Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
Corruption and Transparency > NetSparsh - Viral Content you Love & Share

Corruption and Transparency

I. The Facts

Just days before a much-awaited donor conference, the influential International Crisis Group (ICG) recommended to place all funds pledged to Macedonia under the oversight of a "corruption advisor" appointed by the European Commission. The donors ignored this and other recommendations. To appease the critics, the affable Attorney General of Macedonia charged a former Minister of Defense with abuse of duty for allegedly having channeled millions of DM to his relatives during the recent civil war. Macedonia has belatedly passed an anti-money laundering law recently - but failed, yet again, to adopt strict anti-corruption legislation.

In Albania, the Chairman of the Albanian Socialist Party, Fatos Nano, was accused by Albanian media of laundering $1 billion through the Albanian government. Pavel Borodin, the former chief of Kremlin Property, decided not appeal his money laundering conviction in a Swiss court. The Slovak daily "Sme" described in scathing detail the newly acquired wealth and lavish lifestyles of formerly impoverished HZDS politicians. Some of them now reside in refurbished castles. Others have swimming pools replete with wine bars.

Pavlo Lazarenko, a former Ukrainian prime minister, is detained in San Francisco on money laundering charges. His defense team accuses the US authorities of "selective prosecution".

They are quoted by Radio Free Europe as saying:

"The impetus for this prosecution comes from allegations made by the Kuchma regime, which itself is corrupt and dedicated to using undemocratic and repressive methods to stifle political opposition ... (other Ukrainian officials) including Kuchma himself and his closest associates, have committed conduct similar to that with which Lazarenko is charged but have not been prosecuted by the U.S. government".

The UNDP estimated, in 1997, that, even in rich, industrialized, countries, 15% of all firms had to pay bribes. The figure rises to 40% in Asia and 60% in Russia.

Corruption is rife and all pervasive, though many allegations are nothing but political mud-slinging. Luckily, in countries like Macedonia, it is confined to its rapacious elites: its politicians, managers, university professors, medical doctors, judges, journalists, and top bureaucrats. The police and customs are hopelessly compromised. Yet, one rarely comes across graft and venality in daily life. There are no false detentions (as in Russia), spurious traffic tickets (as in Latin America), or widespread stealthy payments for public goods and services (as in Africa).

It is widely accepted that corruption retards growth by deterring foreign investment and encouraging brain drain. It leads to the misallocation of economic resources and distorts competition. It depletes the affected country's endowments - both natural and acquired. It demolishes the tenuous trust between citizen and state. It casts civil and government institutions in doubt, tarnishes the entire political class, and, thus, endangers the democratic system and the rule of law, property rights included.

This is why both governments and business show a growing commitment to tackling it. According to Transparency International's "Global Corruption Report 2001", corruption has been successfully contained in private banking and the diamond trade, for instance.

Hence also the involvement of the World Bank and the IMF in fighting corruption. Both institutions are increasingly concerned with poverty reduction through economic growth and development. The World Bank estimates that corruption reduces the growth rate of an affected country by 0.5 to 1 percent annually. Graft amounts to an increase in the marginal tax rate and has pernicious effects on inward investment as well.

The World Bank has appointed last year a Director of Institutional Integrity - a new department that combines the Anti-Corruption and Fraud Investigations Unit and the Office of Business Ethics and Integrity. The Bank helps countries to fight corruption by providing them with technical assistance, educational programs, and lending.

Anti-corruption projects are an integral part of every Country Assistance Strategy (CAS). The Bank also supports international efforts to reduce corruption by sponsoring conferences and the exchange of information. It collaborates closely with Transparency International, for instance.

At the request of member-governments (such as Bosnia-Herzegovina and Romania) it has prepared detailed country corruption surveys covering both the public and the private sectors. Together with the EBRD, it publishes a corruption survey of 3000 firms in 22 transition countries (BEEPS - Business Environment and Enterprise Performance Survey). It has even set up a multilingual hotline for whistleblowers.

The IMF made corruption an integral part of its country evaluation process. It suspended arrangements with endemically corrupt recipients of IMF financing. Since 1997, it has introduced policies regarding misreporting, abuse of IMF funds, monitoring the use of debt relief for poverty reduction, data dissemination, legal and judicial reform, fiscal and monetary transparency, and even internal governance (e.g., financial disclosure by staff members).

Yet, no one seems to agree on a universal definition of corruption. What amounts to venality in one culture (Sweden) is considered no more than hospitality, or an expression of gratitude, in another (France, or Italy). Corruption is discussed freely and forgivingly in one place - but concealed shamefully in another. Corruption, like other crimes, is probably seriously under-reported and under-penalized.

Moreover, bribing officials is often the unstated policy of multinationals, foreign investors, and expatriates. Many of them believe that it is inevitable if one is to expedite matters or secure a beneficial outcome. Rich world governments turn a blind eye, even where laws against such practices are extant and strict.

In his address to the Inter-American Development Bank on March 14, President Bush promised to "reward nations that root out corruption" within the framework of the Millennium Challenge Account initiative. The USA has pioneered global anti-corruption campaigns and is a signatory to the 1996 IAS Inter-American Convention against Corruption, the Council of Europe's Criminal Law Convention on Corruption, and the OECD's 1997 anti-bribery convention. The USA has had a comprehensive "Foreign Corrupt Practices Act" since 1977.

The Act applies to all American firms, to all firms - including foreign ones - traded in an American stock exchange, and to bribery on American territory by foreign and American firms alike. It outlaws the payment of bribes to foreign officials, political parties, party officials, and political candidates in foreign countries. A similar law has now been adopted by Britain.

Yet, "The Economist" reports that the American SEC has brought only three cases against listed companies until 1997. The US Department of Justice brought another 30 cases. Britain has persecuted successfully only one of its officials for overseas bribery since 1889. In the Netherlands bribery is tax deductible. Transparency International now publishes a name and shame Bribery Payers Index to complement its 91-country strong Corruption Perceptions Index.

Many rich world corporations and wealthy individuals make use of off-shore havens or "special purpose entities" to launder money, make illicit payments, avoid or evade taxes, and conceal assets or liabilities. According to Swiss authorities, more than $40 billion are held by Russians in its banking system alone. The figure may be 5 to 10 times higher in the tax havens of the United Kingdom.

In a survey it conducted last month of 82 companies in which it invests, "Friends, Ivory, and Sime" found that only a quarter had clear anti-corruption management and accountability systems in place.

Tellingly only 35 countries signed the 1997 OECD "Convention on Combating Bribery of Foreign Public Officials in International Business Transactions" - including four non-OECD members: Chile, Argentina, Bulgaria, and Brazil. The convention has been in force since February 1999 and is only one of many OECD anti-corruption drives, among which are SIGMA (Support for Improvement in Governance and Management in Central and Eastern European countries), ACN (Anti-Corruption Network for Transition Economies in Europe), and FATF (the Financial Action Task Force on Money Laundering).

Moreover, The moral authority of those who preach against corruption in poor countries - the officials of the IMF, the World Bank, the EU, the OECD - is strained by their ostentatious lifestyle, conspicuous consumption, and "pragmatic" morality.

II. What to Do? What is Being Done?

Two years ago, I proposed a taxonomy of corruption, venality, and graft. I suggested this cumulative definition:

The withholding of a service, information, or goods that, by law, and by right, should have been provided or divulged.

The provision of a service, information, or goods that, by law, and by right, should not have been provided or divulged.

That the withholding or the provision of said service, information, or goods are in the power of the withholder or the provider to withhold or to provide AND That the withholding or the provision of said service, information, or goods constitute an integral and substantial part of the authority or the function of the withholder or the provider.

That the service, information, or goods that are provided or divulged are provided or divulged against a benefit or the promise of a benefit from the recipient and as a result of the receipt of this specific benefit or the promise to receive such benefit.

That the service, information, or goods that are withheld are withheld because no benefit was provided or promised by the recipient.

There is also what the World Bank calls "State Capture" defined thus:

"The actions of individuals, groups, or firms, both in the public and private sectors, to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illicit and non-transparent provision of private benefits to public officials."

We can classify corrupt and venal behaviours according to their outcomes:

Income Supplement - Corrupt actions whose sole outcome is the supplementing of the income of the provider without affecting the "real world" in any manner.

Acceleration or Facilitation Fees - Corrupt practices whose sole outcome is to accelerate or facilitate decision making, the provision of goods and services or the divulging of information.

Decision Altering Fees - Bribes and promises of bribes which alter decisions or affect them, or which affect the formation of policies, laws, regulations, or decrees beneficial to the bribing entity or person.

Information Altering Fees - Backhanders and bribes that subvert the flow of true and complete information within a society or an economic unit (for instance, by selling professional diplomas, certificates, or permits).

Reallocation Fees - Benefits paid (mainly to politicians and political decision makers) in order to affect the allocation of economic resources and material wealth or the rights thereto. Concessions, licenses, permits, assets privatized, tenders awarded are all subject to reallocation fees.

To eradicate corruption, one must tackle both giver and taker.

History shows that all effective programs shared these common elements:

The persecution of corrupt, high-profile, public figures, multinationals, and institutions (domestic and foreign). This demonstrates that no one is above the law and that crime does not pay.

The conditioning of international aid, credits, and investments on a monitored reduction in corruption levels. The structural roots of corruption should be tackled rather than merely its symptoms.

The institution of incentives to avoid corruption, such as a higher pay, the fostering of civic pride, "good behaviour" bonuses, alternative income and pension plans, and so on.

In many new countries (in Asia, Africa, and Eastern Europe) the very concepts of "private" versus "public" property are fuzzy and impermissible behaviours are not clearly demarcated. Massive investments in education of the public and of state officials are required.

Liberalization and deregulation of the economy. Abolition of red tape, licensing, protectionism, capital controls, monopolies, discretionary, non-public, procurement. Greater access to information and a public debate intended to foster a "stakeholder society".

Strengthening of institutions: the police, the customs, the courts, the government, its agencies, the tax authorities - under time limited foreign management and supervision.

Awareness to corruption and graft is growing - though it mostly results in lip service. The Global Coalition for Africa adopted anti-corruption guidelines in 1999. The otherwise opaque Asia Pacific Economic Cooperation (APEC) forum is now championing transparency and good governance. The UN is promoting its pet convention against corruption.

The G-8 asked its Lyon Group of senior experts on transnational crime to recommend ways to fight corruption related to large money flows and money laundering. The USA and the Netherlands hosted global forums on corruption - as will South Korea next year. The OSCE is rumored to respond with its own initiative, in collaboration with the US Congressional Helsinki Commission.

The south-eastern Europe Stability Pact sports its own Stability Pact Anti-corruption Initiative (SPAI). It held its first conference in September 2001 in Croatia. More than 1200 delegates participated in the 10th International Anti-Corruption Conference in Prague last year. The conference was attended by the Czech prime minister, the Mexican president, and the head of the Interpol.

The most potent remedy against corruption is sunshine - free, accessible, and available information disseminated and probed by an active opposition, uncompromised press, and assertive civic organizations and NGO's. In the absence of these, the fight against official avarice and criminality is doomed to failure. With them, it stands a chance.

Corruption can never be entirely eliminated - but it can be restrained and its effects confined. The cooperation of good people with trustworthy institutions is indispensable. Corruption can be defeated only from the inside, though with plenty of outside help. It is a process of self-redemption and self-transformation. It is the real transition.

About The Author

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 .

Until recently, he served as the Economic Advisor to the Government of Macedonia.

Visit Sam's Web site at;

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at

Brookings Institution (blog)

The politics and tradeoffs of congressional budget process reform
Brookings Institution (blog)
In February, Congress reached a long-awaited budget deal to set overall levels of discretionary federal spending for this year and next. Included in the package was language establishing a new Joint Select Committee (JSC) on Budget and Appropriations ...

and more »

Maine Public

The Great (Political) Divide: Why Women and Millennials are Underrepresented in Politics
Maine Public
Dr. Shames' primary area of academic interest is American political behavior, with a focus on race, gender, and politics. For her dissertation research, she conducted and analyzed data from an original survey and a set of in-depth interviews about ...


Politics In The News
Noel King talks to Jonah Goldberg, senior editor of National Review, about President Trump breaking his silence over the weekend about special counsel Robert Mueller's Russia influence probe. NOEL KING, HOST: And it was a busy weekend here in D.C. It ...
Rancorous week looms with Trump untamed - CNNPolitics - CNN.comCNN
Five reasons why a single Trump tweet on Mueller stretched the
Trump Assails Mueller, Drawing Rebukes From RepublicansNew York Times
Washington Post -Fox News -Bloomberg -Twitter
all 1,175 news articles »


Is Gerrymandering to Blame for Our Polarized Politics?
For many pundits, the culprit is gerrymandering. Gerrymandering is the process by which districts for the House of Representatives are drawn so that one party—in recent years, because of their control of most state houses, the Republicans—has a ...

and more »

BBC News

Osborne and Blair: 'Gap in centre politics'
BBC News
Former chancellor George Osborne says there is an "enormous gap" in the centre ground of UK politics. He said "hard Brexiteers" had dragged the Conservatives to the right, while Jeremy Corbyn had moved Labour left. "I don't believe that the moderate ...

and more »


How do you handle conversations about politics?
Dr. Rock said too much politics can get in between people even people who agree on political views because one person will get typically more wrapped up in it than the other. He said no matter what a persons political persuasion is, there is bound to ...


AP PHOTOS: Curtains to carpets, red rules Chinese politics
In this Thursday, March 15, 2018 photo, delegates walk past red curtains as they leave after attending the closing session of the Chinese People's Political Consultative Conference (CPPCC) at the Great Hall of the People in Beijing. Red has long held a ...

Youth Mobilization Could Carve a United Front in Politics
Maine Public
Our saving grace is the people who are not only aware of the damage and lack of productivity this division has formed, but the people who act on their awareness. The way we have discussions and approach subjects must take on a nonaggressive and open ...

The politics behind Rauner's veto and the future of gun bills
The Capitol Fax Blog (blog)
Governor Bruce Rauner's veto of a gun-dealer licensing bill last week took a lot of folks by surprise. It probably shouldn't have. We'll get to the politics in a second, but as with HB40, the governor was acting on his beliefs. Rauner is a strong ...

and more »


The week in politics
(CNN) Take a look at the week in politics from March 11 through March 17. Andrew Harnik/AP. Secretary of State Rex Tillerson waves goodbye after delivering his farewell remarks at the State Department Tuesday following President Donald Trump's ...
Newly Emboldened, Trump Says What He Really Feels - The New ...New York Times
Trump decides to remove national security adviser, and others may followWashington Post

all 1,097 news articles »
Google News

UK Elections on the Horizon

With elections on the horizon and Blair looking tired and... Read More

Colts? Stadium Short on Horse Sense

The predominant discussion in the Indianapolis media over the proposed... Read More

Is The Bill Of Rights Necessary?

The Bill of Rights to our Constitution caused -- and... Read More

Droughts, Dirty Water and Disease

When we go through periods of droughts we also have... Read More

Cindy Sheehan ? President Bush and the Accountability Moment

Death may not be dignified in any light but the... Read More

The Self-Appointed Altruists

Their arrival portends rising local prices and a culture shock.... Read More

Companies, Consumer and Cost of Fuel

Which companies are most affected by fuel? Who really bears... Read More

Does America Get It about Terrorism?

I have to be honest. It is time to come... Read More

US Trade Deficit with Bordering Neighbors

The trade deficit with Canada is now 50 Billion per... Read More

Joseph Campbell - Permanent Human Values

At the start of the US involvement in WWII Joseph... Read More

The Typology of Financial Scandals

Tulipmania - this is the name coined for the first... Read More


MUD ? Much Unnecessary DisclosureThe Federal Trade Commission recently asserted... Read More

A Few Quick Thoughts on Freedom and Technology

We have known of the innate characteristic need of members... Read More

Truckers Take Some Hits and Keep On Trucking

After 9-11 insurance rates on Independent Truck Drivers and smaller... Read More

Wartime Britain & Things Look Bleak

This is the second of a series of four articles... Read More

Bio Attack Nation Unready

We are told by out leadership that we risk loss... Read More

How Futuristic Is Anarchy As A Way To Organize The State (I)

When organising a country or a group of people in... Read More

Bushs Election Victory: Ethics, Morality and Religion Defeated War, Economy and Foreign Policy

President George W. Bush has unofficially won his re-election bid... Read More

Eurovision Song Contest - Kiss My Butt Neighbours

Tonight I resigned myself to the fact that this is... Read More

History of the Media, Radio, and Television

When were the forms of media created? When did advertising... Read More

Ifs and VATs of Taxation in Macedonia - Should VAT be Applied in Macedonia?

To be justified, taxes should satisfy a few conditions:Above all,... Read More

Market Impeders and Market Inefficiencies

Even the most devout proponents of free marketry and hidden... Read More

Council of Six

The head of the Club of Rome has said that... Read More

The Wage-Productivity Gap

The most damaging factor to our economy today is the... Read More

Oil Prices Effect The United States Competitiveness

Just because we have been leading the World in innovation... Read More