Glossary

Accountability 

The obligation of an individual or an organisation (either in the public or the private sectors) to accept responsibility for their activities, and to disclose them in a transparent manner. This includes the responsibility for decision-making processes, money or other entrusted property.

Active bribery

Active bribery refers to the act of promising or giving the bribe, as opposed to the act of receiving a bribe (passive bribery). The term does not mean the active briber has taken the initiative, since the bribe may have been demanded by the receiving party (who commits “passive bribery”). When a citizen reluctantly makes an informal payment in order to receive medical care, which would be refused otherwise, she is nevertheless committing active bribery. The distinction between active and passive bribery is primarily made in legal definitions, which need to be precise and allow for the possibility to sanction either side of the transaction, as appropriate. The classification is similar to the distinction between supply-side and demand-side corruption, which is used in analysing the patterns of incentives or drivers of corrupt practices.

Administrative corruption

Corruption occurring at the interface between the state, represented by public officials/bureaucrats in decision-making positions and the public/citizens when they need a service. For example, when a citizien coming to take out an ID card is only provided this service if he/she pay the bureaucrat an unofficial payment in addition to the official fee.

Anti-corruption

A term used to designate the range of approaches to combat corruption. Many broader good governance and democracy-promotion approaches produce similar outcomes, even if they are not explicitly labelled as "anti-corruption."

Assessment

An assessment analyses the situation in a country, sector or institution to identify the system's shortcomings and other factors (including political dynamics) that enable and sustain corruption.

Asset forfeiture

The seizure and confiscation of assets linked to a crime, usually because they were used in committing the crime, or derived from it.

Asset recovery

The process by which the proceeds of corruption are recoverd and returned to individuals, governments or organisations.

Auditing

An official inspection of an organisation's (public or private sector) accounts to make sure money is spent and reported on appropriately.

Bribery

The offer or exchange of money, services or other valuables to influence the judgment or conduct of a person in a position of entrusted power. The benefit does not need to go to the official in question directly – it can go to a spouse, a child, another relative, a friend, or even to the official's political party as a donation. A bribe is sometimes paid after the fact – for instance, in monthly instalments to the official issuing permits to street vendors as long as they are allowed to operate. This form of bribery is called a kickback. Bribery is widely criminalised, and both the party paying the bribe and the party receiving may be liable (see active bribery/ passive bribery). However, in practice, certain forms of bribery are often exempt from prosecution (see facilitation payments).

Capital flight

The movement of large sums of money out of a country. This movement can be legal (for example investors withdraw their money because of a political crisis and a lack of confidence in the economic situation) or illegal. Illegal capital flight often concerns money earned through criminal activity, and the intention is that the money disappears from any record in the country of origin. Any earnings on it are not usually returned to the country of origin.

Carbon cowboys

Unscrupulous entrepreneurs who attempt to acquire rights to carbon in rainforests. They gain the rights by signing indigenous communities to unfair contracts. They often aim to sell on the rights to investors for a quick profit.

Citizen charters

A government document that lays out standards of service for public and private sector institutions (schools, hospitals, water and energy suppliers etc.), and which sets out the rights of citizens to services in that sector, as well as ways in which they can seek redress should the services not be provided according to these standards.

Clientelism

An informal exploitative system of exchanges (of resources, services, favours) between a wealthier and/or more powerful "patron" or "boss" and less wealthy/weaker "clients" or "followers." Such systems are typically found in settings where formal governance structures fail to provide adequate resources (including protection), leaving poor and/or marginalised members of society to seek assistance from powerful figures that can deliver them. The corruption dimension is clear when the "patron" is an elected official who distributes resources under his/her control inequitably (abusing his/her entrusted power), as a reward for electoral support (private benefit). Similar informal systems may not involve elected officials directly, but may nevertheless undermine formal rules and institutions, including efforts to combat corruption.

Competitive bidding

A selection process based on open and transparent advertisement of an item or service. It ensures that the best bidder wins according to qualifications, value-for-money, and other objective criteria, through which family or friendship ties, bribery or threats are removed from the process. Competitive bidding processes are typically required by law on most public contracts and purchases.

Conflict of interest

A conflict of interest is a conflict between an entrusted duty on the one hand, and the private interest of the duty-bearer on the other hand. For example, a parliamentarian sitting in the committee for healthcare reform might own stock in a major parmaceutical company. The existence of this private interest could improperly influence the performance of entrusted responsibilities. Because conflicts of interest creat opportunities for corruption to take place, they should be avoided or managed.

Corruption

The abuse of entrusted power for private gain. Although this is the most common definition, other definitions exist. The World Bank, for example, defines corruption more narrowly as "abuse of public office for private gain". All expert/specialist variations nevertheless include three common elements: abuse (misuse, violation) of entrusted power (duty, office, etc.) and private benefit. In everyday language, the term is used more broadly to deonte a wide variety of objectionable or immoral acts, and not onlly those associated with formal duty.

Corruption indices

Corruption indices are mutli-country tables with scores or grades reflecting corruption levels or related features, such as the strength of systems for controlling corruption. The assumption for the latter is that robustness of corruption-control systems directly reflects corruption risks and consequently, the likely levels of corruption.

Criminal forfeiture

The loss, following a criminal conviction, of the right to a property that was used to commit a crime and which was confiscated by the government.

Cronyism (see also clientelism and patronage)

The favourable treatment of friends and associates in the distribution of resources and positions. The concept is related to nepotism, where the favourable treatment extends to family members. (See also patronage.)

Customer due diligence

Obligation for financial institutions to implement identification processes for customers, i.e. to verify that they are who they claim they are by checking their names, residential addresses etc.

Debarment

Debarment is the term used for an individual or a company being formally excluded from tendering for a project that the government is funding or supporting. A company is debarred when an enquiry or examination finds it has been involved with fraud, mismanagement, or corruption.

Demand side

The demand side of the bribe (also known as "passive" bribery) focuses on the person or entity soliciting or receiving the bribe.

Democratic accountability

Democratic accountability refers to the idea that citizens can provide feedback to actors (political parties; parliaments; public officials) that are in charge of policy-setting and decision-making and in this way, shape policies and decisions.

Double taxation

Double taxation is a principle by which a taxpayer is taxed twice for the same asset or income. It happens when tax jurisdictions overlap and a transaction, asset or income is taxed in both. Double taxation agreements are conventions aiming to eliminate double taxation of residents.

Elite capture

Political and social elites take resources intended to benefit the majority of the population. This can include economic, educational, social and political resources.

Embezzlement

The misappropriation of property or funds legally entrusted to someone in their formal position as an agent or guardian. Accountants and financial managers typically have access to an agency's funds and so are in a position to embezzle them. Other forms of embezzlement include the taking of supplies, equipment, etc.

Endemic corruption

Endemic corruption is corruption that is primarily due to organisational weaknesses. In these cases, corruption is the norm and not the exception.

Enhanced due diligence

Additional identification measures to be taken by financial institutions with regards to high-risk customers and politically exposed persons (PEPs). Measures include validation and documentation by third parties.

Entrusted authority

Refers to the authority, power, duty or office entrusted to a person through election, apppointment, or employment contract, etc. It concerns conduct in a formal or professional capacity as opposed to actions as a private individual.

Experience surveys

Questionnaires that ask about direct encounters with corruption, for instance: - whether respondents have had to pay a bribe for a particular public service; - how many times in the past year they paid a bribe; - the amount of the bribe paid.

Extortion

The practice of obtaining something (money, favours, property) through the use of threats or force. For example, extortion takes place when armed guards exact money for passage through a roadblock. Withholding life-saving medical attention unless a bribe is paid could also be considered an act of extrotion. See also sextortion, which involves threats or force to obtain sexual benefits.

Facilitation payments

Refer to relatively small, individual amounts paid beyond the official fees to speed up services such as customs clearance, work permits, border crossings, etc. Technically, these are a bribe. In many countries, however, facilitation payments by companies doing business aborad are exempt from prosecution for bribery in their home countries as long as they are used to speed up legal processes, rather than to avoid regulations. This excetpion recognises the fact that in certain settings, it is impossible to operate a business without conceding to such payments.

Favouritism

The biased distribution of resources based on personal preference. For example, giving offices or benefits to friends and family regardless of qualification. Unfair distribution of positions and resources is also known as cronyism or nepotism. It can be a form of corruption.

Fiduciary risk

In the context of development aid, fiduciary risk is the risk that aid funds are used incorrectly, including that they do not achieve value for money, or are not properly accounted for. Fiduciary risk is a particular concern when donors provide direct budget support, because partner governments' public financial management systems are often relatively weak.

Fraud

An economic crime involving deceit, trickery or fals pretences by which someone gains unlawfully. Fraud often accompanies corrupt acts, in particular embezzlement, where it is typically used to falsify records to hide stolen resources.

Ghost workers

Ghost workers are employees who appear on a payroll but do not actually work for the company or the public institution. Paychecks are created and paid to someone who either does not exist, or exists but does not work for the company or the public institution.

Gift giving

People offer presents and favours in various circumstances. It is a cultural practice in many societies. Problems arise when gift giving to and by public officials contradicts impartiality, professionalism, and meritocracy. In exchange for a gift, the official is expected to show preferential treatment to the giver. In those cases, gift-giving can be regarded as bribery.

Governance

Governance goes further than traditional conceptions of government. It focuses on relationships between leaders, public institutions and citizens. It includes decision-making and implementation processes. Governance can also apply to companies and NGOs.

Grand corruption

In contrast to "petty corruption", high-level or "grand" corruption is perpetrated at the highest levels of government and usually involves both substantial benefits for the officials involved and significant losses for the state and its citizens. It can refer to specific acts such as ministers taking multi-million dollar bribes to award lucrative government concessions or embezzling millions from state coffers into a secret bank account. But it also refers to illicit exchanges in the realm of policy formation (see also state capture). Though large sums of money may be involved, other benefits like high-level appointments, inside information and policy influence can be the currency of grand corruption. Corruption at this level is also sometimes referred to as political corruption.

Grease money

Bribes, seen from the angle of the briber, and alluding to the "drop of oil given to a squeaky wheel" of excessive bureaucracy to make the things move smoothly again. Also called a softener, sweetener, gift.

Illicit financial flows (IFFs)

Cross-border movements of money illegally earned, transferred, or utilised. Illicit financial flows (IFFs) involve the transfer of money earned through illegal activities. These activities include corruption, criminal activities, and efforts to hide wealth from tax authorities.

Integrity

Integrity means following of a set of moral or ethical principles. A National Integrity System is an assessment methodology developed by the NGO Transparency International. It evaluates key ‘pillars’ in a country’s governance system, both in terms of its internal corruption risks and their contribution to fighting corruption in society at large. When all the pillars are functioning well, corruption remains in check. Where some or all of the pillars are weak, this can allow corruption to thrive.

Integrity pact

An agreement intended to prevent corruption in public contracting. One party represents a central, local or municipal government, government subdivision or state-owned enterprise. The other party is usually a private company interested in obtaining or implementing the contract. Both parties agree not to bribe or take bribes, and to punishment if they break this pledge.

Kickback

A bribe paid after the fact for an undue favour or service. For instance, a company that receives a government contract might send the responsible official regular payoffs for the duration of the contract. Street vendors may pay the permission-granting authority a small sum each month as long as they are allowed to operate.

Kleptocracy

A Greek word meaning "rule by thieves", kleptocracy refers to a system of government in which leaders use their position for private gain at the expense of the governed. It is typically correlated with autocratic regimes with no meaningful accountability mechanism, effectively allowing the leader to plunder the state and its citizens for personal enrichment and to entrench his hold on power. Some well-known former kleptocrats include Francois Duvalier ("Papa Doc") of Haiti, Mobutu of Zaire, and Suharto of Indonesia.

Lobbying

Any activity carried out to influence a government or institution's policies and decisions in favour of a specific cause or outcome. Lobbying is an essential tool for staekholders to make their voice heard with politicians and public officials. Citizens engage in lobbying when they write to their elected representative or join a protest, etc. Professional lobbyists, by contrast, are paid to advocate for specific interest of their clients before responsible public officials. They are sometimes former officials themselves, hired due to their konwledge of the issues and contacts in the sector. But terms of engagement of former public officials are usually clear and limited in order to distinguish permissible lobbying from illegal trading in influence.

Measurement of corruption

There are two main approaches in appraising/evaluating corruption. One is measurement, which aims to quantify the extent of corruption. The other is assessment, which seeks to identify the factors that allow corruption to take place.

Money laundering

Any act or attempted act disguising the source of money or assets from criminal activity. Money laundering includes concealing the origins and the use of the illegal assets. It is often used to hide the proceeds of corruption, and is practiced by drug traffickers, human traffickers, kleptocrats and white-collar criminals. Bank secrecy makes laundered money particularly hard to trace.

Neopatrimonialism

A style of governance based on informal patron-client relationships, where the elite uses resources such as public goods and public offices to secure loyalty from the general population.

Nepotism

A form of favouritism involving family relationships, in which someone exploits his or her authority to procure jobs or other favours for relatives. When this treatment is extended to friends and associates, the appropriate term is cronyism.

Off-shore financial centre (OFC)

A jurisdiction providing tax and regulatory privileges, usually to companies, trusts and bank account holders. Account holders get privileges on the condition they do not conduct active business within that jurisdiction. Off-shore financial centres host a functional financial service centre, the commercial response to provisions offered by tax havens.

Passive bribery

Refers to the act of receiving the bribe. This does not mean the passive briber has taken no initiative – in many cases he or she may have demanded the bribe in the first place.

Patronage

The support or sponsorship of a patron (wealthy or influential guardian). Patronage is used to make appointments to government jobs, promotions, contracts for work, etc. The desire to gain power, wealth and status through their behaviour motivates most patrons. Patronage violates the boundaries of legitimate political influence and the principles of merit.

Perception surveys

Questionnaires that ask about the respondent's views on levels of corruption in a country/sector/institution, and sometimes his or her impression of whether the situation is changing for the better or worse.

Petty corruption

Alternatively called "administrative" or "bureaucratic" corruption, the term refers to the everyday corruption that takes place when bureaucrats meet the public. While the sums of money involved tend to be small, they are far from "petty" for the people concerned. Examples include paying bribes to get an ID; enrol in school; or have a phone line installed.

Political corruption

The term is both narrowly used to designate the manipulation of policies, institutions and rules in the financing of political parties and in electoral campaigns, and also more broadly as a synonym for "grand corruption", or corruption taking place at the highest levels of government where policies and rules are formulated and executive decisions are made.

Politically exposed persons (PEPs)

Individuals who are or were in the past entrusted with prominent public functions in a foreign country, such as heads of state, senior politicians, military officials, senior executives. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or corruption.

Predicate offence

The criminal activity from which the proceeds of a crime are derived. Money laundering is a derivative crime. Its status as a crime depends on the origin of the funds involved.

Principal-agent theory

This theory is based on an economic concept called the principal-agent problem. It assumes that the problem of corruption is one of bureaucrats and other public employees (“agents”) not following the rules and failing to fulfil the expectations of their leaders (“principals”). Agents are delegated the responsibility to implement and enforce rules and regulations, but they can choose to pursue their private interests instead of the public interest represented by the principal. They can do this because principals in complex organisations don’t necessarily have access to all the information about what goes on, and agents can withhold key information, so principals are not fully able to monitor and control what agents do. This “information asymmetry” creates opportunities for corruption. In other words, not participating in corrupt actions is assumed to be the normal state of affairs as mandated by principals, and corruption is a deviation from this norm. The solution, in this way of thinking, is for policy makers (the principals) to change the rules and the monitoring enforcement mechanisms to limit the room for deviation and assure that bureaucrat’s behavior will stay closer to the expected norms of clean management. This thinking gave rise to a number of “technical” reforms, including measures aimed explicitly at corruption, and those that are assumed to implicitly alter incentives for corruption through controls and monitoring of important government processes where corruption can take place.

Private sector corruption

The abuse of professional obligations within a corporation or other non-governmental entity for private gain. For example, private sector corruption occurs when a corporate employee sells commercial secrets to a competitor. The term is also used more broadly for situations where individuals or groups from the private sector influence public officials to take decisions and actions that constitute abuses of entrusted power. One example would be corporations offering bribes to public officials in exchange for favourable legislation or lucrative contracts.

Procurement

Procurement refers to the different stages of acquiring goods or services from an external source, and where buyers (such as public institutions and organisations), often in a bidding process, look for the best value-for-money offer for the goods and services that need to be procured.

Protected disclosure

Protected disclosure refers to a statement or report about serious wrongdoing, usually corrupt conduct, maladministration or a waste of public money, and entitles the person who made the disclosure to support and protection from reprisal. Protected Disclosures legislation is in place in many countries to provide the legal framework to encourage people to report wrongdoing without the fear of retaliation.

Public financial management (PFM)

PFM is the legal and organisational framework for supervising the budget cycle. Fiscal discipline and effective allocation of resources and public services are the underpinning features of a sound PFM. Donor support PFM reforms as part of a wider anti-corruption agenda because of the relative share of public expenditure in a country's economy and the fact that corruption in PFM can directly affect a range of different development outcomes, such as pro-poor growth, or the quality and availability of public services.

REDD (Reducing Emissions fom Deforestation and Forest Degradation)

REDD refers to the mechanisms or schemes negotiated under the UN Framework Convention on Climate Change. They aim to reduce carbon emissions from deforestation and forest degradation in developing countries. The schemes commonly involve public aid financing. REDD+ schemes aim to go beyond REDD by enhancing forest carbon stocks.

Revolving doors

Revolving doors refers to individuals' moves from jobs as legislators or regulators into jobs in companies or lobby firms subject to legislation and regulation. It can be abused if not properly regulated.

Risk assessment

A systematic process of evaluating the potential risks or hazards that may be involved in an activitiy or undertaking. A corruption risk assessment involves first describing how a given governance mechanisms operates, through a detailed mapping of all relevant sub-processes. Each element is then analysed to identify the opportunities for corruption. Identified risks are then evaluated for probability of occurrence and the expected impact, so that appropriate mitigation measures can be identified and implemented. Together, the steps constitute a risk management system.

Secrecy jurisdiction

Secrecy jurisdications are also referred to as "tax havens". According to the Tax Justice Network, they are defined as “places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.” Secrecy jurisdictions encourage the relocation of economic transactions to that domain. Low or minimal tax rates to non-residents might apply. They may also host a range of financial service providers.

Sextortion

The abuse of power to obtain a sexual benefit or advantage. Related to the concept of extortion.

Shell companies

A shell company is a non-trading company, which is used as a vehicle for various financial manoeuvres, illicit purposes, or which is kept dormant for future use in some other capacity. Shell companies are usually incorporated in a jurisdiction in which it has no physical presence and is unaffiliated with a regulated group.

Spoliation 

Spoliation refers to the intentional destruction or alteration of a document required for evidence. More broadly, the concept includes destruction or plunder of something valuable. It occurs when high-ranking officials loot the wealth of their states. The spoils are the benefits reaped, the booty, rewards, profits etc. from corrupt acts.

Sporadic corruption

Sporadic corruption is the opposite of systemic corruption. Because it occurs irregularly, it does not threaten the mechanisms of control nor the economy as such. It is not crippling, but can seriously undermine morale and sap the economy of resources.

State capture

Coined by the World Bank in the early 2000s, state capture refers to a type of systemic political corruption in which private interests significantly influence a state's decision-making processes to their own advantage. For example, businesses can improperly influence legislators to pass favourable laws.

Supply side

Supply side refers to the person or entities who offer or provide the illicit benefit in corrupt transactions. The officials with entrusted authority who receive illicit benefits constitute the demand side. The distinction is similar to that between active and passive bribery, which is used primarily for legislative purposes. Also similar is the fact that the term "demand side" does not imply that it is the official on the receiving end who proactively solicited the bribe. The distinction between supply and demand can be useful in analysing the different sets of incentives that contribute to corruption.

Suspicious activity reports (SARs)

SARs are documents that financial institutions must file with the national crime authorities following a suspected incident of money laundering or fraud.

Sustainable Development Goals (SDGs)

As part of the 2030 Agenda for Sustainable Development, UN member states adopted 17 Sustainable Development Goals (SDGs) in September 2015. These SDGs build on the Millennium Development Goals (MDGs) and demand action by all countries to combat poverty while protecting the planet. While corruption impedes progress in meeting all of the SDGs, Goal 16 explicitly calles on states to "substantially reduce corruption and bribery in all their forms."

Systemic corruption

(Also know as endemic corruption). A situation when corruption is an integral part of a state's economic, social and political system, and where most people have no alternatives to dealing with corrupt officials. Sporadic corruption, in contrast, occurs irregularly and does not compromise the mechanisms of governance in the same crippling way.

Tax information exchange agreements (TIEAs)

TIEAs are bilateral agreements under which countries agree to co-operate in tax matters through the exchange of information.

Trading in influence

(Also known as influence peddling). Trading in influence occurs when a person who as real or apparent influence on the decision-making of a public official exchanges this influence for an undue advantage. The offence is similar to bribery with one important difference: trading in influence concerns the "middleman", or the person that serves as the go-between the decision-maker and the party that seeks an improper advantage. The final decision-maker may not even be aware of the illicit exchange. One example is when an MP receives a payment from a company to attempt to convince fellow legislators to support amendments that would benefit that company. Trading in influence is difficult to prove because the legal definitions involve disputable criteria of "intentionality" and "undue"/improper influence. Trading in influence is also often difficult to distinguish from permissible forms of lobbying.

Transfer mispricing

Transfer mispricing refers to the manipulation of import and export prices. Related parties trade at prices meant to manipulate markets or to deceive tax authorities.

Transparency

Transparency is the quality of being open, communicative and accountable. It implies that governments and other agencies have a duty to act visibly and understandably. Transparency can lead to improved resource allocation, enhanced efficiency, and better prospects for economic growth.

Underground banking

Underground banking refers to informal banking arrangements that run alongside the formal banking system. They are independent of formal systems and involve the global transfer of currency, for example remittances from overseas workers. Underground banking systems are, however, also known to be conduits for money laundering. Therefore, a balance needs to be found between regulating the underground banking system to stop illicit financial flows on the one hand, and to allow its continued use for legitimate money transfers on the other hand.

Whistleblower

Whistleblowers are people who inform the public or the authorities about corrupt transactions and/or other unlawful or immoral behaviour they have witnessed or uncovered. These individuals often require protection from those they expose. Whistleblower protection refers to the measures taken to shield the informer from retaliation.