/ss.2011.11029aab.005