Political corruption

What is political corruption?

The table below shows estimates of the funds allegedly embezzled by some of the most notorious leaders over the last three decades (from TI Global Corruption Report 2004:13). They represent only the tip of the iceberg of the problem of political corruption. Government leaders still abuse their political power to extract and accumulate for private enrichment, and use politically corrupt means to maintain their hold on power. (Photos by Microsoft Encarta (Suharto, Marcos), ANSA (Mobutu), Wikipedia (Abacha, Milosevic), Xinhuanet (Fujimori)

INTRODUCTION

What is political corruption?

Political corruption can be defined both with reference to the main actors involved, namely persons at the highest levels of the political system, and the purpose of the corrupt behaviour, namely to sustain the hold on power. Hence, political corruption can be for private and group enrichment, and for power preservation purposes. Often these two forms of political corruption are connected. Some of the larger and more serious political corruption scandals include both processes - accumulation on the one hand and the misuse of extracted or public money for political purposes on the other. The latter process is somewhat under-researched and underestimated, since much of the focus in the literature has been on accumulation.

Political corruption in the form of accumulation or extraction occurs when government officials use and abuse their hold on power to extract from the private sector, from government revenues, and from the economy at large. These processes of accumulation have been called extraction, embezzlement, rent-seeking, plunder and even kleptocracy ("rule by thieves"), depending on the extent and context. Extraction takes place mainly in the form of soliciting bribes in procurement and government projects, in privatisation processes and in taxation. Military procurement is known to be particularly affected by extractive political corruption worldwide, because of the involvement of top-level politicians, national interests and secrecy.

The other process, when extracted resources (and public money) are used for power preservation and power extension purposes, usually takes the form of favouritism and patronage politics. It includes a favouritist and politically motivated distribution of financial and material inducements, benefits, advantages, and spoils. Techniques include money and material favours to build political loyalty and political support. Power-holders can pay off rivals and opposition and secure a parliamentary majority. By giving preferences to private companies they can get party and campaign funds, and by paying off the governmental institutions of checks and control they can stop investigations and audits and gain judicial impunity. Furthermore, by buying loyal decisions from election commissions and by buying votes they can secure their re-election.

Political corruption takes place at the highest levels of the political system, and can thus be distinguished from administrative or bureaucratic corruption. Bureaucratic corruption takes place at the implementation end of politics, for instance in government services like education and health. Political corruption takes place at the formulation end of politics, where decisions on the distribution of the nation's wealth and the rules of the game are made.

Political corruption is usually also distinguished from business and private sector corruption. This is only a matter of academic classification, however, since the bribes offered by private companies, domestic and international, are frequent and significant corruption drivers. Our focus here, however, is not on the supply side of corrupt transactions, but on the demand side. Most definitions of corruption also emphasise the demand (state) side, for instance in stating that corruption is "abuse of public authority and power for private benefit".

In this text, we will not go into bureaucratic/administrative corruption, except when relevant to illustrating the systemic character of political corruption - the pyramid of upward extraction. We will keep the focus on the demand side, on corrupt governments, while acknowledging the importance of the supply side as drivers. We will furthermore focus on political corruption in developing and transition countries, and not the developed world (although examples from the developed world are used to illustrate certain mechanisms).

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Challenges for donors

What can donors do when the aid recipients/partner governments and/or senior government officials and politicians are corrupt? The two forms of political corruption pose at least three types of challenge for donors.

Firstly, how can the lack of political will to address the problem be confronted? When key individuals with political power are corrupt, there is often a deep lack of political will within government to address the problem. Political corruption cannot be tackled by a technical or bureaucratic approach alone, nor can it be treated only as another problem of market regulation or defective administration. Political corruption calls for solutions of a political nature that can be influenced by donors only to a very limited extent.

A second challenge for donors is how to contribute to constraining the corrupt extraction practices of certain governments and of government institutions and officials. On the one hand, this is a question of donor country/developed world companies offering bribes - how to dry out the supply side of the problem. On the other hand, the question is how can donors help create an environment that makes it harder for politicians to milk the system - to restrict the demand. The challenge is how to plug the holes of illicit extraction, and how to create transparency, accountability and domestic control mechanisms.

A third challenge for donors is how to constrain the corrupt use of resources for power preservation purposes. The corrupt use of public and private money by power-holders to maintain their hold on power is to a large extent a question of democratic controls, by state institutions (institutions of checks and balances, control and oversight), by independent civil society organisations and the media, and by citizens through the ballot box (democratic elections).

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DELIMITING POLITICAL CORRUPTION

Definitions

Political corruption is a phenomenon that defies direct measurement as well as clear-cut definition. In terms of measurement, researchers have relied on indirect methods and people's perceptions. In terms of definition, researchers have been confronted with a broad spectrum of popular connotations. "Political corruption" is frequently used synonymously with "corruption" (in general), whereas "governmental", "grand" and "coercive" corruption is sometimes used to denote political corruption, but the overlap is not obvious.

Political corruption has on the one hand been understood very broadly as "unethical behaviour which violates the norms of the system of political order". This includes almost anything and may embrace all sorts of moral and political judgements. On the other hand, it has been understood as "the breaking of the formal rules that regulate a position of political authority". This would restrict it to a matter of legal interpretation and criminal investigation, but would miss the deliberate manipulation of political institutions, laws and rules of procedure.

The most widely used definition of corruption is the World Bank's working definition of corruption as "abuse of public power for private benefit". Transparency International (TI) takes a somewhat broader approach and defines it as "the abuse of entrusted power for private gain". In this line, political corruption can be defined as "abuse of political power for private benefit". But the problem remains of defining what is "abuse" and what is "political".

Taking it back to Aristotle, the ancient Greeks had an understanding of corruption as a deviation from or perversion of sound government systems. Tyranny, for instance, was a corrupted monarchy, where the monarch no longer had the well-being of the nation (his subjects) in mind, but his own advantage. Corruption was basically seen as a problem of moral decay.

In 18th century England, corruption meant the encroachment by the executive on the legislature, for instance by money payments, the offer of positions and pensions, and the trading of patronage. Corruption was the violation of the principle of constitutional "checks and balances", authoritarian tendencies and the subsequent decay of the political order.

These and other historical understandings of corruption bring in two important aspects, namely motives and consequences. The corrupt motive is wealth, status and power, or more specifically self-enrichment, self-indulgence and power preservation (as contrasted to the non-corrupt political leader's concern for the well-being of the nation). The consequences of political corruption are institutional decay, arbitrary power, authoritarian tendencies and reduced liberty.

However, the consequences of political corruption cannot be the basis for a definition. That would be to put the cart in front of the horse. Not all acts of political corruption necessarily lead to institutional decay and political oppression, and political corruption is not the only factor that leads to institutional decay and political oppression. Not all acts of political corruption are even necessarily to the detriment of the 'public interest'.

The corrupt motive of power preservation is important. The concerns of the ancient Greeks bring in the possibility of collective benefit or gain, in addition to private benefit. Political corruption is therefore when the rulers or ruling elites misuse the resources they control for the benefit of preserving their political power.

A more specific delineation of political corruption can thus be made. The main aspects of political corruption are that it takes place at the highest levels of the political system, and that it involves politicians, government ministers, senior civil servants and other elected, nominated or appointed senior public office holders. It occurs when these officials, who make and enforce the laws in the name of the people, are themselves corrupt.

Furthermore, political corruption includes two basic processes. One process is located on the demand side of corrupt transactions; it is the methods by which ruling elites abuse their hold on power to extract and accumulate resources. It occurs when political power-holders enrich themselves, individually and collectively. The other process is the corrupt use of these (and other public) resources for the purpose of power preservation and expansion. It occurs when political power-holders use extracted resources or other corrupt means to maintain or strengthen their hold on power.

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A: Extraction

Political leaders may use their power to capture and accumulate resources in an illegal and immoral way through bribes, embezzlement, and fraud. The same purpose of accumulation can be achieved also in processes of privatisation, land allocation, public contracting, lending, and through preferences that benefit the business interests of office holders, even when they are legal or made relatively legal.

• Direct extraction from the private sector includes bribes, "commissions", and fees demanded from private businesses. It includes the classic (demand side) forms of corruption: payments taken for the granting and delivering of government services, licences, guarantees and loans, public projects and contracts. Bribes can also be taken to "protect" companies, and for the political creation of market protection, preferences, and monopoly rights. It includes payments taken for giving exemptions and relief from, for instance, tax regulations, environmental protection, and labour laws.

  One example is the South African arms deal scam, in which deputy president Jacob Zuma allegedly solicited bribes from an arms company in return for protecting the company from investigation and giving it his 'permanent support'. Another example is the shady financing of politicians in Costa Rica, a scandal which involved former president Rodríguez in a bribery scheme with the French telecommunications company Alcatel. Alcatel was awarded a contract to improve the country's cellular phone system after its officials successfully paid a US $2.4 million bribe, with 60% allegedly demanded by Rodríguez personally. Moreover, former president Figueres also received a US $900,000 bribe from Alcatel, and current President Abel Pacheco has been asked to explain an undeclared US $100,000 donation by Alcatel.

• The ruling elite can extract by giving preferences and favours to businesses in which they have a direct ownership. It is political corruption when through such means power-holders build up their private businesses and enterprises, while in power. It includes many of the same mechanisms as above, like the political granting of services, contracts, and licences, politically created market protection and monopolies, and regulatory exemptions.

  One example is the military-political corruption case in Uganda. Here, the Tri-Star company obtained unusually generous favours from the government (like start-up capital, tax holidays, and more). This led some Parliamentarians to suggest that Kananathan, the formal owner of the Tri-Star company, was a mere front for President Museveni. Another example is Zimwe Construction Co. Ltd., which has become one of the most successful bidders for government construction work. The company is successful because its owners have important connections with technocrats and political ties with high-level politicians (including the President). By some accounts, Zimwe Construction Co. Ltd is indirectly owned by the President.

• The ruling elite can also extract through theft and embezzlement of public resources. These practices include off-budget transfers and manipulated privatisation processes, and they include extraction from (and sometimes the depletion of) the country's natural resources, such as oil and gas, minerals, fish, and timber.

  The creation of the Russian oligarchs is symptomatic of how large privatisation processes may benefit only a few people with political connections. Another example is again military-political corruption in Uganda. Here, army officers, senior defence ministry officials and civilian politicians, including President Museveni, have benefited form Ugandan military operations in neighbouring countries. For instance, Ugandan forces have advanced into areas of eastern Congo to profit financially from the plunder of natural resources. Congo has proven to be a veritable treasure trove for a small number of high-ranking army officers who, together with their civilian counterparts, have become rich from this plunder.

  Another example is the Goldenberg Affair and the graft of the Kibaki regime in Kenya. The Goldenberg affair was a gold and diamond re-export plan, in which the government of former president Moi paid the Goldenberg company export subsidies for exports that later proved fictitious. Witnesses have given details of how former government officials allegedly took part in looting government resources through this fake gold and jewellery export compensation scheme. But the graft of the current Kibaki regime is also evident, according to a report of the former leader of the Kenya Anti-Corruption Commission, John Githongo. Allegedly, senior officials in the Kibaki regime are linked to a series of fraudulent contracts with the non-existent Anglo Leasing Company. Not only were Ministers involved in approving payments, but they also attempted to cover it up when it became clear that they were going to be investigated.

In these direct and indirect ways, power-holders can use their political control to extract from (and sometimes ruin) the private sector at large. When the returns to the companies are meagre, this form of corruption can be seen as extortion. Examples abound of businesses going bankrupt because of excessive and undue government extraction. In addition to impeding normal economic activities, the consequences can be devastating for investment, and increase economic inequality and inefficiency. When systemic, extractive corruption can destroy a country's development potential.

The consequences in political terms are equally grave. Corrupt extractive practices annihilate the political will of politicians to address the corruption problem in any serious way, erode trust and legitimacy in the government and in politics in general, make political decisions non-transparent, and can foster authoritarian political tendencies. Most important, the possibility of extraction can represent the strongest incentive for politicians to enter politics in the first place, and to try to hold onto power indefinitely.

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B: Power preservation

Incumbents can use many techniques to maintain power, of which many are perfectly legal while others are illegal and corrupt. The corrupt use of political power for power preservation and extension may take the form of buying political support through favouritism, clientelism, co-optation, patronage politics and vote buying. The means include the distribution of financial and material benefits (money, gifts and rents), but also symbolic values like status and "inclusion". The corrupt use of political power for power preservation and extension also includes the manipulation of various oversight and control institutions, creating various "impunity syndromes".

• One form of political corruption for power preservation is the use of money and material inducements to build political loyalty and political support. This can take place at all levels from opposition parties and MPs to citizens. Political loyalty and support can be bought in very many ways: it may take the form of direct money payments or promises thereof, the offer of jobs, appointments and positions (including ministerial, judicial, regional and other senior government positions), or positions in public companies and parastatals, and even titles of nobility.

  Parliamentary majorities can be bought. One example is vote buying in congress in Brazil. In 2005, the minority ruling Labour Party was accused of paying a monthly allowance of R 30,000 (US$ 12,500) to congressmen from two allied parties in return for their votes.

  Coalitions, 'opposition parties' and other political support groups can also be bought. One important technique is co-optation, which is the buying off of rivals. Civil society organisations and media can be incorporated (consumed) by government agencies; and journalists, NGO leaders, and activists can be co-opted. One example is the Angolan Christmas bonuses. One of the tactics used by the Government of Angola to foment a split in the rival party UNITA and force people into the new, regime-loyal "UNITA-Renovada", was to strip the non-compliant parliamentarians of their parliamentary privileges like homes, cars and cellular phones. Furthermore, 'worthy' members of the political establishment receive an annual 'Christmas bonus' from the President, including parliamentarians and members of 'opposition' parties who have behaved well. This bonus has in some years run as high as $30,000, dwarfing their annual salaries.

  Voters and elections can also be bought. An example of vote buying in Latin America is Brazil's municipal elections in 2001, in which 7 per cent of voters were reportedly offered money for their votes. Different surveys in Mexico place the frequency between 5 and 26 per cent, while a 1999 survey in Argentina found that 24 per cent knew someone who had sold his or her vote. The object of transaction is not always cash; offers include food, clothes, construction material, infrastructure projects, and more. Short-term jobs and public contracts were traded in Colombia's 2002 presidential campaign.

• By corrupt means, power-holders can secure their hold on power by buying and manipulating the public institutions of accountability and control. Parliamentary majorities and favourable legislative decisions can be bought, as can favourable decisions and lenient controls by various control agencies (ombudsmen, comptrollers, auditors, prosecutors). Even loyal decisions from electoral commissions and high courts have been bought.

  The latter point is clear from the example of the questionable impartiality of the election commission in Bangladesh. The alleged problem is that appointments to various positions in the Commission have been made based on political considerations, bringing into question the impartiality of the commission. The example of the Nicaraguan pact demonstrates how an informal agreement between the leaders of the two biggest parties has secured them both a seat in the National Assembly (and thus immunity), and has blocked opposition in parliament and investigations of corruption.

• It is political corruption when state resources - made available to office holders for public purposes - are used for party campaigning and electioneering in a biased, unconstitutional way. Material support to political parties and political campaigns can also be obtained from private businesses, and will be corrupt if state resources or other advantages are offered in return.

  One example of public money being used for a particular party or party campaign is the 'Dashain allowance' in Nepal. In 2005, the Royal Commission for Corruption Control began the prosecution of six former ministers for misusing the prime minister's relief fund to distribute some NPR 4 million (US $57,000) to political supporters. The Costa Rican case above (shady financing of politicians) is an example of how resources can be extracted from the private sector and invested in power preservation; the undeclared US $100,000 donation by Alcatel was given to President Pacheco's presidential campaign. The Israeli money and party financing example demonstrates how illegal donations for the political campaigns of ruling parties and candidates have been funnelled through foreign companies and family members. In 2005, the Israeli Attorney General indicted Omri Sharon, son of Prime Minister Ariel Sharon, for campaign finance violations during his father's campaign for the leadership of the Likud party in 1999 and during the 2001 national elections. Allegedly, Ariel Sharon took illegal donations of NIS 5.9 million (US$1.3 million) to enhance his chances of winning the elections.

The consequences of this form of political corruption are also grave, perhaps even worse than the consequences of extractive political corruption. Political corruption for power preservation purposes leads to bad governance in the form of unaccountable and favouritist political decisions; manipulated, weak and distorted institutions; lack of transparency and accountability; immunity and impunity; and elections that are not free and fair.

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C: The full circle

The two processes of political corruption - extraction for private benefit and enrichment, and the use of corrupt means for power preservation - are important analytical categories, especially when it comes to formulating counter-measures. Importantly, the two processes are often connected. Many of the larger political corruption scandals include both aspects: large-scale bribery schemes are concluded when the extracted money is used to buy political support, and the full circle is made when the purpose of power is wealth and the purpose of wealth is power.

One of the most prominent examples in Western Europe of bribes and embezzlement taken from a company not only for personal enrichment but also to extend the powers and ensure the re-election of the rulers is the French Elf Scandal. Here, huge sums were embezzled for private consumption, but millions were also funnelled into the infamous "caisse noire" that benefited the ruling party, patronage purposes in France and even French foreign policies. Another less famous French example is the "Ile de France" trials, where corruption in public procurement of schools extended into a system of payments to various political parties and their political campaigns.

In the developing world, systems of corruption, embezzlement, fraud, patronage and vote buying can lead to a complete "criminalisation of the state" (Bayart, Hibou & Ellis, 1997).

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Delimitations

A. Political and bureaucratic corruption

The distinction between political and bureaucratic corruption is rather ambiguous, because it depends on the separation of politics from administration and the separation of an individual's status as a public official and his/her status as a private person. This distinction is unclear in most political systems.

The distinction is nevertheless important in analytical and practical terms. Political corruption takes place at the formulation stage of politics, whereas bureaucratic or petty corruption takes place at the implementation end of politics. Thus, we should not regard as political corruption the forms of corruption that take place in service delivery, in health care and education services, and where people meet the government as clients and users of public services. We are not here concerned with common criminals buying their way out of custody, or bribes paid to the public telephone company, or other petty corruption cases without political implications. However, petty corruption can sometimes add up to a pyramid of upward extraction, through which small bribes accumulate into larger fortunes at the top of the system.

Whether local authorities (such as council members and governors) are included in the concept is a matter of debate. Some researchers will have them included, others not. We believe this is a matter of practical delineation: a state governor in Nigeria is very different from a local council ("commune") member in Senegal.

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B. Illegal and immoral

Political corruption usually involves a violation of existing laws and regulations, but it is not restricted to this. It is political corruption also when the national laws and regulations have custom-made loopholes and are deliberately side-stepped or ignored. President Ferdinand Marcos of the Philippines, for instance, had sections of the Philippines Constitution reformulated to legalise his looting of the nation's wealth.

Thus, it remains unclear what are the legal, normal and acceptable political means of influence, and what are not. Take public nominations, for instance. Many presidents have an exclusive right to nominate a large number of top-level civil servants, military and security personnel, managers of state companies and parastatals, etc., and this right is of course used politically, for what it is worth, for the purposes of power preservation, status and even wealth maximation. As such, it is seen by many researchers as a core problem, for instance of African politics (excessive presidentialism), and it demonstrates democratic deficiencies and favouritism. But it is perfectly legal within the given system.

So where is the line to be drawn between political corruption and other undue uses of political influence? It is important that international standards be included in setting the benchmarks, because political corruption is a breaking of national legal and regulatory principles, and/or a breaking of internationally accepted standards and principles.

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C: Money involved

Some political scientists have defined political corruption in terms of transactions between the private and public sectors in which collective goods are illegitimately channelled into private pockets. Thus, money enters the definition as an indispensable aspect. Most researchers would argue that some pecuniary benefits must necessarily be involved.

Moral and institutional decay is not a necessary element in the definition of political corruption, but the accumulation of material benefits to political leaders is. Without the inclusion of money and material favours in the definition, the concept would encompass any illegal and/or illegitimate political action (and decision), any form of undue influence and any abuse of political power.

For instance, the Watergate scandal revealed misuse of political power by the president and his office, in order to undermine his opponents, in clear violation of the rules in the US. This led to the near impeachment and resignation of President Nixon and the imprisonment of many of his closest advisors. But the Watergate scandal was not political corruption. It was abuse of office, in blatant disregard of the constitution, but it was not corruption because it did not involve pay-offs for private gain. Money was not the factor that led to the scandalous political decisions.

It is also difficult to establish the involvement of personal gain or gain for a group, for instance the government or a political party, in the form of money and other material benefits. Especially difficult are promises of future benefits, promises that can be understood as such and that can influence decisions and loyalties. An example is the promise of future positions, such as ministerial positions given to parliamentarians for enacting certain pieces of legislation. However, a broad understanding of private and group gain will include issues of favouritism, nepotism, clientelism and patronage in the definition of political corruption.

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