A PEEP INTO CORRUPTION

In many instances one became speechless at the magnitude of corruption that bedevilled almost every nation of the world. It makes one to wonder why men can be so heartless to perform such unscrupulous act; this makes one to be dumfounded and imagine if corruption would ever be eliminated. A deep insight into the level of corruption as this write up would suggest, will expect a positive response as to how to culminate the evils that have been perpetrating our world.

A number of factors have been identified for increasing level of corruption and they are majorly linked with the structure of government activities that provide an avenue for insidious activities of public officials especially in the developing countries. Most of the processes in these countries, like issuing of permits and licences, collection of taxes, passport, have not been automated. Manual interference therefore allows the public officials who are saddled with the responsibility of authorizing and inspecting these activities to use their power to exploit individuals through bribery.

Another major cause of corruption that is majorly associated with the developing countries is the institutional issues. Public officials take advantage of the institution in place to commit all sort of atrocities. Public projects are awarded based on prejudice and nepotism; therefore, not given to the companies most suitable for efficient execution of the contract. They always find a way to influence contracts for their personal gain.

There are several unnecessary government accounts in many countries and therefore made it very difficult for government to monitor the inflow and outflow of all transactions most especially budgetary allocations. Government officials at different levels cash in on the loop holes to engage in all kinds of dubious transaction for their gains.

In many developing countries, developmental projects are chosen based on ethnicity, religion, association with a particular group, party interest and not on programmes that are actually suitable for economic development. These undermine government efforts to ensure thorough supervision of such projects and create an open ground for the mismanagement of funds needed for execution.

Many of the developing countries leaders have used their positions to loot billions of Dollars with the adverse effect on the economy. Some popular cases of corruption and the amount looted as reported by mapoftheworld.com are

General Sani Abacha(Nigeria)                     2-5 Billion Dollars

Mobutu Sese Seko (DRC)                                5 Billion Dollars

Mohamed Suharto (Indonesia)                    15-35 Billion Dollars

Muhammad Hosni Mubarak (Egypt)          70-90 Billion Dollars

 

When I thoroughly think over developing countries corruption cases, I can easily point out lack of good structures and institutions but even if they have them in place, will it ever face out or reduce to the barest minimum the level of corruption? My answer is NO and the reason being that the developed countries who have to a reasonable extent good structures, institutions and quality legal enforcement are still battling with the issue of corruption

Let us look at the cases below as reported by the same website

George Ryan was a former Governor of Illinois, USA from 1999 to 2003. In 2006, he was found guilty of money laundering and embezzlement, bribery, corruption, and tax fraud while in office. Also, Cunningham, a former member of USA house of representative, pleaded guilty to accepting bribes worth $2.4 million and for tax frauds. He resigned from the House in November 2005 and in March 2006 he was sentenced to over eight years in prison.

There is another case of Libor (London Interbank offered rate) scandal where it came to be evident that billions of Dollars worth of derivate was underpinned by banks who were inflating or deflating their rates fraudulently. These gave them the appearance of better credit-worthiness and helped them trade to trade in securities profitably. Loss to the US bank was 35 billion Dollars.

Let us not also forget the FIFA corruption scandal 2015. Let us just pause for few minutes and think over this, … done right or probably you can think very fast, that’s ok, did you figure out something? I am not trying to emphasize how much has been embezzled or whether they have been tried or not. But what I am trying to figure out is the reason such act is conceived and how to put a check to it. I don’t want to be a utopian that think of a perfect island but I believe there can be better checks to this monster called corruption knowing fully well its effect on the economy.

Corruption retards economic growth since funds that are needed for developmental projects (electricity, water, transportation etc.) and programs (poverty alleviation programs, youth development programs etc.) have been mismanaged leaving little or nothing for the said projects. Once corruption incidence is very high, it will also affect the confidence of foreign investors and they may divert their funds elsewhere

Corruption affects the ability of government to correct market failure through regulations and inspections. Once government fails to efficiently use his control measures on banks, hospital, transportation and financial activities, it will lose part of its reasons for existence (Tanzi, 1998).  This in no turn can increase the level of inequality within a country as the people who have better position takes advantage of the masses therefore creating a situation where the rich become richer while the poor become poorer.

The inability of any government to fight and reduce the level of corruption in any country will trickle down to every sectors of the economy. Most countries set up institutes or commission to tackle corruption but once these institutes are also corrupt, it then becomes a question of who watch after the other. There are also several regional anti-corruption agencies as well as United nation anti-corruption agreement between member states but can we also deliberate on other possible solutions that would help our world?

 

References

Can corruption ever be eliminated? Facts and infographics. (n.d.) World map website.  http://www.mapsofworld.com/infographics/poll/can-corruption-ever-be-eliminated-infographic-text.html

Tanzi, V. (1998). Corruption around the world: Causes, consequences, scope and cures. IMF Working paper WP/98/63

4 thoughts on “A PEEP INTO CORRUPTION

  1. Corruption is a global phenomenon affecting all the countries of the world. According to the transparency international, over six billion people live in a country where there is a serious corruption problem. The annual cost of bribes paid in both emerging and developed economies amounts to $1.5 to $2 trillion globally which is about two percent of the global GDP meanwhile the total cost of corruption is multiple times larger because bribes constitute only one aspect of the possible forms of corruption (IMF report (2016). In my opinion, I believe there should be a global concerted effort to tackle corruption. International organisations need to work with anti-corruption agencies at different countries to strengthening institutions, expose corrupt officials and bring them to justice. This would serve as a disincentive to others who have the tendencies to be corrupt.

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  2. You have raised valid points, and we cannot discard the socioeconomic effect of corruption. According to the World Bank, the annual exchange of bribes is valued to be worth 1 Trillion dollars, and trust me, this is a very conservative approach. However, I have contrary opinion on some of your arguments most especially your points on corruption in the developed world. While you have raised examples of different cases of corruption in some developed countries, your points may be misleading because those examples does not particularly affect people directly. Of course, I understand that tax evasion is bad, but when you compare this type of corruption with what is obtainable in the developing world most specifically, Sub-Saharan Africa, you will agree with me that those are “child’s play”.

    Think of a certain individual that divert all the funds meant for the internally displaced people in Nigeria. Look at the effect on those people affected. It is already sad that this people fled their homes as a result of terrorist activities of BokoHaram which should have been combated by the Military if they are provided with arms and other necessary ammunitions (Corruption), but someone actually embezzle the funds meant to be used to purchase relief for them?

    Another instance in which corruption is different between the developed world and less developed world is the structure, form and the institutional display of corruption. In the developed world, while there are different cases at the upper echelon of the society like the examples you have provided, and even the recent VolksWagen C02 emmission saga, you may not likely have to pay bribes to the Policeman on the street, or tip a goverment offical to get some licenses, or permit. Unfortunately, this is not the case in the “poor countries”. Corruption is unfortunately the fabric of these societies, and trust me, these are the forms of corruption that actually affect individuals directly.

    I will appreciate your opinion on this.

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  3. Thanks for your observation Tayo, I really understand your view. I just want you to know that corruption is detrimental to any economy whether it is vivid as in the case of emerging economies or has no much influence when referring to the developed economies. Corruption in the emerging economies can be clearly seen because their institutions are porous while majority of the people are poor, unemployed, lack basic infrastructures to mention are few and the impact can be greatly felt when the little resources to create wealth are being mismanaged.
    Corruption is also worrisome in the developed countries as it has long term effect in the distribution of wealth and income. How do you want to value the activities of the lobbyists in the US for example who influence politicians in the legislation process and pass bills that favour their businesses into law at the expense of heavy tax being laid on the people? What of the issue of panama papers, how do you want to estimate the value and the enormous effect of tax evasion? Corruption is a serious problem in the world generally and the need for concerted effort to fight against it

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