Corruption Essay In Punjabi Language Thoughts

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Language thoughts punjabi Essay mother my in on

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For other uses, see Corruption (disambiguation).

"Corrupt" redirects here. For other uses, see Corrupt (disambiguation).

Corruption is a form of dishonest or unethical conduct by a person entrusted with a position of authority, often to acquire personal benefit.[1] Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries.[2]Government, or 'political', corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain.

It is commonplace in kleptocracies, oligarchies, Narco states and Mafia states.

The Kaunas golden toilet case was a modern real-life example of corruption.

Scales of corruption[edit]

Stephen D. Morris,[3] a professor of politics, writes that political corruption is the illegitimate use of public power to benefit a private interest. Economist Ian Senior[4] defines corruption as an action to (a) secretly provide (b) a good or a service to a third party (c) so that he or she can influence certain actions which (d) benefit the corrupt, a third party, or both (e) in which the corrupt agent has authority. Daniel Kaufmann,[5] from the World Bank, extends the concept to include 'legal corruption' in which power is abused within the confines of the law—as those with power often have the ability to make laws for their protection. The effect of corruption in infrastructure is to increase costs and construction time, lower the quality and decrease the benefit.[6]

Corruption can occur on different scales. Corruption ranges from small favors between a small number of people (petty corruption),[7] to corruption that affects the government on a large scale (grand corruption), and corruption that is so prevalent that it is part of the everyday structure of society, including corruption as one of the symptoms of organized crime.

Increasingly, a number of indicators and tools have been developed which can measure different forms of corruption with increasing accuracy.[8]

Petty corruption[edit]

Petty corruption occurs at a smaller scale and takes place at the implementation end of public services when public officials meet the public. For example, in many small places such as registration offices, police stations, state licensing boards,[9][10] and many other private and government sectors.

Grand corruption[edit]

Grand corruption is defined as corruption occurring at the highest levels of government in a way that requires significant subversion of the political, legal and economic systems. Such corruption is commonly found in countries with authoritarian or dictatorial governments but also in those without adequate policing of corruption.[11]

The government system in many countries is divided into the legislative, executive and judiciary branches in an attempt to provide independent services that are less subject to grand corruption due to their independence from one another.[12]

Systemic corruption[edit]

Systemic corruption (or endemic corruption)[13] is corruption which is primarily due to the weaknesses of an organization or process. It can be contrasted with individual officials or agents who act corruptly within the system.

Factors which encourage systemic corruption include conflicting incentives, discretionary powers; monopolistic powers; lack of transparency; low pay; and a culture of impunity.[14] Specific acts of corruption include "bribery, extortion, and embezzlement" in a system where "corruption becomes the rule rather than the exception."[15] Scholars distinguish between centralized and decentralized systemic corruption, depending on which level of state or government corruption takes place; in countries such as the Post-Soviet states both types occur.[16] Some scholars argue that there is a negative duty[clarification needed] of western governments to protect against systematic corruption of underdeveloped governments.[17][18]

Corruption in different sectors[edit]

Corruption can occur in any sector, whether they be public or private industry or even NGOs (especially in public sector). However, only in democratically controlled institutions is there an interest of the public (owner) to develop internal mechanisms to fight active or passive corruption, whereas in private industry as well as in NGOs there is no public control. Therefore, the owners' investors' or sponsors' profits are largely decisive.

Government/public sector[edit]

Public sector corruption includes corruption of the political process and of government agencies such as the police as well as corruption in processes of allocating public funds for contracts, grants, and hiring. Recent research by the World Bank suggests that who makes policy decisions (elected officials or bureaucrats) can be critical in determining the level of corruption because of the incentives different policy-makers face.[19]

Political corruption[edit]

Main article: Political corruption

Political corruption is the abuse of public power, office, or resources by elected government officials for personal gain, by extortion, soliciting or offering bribes. It can also take the form of office holders maintaining themselves in office by purchasing votes by enacting laws which use taxpayers' money.[20] Evidence suggests that corruption can have political consequences- with citizens being asked for bribes becoming less likely to identify with their country or region.[21]

The political act of Graft (American English), is a well known and now global form of political corruption, being the unscrupulous and illegal use of a politician's authority for personal gain, when funds intended for public projects are intentionally misdirected in order to maximize the benefits to illegally private interests of the corrupted individual(s) and their cronies.

The Kaunas golden toilet case was a major Lithuanian scandal. In 2009, municipality of Kaunas (led by mayor Andrius Kupčinskas) ordered that a shipping container was to be converted into an outdoor toilet at a cost of 500'000 litas (around 150'000 euros). It was to also require 5'000 LTL (1'500 EUR) in monthly maintenance costs.[22] At the same time when Kaunas "golden toilet" was built, Kėdainiai tennis club acquired a very similar, but more advanced solution for 4'500 EUR.[22] Because of the inflated cost of the outdoor toilet was nicknamed "golden toilet". Despite the investment, the "golden toilet" remained closed for years due to the dysfunctionality and was a subject of a lengthy anti-corruption investigation into those who had created it and [22] the local municipality even considered demolishing the building at one point.[23] The group of public servants involved in the toilet's procurement received various prison sentences for recklessness, malfeasance, misuse of power and document falsifications in a 2012 court case, but were cleared of their corruption charges and received compensation, which pushed the total construction cost and subsequent related financial losses to 352'000 euros.

Police corruption[edit]

Main article: Police corruption

Police corruption is a specific form of police misconduct designed to obtain financial benefits, other personal gain, career advancement for a police officer or officers in exchange for not pursuing, or selectively pursuing, an investigation or arrest and/or aspects of the thin blue line itself, where force members collude in lies to protect other members from accountability. One common form of police corruption is soliciting and/or accepting bribes in exchange for not reporting organized drug or prostitution rings or other illegal activities.

Another example is police officers flouting the police code of conduct in order to secure convictions of suspects—for example, through the use of falsified evidence. More rarely, police officers may deliberately and systematically participate in organized crime themselves. In most major cities, there are internal affairs sections to investigate suspected police corruption or misconduct. Similar entities include the British Independent Police Complaints Commission.

Judicial corruption[edit]

Judicial corruption refers to corruption related misconduct of judges, through receiving or giving bribes, improper sentencing of convicted criminals, bias in the hearing and judgement of arguments and other such misconduct.

Governmental corruption of judiciary is broadly known in many transitional and developing countries because the budget is almost completely controlled by the executive. The latter undermines the separation of powers, as it creates a critical financial dependence of the judiciary. The proper national wealth distribution including the government spending on the judiciary is subject to the constitutional economics.

It is important to distinguish between the two methods of corruption of the judiciary: the government (through budget planning and various privileges), and the private.[24] Judicial corruption can be difficult to completely eradicate, even in developed countries.[25] Corruption in judiciary also involves the government in power using the judicial arm of government to oppress the opposition parties in the detriments of the state.

Corruption in the educational system[edit]

Corruption in education is a worldwide phenomenon. Corruption in admissions to universities is traditionally considered as one of the most corrupt areas of the education sector.[26] Recent attempts in some countries, such as Russia and Ukraine, to curb corruption in admissions through the abolition of university entrance examinations and introduction of standardized computer-graded tests have largely failed.[27] Vouchers for university entrants have never materialized.[28] The cost of corruption is in that it impedes sustainable economic growth.[28][28] Endemic corruption in educational institutions leads to the formation of sustainable corrupt hierarchies.[29][30][31] While higher education in Russia is distinct with widespread bribery, corruption in the US and the UK features a significant amount of fraud.[32][33] The US is distinct with grey areas and institutional corruption in the higher education sector.[34][35] Authoritarian regimes, including those in the former Soviet republics, encourage educational corruption and control universities, especially during the election campaigns.[36] This is typical for Russia,[37] Ukraine,[38] and Central Asian regimes,[39] among others. The general public is well aware of the high level of corruption in colleges and universities, including thanks to the media.[40][41] Doctoral education is no exception, with dissertations and doctoral degrees available for sale, including for politicians.[42] Russian Parliament is notorious for "highly educated" MPs[43] High levels of corruption are a result of universities not being able to break away from their Stalinist past, over bureaucratization,[44] and a clear lack of university autonomy.[45] Both quantitative and qualitative methodologies are employed to study education corruption,[46] but the topic remains largely unattended by the scholars. In many societies and international organizations, education corruption remains a taboo. In some countries, such as certain eastern European countries and certain Asian countries, corruption occurs frequently in universities.[47] This can include bribes to bypass bureaucratic procedures and bribing faculty for a grade.[47][48] The willingness to engage in corruption such as accepting bribe money in exchange for grades decreases if individuals perceive such behavior as very objectionable, i.e. a violation of social norms and if they fear sanctions regarding the severity and probability of sanctions.[48]

Within labor unions[edit]

The Teamsters (International Brotherhood of Teamsters) is an example of how the civil RICO process can be used. For decades, the Teamsters have been substantially controlled by La Cosa Nostra. Since 1957, four of eight Teamster presidents were indicted, yet the union continued to be controlled by organized crime elements. The federal government has been successful at removing the criminal influence from this 1.4 million-member union by using the civil process.[49]

Corruption in religion[edit]

The history of religion includes numerous examples of religious leaders calling attention to corruption in the religious practices and institutions of their time. Jewish prophets Isaiah and Amos berate the rabbinical establishment of Ancient Judea for failing to live up to the ideals of the Torah.[50] In the New Testament, Jesus accuses the rabbinical establishment of his time of hypocritically following only the ceremonial parts of the Torah and neglecting the more important elements of justice, mercy and faithfulness.[51] In 1517, Martin Luther accuses the Catholic Church of widespread corruption, including selling of indulgences.[52]

In 2015, Princeton University professor Kevin M. Kruse advances the thesis that business leaders in the 1930s and 1940s collaborated with clergymen, including James W. Fifield Jr., to develop and promote a new hermeneutical approach to Scripture that would de-emphasize the social Gospel and emphasize themes, such as individual salvation, more congenial to free enterprise.[53]

Business leaders, of course, had long been working to "merchandise" themselves through the appropriation of religion. In organizations such as Spiritual Mobilization, the prayer breakfast groups, and the Freedoms Foundation, they had linked capitalism and Christianity and, at the same time, likened the welfare state to godless paganism.[54]

Corruption in philosophy[edit]

19th century German philosopher Arthur Schopenhauer acknowledges that academics, including philosophers, are subject to the same sources of corruption as the society they inhabit. He distinguishes the corrupt "university" philosophers, whose "real concern is to earn with credit an honest livelihood for themselves and ... to enjoy a certain prestige in the eyes of the public"[55] from the genuine philosopher, whose sole motive is to discover and bear witness to the truth.

To be a philosopher, that is to say, a lover of wisdom (for wisdom is nothing but truth), it is not enough for a man to love truth, in so far as it is compatible with his own interest, with the will of his superiors, with the dogmas of the church, or with the prejudices and tastes of his contemporaries; so long as he rests content with this position, he is only a φίλαυτος [lover of self], not a φιλόσοφος [lover of wisdom]. For this title of honor is well and wisely conceived precisely by its stating that one should love the truth earnestly and with one’s whole heart, and thus unconditionally and unreservedly, above all else, and, if need be, in defiance of all else. Now the reason for this is the one previously stated that the intellect has become free, and in this state, it does not even know or understand any other interest than that of truth.[56]

Corporate corruption[edit]

See also: Corporate crime

This section is incomplete. (January 2018)

This article needs attention from an expert in section. Please add a reason or a talk parameter to this template to explain the issue with the article. WikiProject Section may be able to help recruit an expert.(January 2018)

In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corporation or other business entity (see vicarious liability and corporate liability). Some negative behaviours by corporations may not be criminal; laws vary between jurisdictions. For example, some jurisdictions allow insider trading.

Further information: Operation Car Wash

Petróleo Brasileiro S.A. — Petrobras, more commonly known as simply Petrobras (Portuguese pronunciation: [ˌpɛtɾoˈbɾas]), is a semi-public Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil. The company's name translates to Brazilian Petroleum Corporation — Petrobras. The company was ranked #58 in the 2016 Fortune Global 500 list.[57] It is being investigated over corporate and political collusion and corruption.[58]

Odebrecht is a privately held Brazilian conglomerate consisting of diversified businesses in the fields of engineering, real estate, construction, chemicals and petrochemicals. The company was founded in 1944 in Salvador da Bahia by Norberto Odebrecht, and the firm is now present in South America, Central America, North America, the Caribbean, Africa, Europe and the Middle East. Its leading company is Norberto Odebrecht Construtora (pt).[59] Odebrecht is one of the 25 largest international construction companies and is still lead by Odebrecht family.

The firm's executives were examined during Operation Car Wash part of an investigation over Odebrecht Organization bribes to executives of Petrobras, in exchange for contracts and influence.[60][61][58] Operation Car Wash is an ongoing criminal money laundering and bribes related corporate crime investigation being carried out by the Federal Police of Brazil, Curitiba Branch, and judicially commanded by Judge Sérgio Moro since March 17, 2014.[62][63][64][58]

Arms for cash[edit]

This section is incomplete. (January 2018)

This article needs attention from an expert in section. Please add a reason or a talk parameter to this template to explain the issue with the article. WikiProject Section may be able to help recruit an expert.(January 2018)

"Arms for cash" can be done by ether a state sanctioned arms dealer\firm or state it's self to another party it just in regards regards as only a good business partner and not political kindred and\or allies, thus making them no better than regular gun runners. Arms smugglers, who are already in to Arms trafficking may work for them on the ground and\or with shipment. The money is often laundered and records are often destroyed[65][66][67] . It often breaks UN, national and\or international law[65][66][68] . Payment can also be in strange or indirect ways like arms paid for in post-war oil contracts, post-war hotel ownership, conflict diamonds, corporate shares and\or the long term post-war promises of superfus[clarification needed] future contracts between the parties involved in it, etc...

Main article: Mitterrand–Pasqua affair

In 2006 Transparency International ranked Angola a lowly 142 out of 163 countries in the Corruption Perception Index just after Venezuela and before the Republic of the Congo with a 2.2 rating.[69][70] Angola was at 168th place (out of 178 countries) on Transparency International’s Corruption Perceptions Index (CPI), receiving a 1.9 on a scale from 0 to 10.[71] On the World Bank's 2009 Worldwide Governance Index, Angola had done very poorly on all six aspects of governance assessed. While its score for political stability improved to 35.8 in 2009 (on a 100-point scale) from 19.2 in 2004, Angola earned especially low scores for accountability, regulatory standards, and rule of law. The score for corruption declined from an extremely low 6.3 in 2004 to 5.2 in 2009.[72][73]

The country is regarded poorly and that corruption is wounding the economy badly despite the emerging oil industries wealth.[72]

The Mitterrand–Pasqua affair, also known informally as Angolagate, was an international political scandal over the secret and illegal sale and shipment of arms from the nations of Central Europe to the government of Angola by the Government of France in the 1990s. It led to arrests and judiciary actions in the 2000s, involved an illegal arms sale to Angola despite a UN embargo, with business interests in France and elsewhere improperly obtaining a share of Angolan oil revenues. The scandal has subsequently been tied to several prominent figures in French politics.[72]

“Angolagate”, which was carried out and uncovered over the course of the 1990s. 42 individuals, including: 42 people, including Jean-Christophe Mitterrand, Jacques Attali, Charles Pasqua and Jean-Charles Marchiani, Pierre Falcone. Arcadi Gaydamak, Paul-Loup Sulitzer, Union for a Popular Movement deputy Georges Fenech, Philippe Courroye (fr) the son of Francois Mitterrand and a former French Minister of the Interior, were all charged, accused, indicted or convicted with illegal arms trading, tax fraud, embezzlement, money laundering and other crimes.[72][74] "[75]

Methods[edit]

In systemic corruption and grand corruption, multiple methods of corruption are used concurrently with similar aims.[76]

Bribery[edit]

Main article: Bribery

Bribery involves the improper use of gifts and favours in exchange for personal gain. This is also known as kickbacks or, in the Middle East, as baksheesh. It is the common form of corruption. The types of favours given are diverse and may include money, gifts, sexual favours, company shares, entertainment, employment and political benefits. The personal gain that is given can be anything from actively giving preferential treatment to having an indiscretion or crime overlooked.[77]

Bribery can sometimes form a part of the systemic use of corruption for other ends, for example to perpetrate further corruption. Bribery can make officials more susceptible to blackmail or to extortion.

Embezzlement, theft and fraud[edit]

Main article: Embezzlement

Embezzlement and theft involve someone with access to funds or assets illegally taking control of them. Fraud involves using deception to convince the owner of funds or assets to give them up to an unauthorized party.

Examples include the misdirection of company funds into "shadow companies" (and then into the pockets of corrupt employees), the skimming of foreign aid money, scams and other corrupt activity.

Graft[edit]

Main article: Graft (politics)

The political act of Graft (American English), is a well known and now global form of political corruption, being the unscrupulous and illegal use of a politician's authority for personal gain, when funds intended for public projects are intentionally misdirected in order to maximize the benefits to illegally private interests of the corrupted individual(s) and their cronies.

Extortion and blackmail[edit]

Main article: Extortion

While bribery is the use of positive inducements for corrupt aims, extortion and blackmail centre around the use of threats. This can be the threat of violence or false imprisonment as well as exposure of an individual's secrets or prior crimes.

This includes such behavior as an influential person threatening to go to the media if they do not receive speedy medical treatment (at the expense of other patients), threatening a public official with exposure of their secrets if they do not vote in a particular manner, or demanding money in exchange for continued secrecy.

Networking[edit]

Main article: Business networking

Networking can be an effective way for job-seekers to gain a competitive edge over others in the job-market. The idea is to cultivate personal relationships with prospective employers, selection panelists, and others, in the hope that these personal affections will influence future hiring decisions. This form of networking has been described as an attempt to corrupt formal hiring processes, where all candidates are given an equal opportunity to demonstrate their merits to selectors. The networker is accused of seeking non-meritocratic advantage over other candidates; advantage that is based on personal fondness rather than on any objective appraisal of which candidate is most qualified for the position.[78][79]

Abuse of discretion[edit]

Main article: Abuse of discretion

Abuse of discretion refers to the misuse of one's powers and decision-making facilities. Examples include a judge improperly dismissing a criminal case or a customs official using their discretion to allow a banned substance through a port.

Favoritism, nepotism and clientelism[edit]

Main article: Nepotism

Favouritism, nepotism and clientelism involve the favouring of not the perpetrator of corruption but someone related to them, such as a friend, family member or member of an association. Examples would include hiring or promoting a family member or staff member to a role they are not qualified for, who belongs to the same political party as you, regardless of merit.[80]

Some states do not forbid these forms of corruption.[citation needed]

Corruption and economic growth[edit]

Corruption is strongly negatively associated with the share of private investment and, hence, it lowers the rate of economic growth.[81]

Corruption reduces the returns of productive activities. If the returns to production fall faster than the returns to corruption and rent-seeking activities, resources will flow from productive activities to corruption activities over time. This will result in a lower stock of producible inputs like human capital in corrupted countries.[81]

Corruption creates the opportunity for increased inequality, reduces the return of productive activities, and, hence, makes rentseeking and corruption activities more attractive. This opportunity for increased inequality not only generates psychological frustration to the underprivileged but also reduces productivity growth, investment, and job opportunities.[81]

Causes of corruption[edit]

According to a 2017 survey study, the following factors have been attributed as causes of corruption:[82]

  • Higher levels of market and political monopolization
  • Low levels of democracy, weak civil participation and low political transparency
  • Higher levels of bureaucracy and inefficient administrative structures
  • Low press freedom
  • Low economic freedom
  • Large ethnic divisions and high levels of in-group favoritism
  • Gender inequality
  • Low degree of integration in the world economy
  • Large government size
  • Low levels of government decentralization
  • Former French, Portuguese, Belgian or Spanish colonies have been shown to have greater corruption than former British or Dutch colonies
  • Resource wealth
  • Poverty
  • Political instability
  • Weak property rights
  • Contagion from corrupt neighboring countries
  • Low levels of education
  • Low Internet access

Preventing corruption[edit]

R. Klitgaard[83] postulates that corruption will occur if the corrupt gain is greater than the penalty multiplied by the likelihood of being caught and prosecuted:

Corrupt gain > Penalty × Likelihood of being caught and prosecuted

The degree of corruption will then be a function of the degree of monopoly and discretion in deciding who should get how much on the one hand and the degree to which this activity is accountable and transparent on the other hand. Still, these equations (which should be understood in a qualitative rather than a quantitative manner) seem to be lacking one aspect: a high degree of monopoly and discretion accompanied by a low degree of transparency does not automatically lead to corruption without any moral weakness or insufficient integrity. Also, low penalties in combination with a low probability of being caught will only lead to corruption if people tend to neglect ethics and moral commitment. The original R.Klitgaard equation has therefore been amended by C. Stephan[84] into:

Degree of corruption = Monopoly + Discretion – Transparency – Morality

According to Stephan, the moral dimension has an intrinsic and an extrinsic component. The intrinsic component refers to a mentality problem, the extrinsic component to external circumstances like poverty, inadequate remuneration, inappropriate work conditions and inoperable or overcomplicated procedures which demoralize people and let them search for "alternative" solutions.

According to the amended Klitgaard equation, limitation of monopoly and regulator discretion of individuals and a high degree of transparency through independent oversight by non-governmental organisations (NGOs) and the media plus public access to reliable information could reduce the problem. Djankov and other researchers[85] have independently addressed the important role information plays in fighting corruption with evidence from both developing and developed countries. Disclosing financial information of government officials to the public is associated with improving institutional accountability and eliminating misbehavior such as vote buying. The effect is specifically remarkable when the disclosures concern politicians’ income sources, liabilities and asset level instead of just income level. Any extrinsic aspects that might reduce morality should be eliminated. Additionally, a country should establish a culture of ethical conduct in society with the government setting the good example in order to enhance the intrinsic morality.

Enhancing Civil Society Participation[edit]

Creating bottom-up mechanisms, promoting citizens participation and encouraging the values of integrity, accountability, and transparency are crucial components of fighting corruption. The implementation of the ALACs “Advocacy and Legal Advice Centres (ALACs)” has led to a significant increase in the number of citizen complaints against acts of corruption received and documented[86] and also to the development of strategies for good governance by involving citizens willing to fight against corruption.[87] 

Anti-corruption programmes[edit]

See also: List of anti-corruption agencies

The Foreign Corrupt Practices Act (FCPA, USA 1977) was an early paradigmatic law for many western countries i.e. industrial countries of the OECD. There, for the first time the old principal-agent approach was moved back where mainly the victim (a society, private or public) and a passive corrupt member (an individual) were considered, whereas the active corrupt part was not in the focus of legal prosecution. Unprecedented, the law of an industrial country directly condemned active corruption, particularly in international business transactions, which was at that time in contradiction to anti-bribery activities of the World Bank and its spin-off organization Transparency International.

As early as 1989 the OECD had established an ad hoc Working Group in order to explore "...the concepts fundamental to the offense of corruption, and the exercise of national jurisdiction over offenses committed wholly or partially abroad."[88] Based on the FCPA concept, the Working Group presented in 1994 the then "OECD Anti-Bribery Recommendation" as precursor for the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[89] which was signed in 1997 by all member countries and came finally into force in 1999. However, because of ongoing concealed corruption in international transactions several instruments of Country Monitoring[90] have been developed since then by the OECD in order to foster and evaluate related national activities in combating foreign corrupt practices.

In 2013, a document[91] produced by the economic and private sector professional evidence and applied knowledge services help-desk discusses some of the existing practices on anti-corruption. They found:

  • The theories behind the fight against corruption are moving from a Principal agent approach to a collective action problem. Principal-agent theories seem not to be suitable to target systemic corruption.
  • The role of multilateral institutions has been crucial in the fight against corruption. UNCAC provides a common guideline for countries around the world. Both Transparency International and the World Bank provide assistance to national governments in term of diagnostic and design of anti-corruption policies.
  • The use of anti-corruption agencies have proliferated in recent years after the signing of UNCAC. They found no convincing evidence on the extent of their contribution, or the best way to structure them.
  • Traditionally anti-corruption policies have been based on success experiences and common sense. In recent years there has been an effort to provide a more systematic evaluation of the effectiveness of anti-corruption policies. They found that this literature is still in its infancy.
  • Anti-corruption policies that may be in general recommended to developing countries may not be suitable for post-conflict countries. Anti-corruption policies in fragile states have to be carefully tailored.
  • Anti-corruption policies can improve the business environment. There is evidence that lower corruption may facilitate doing business and improve firm’s productivity. Rwanda in the last decade has made tremendous progress in improving governance and the business environment providing a model to follow for post-conflict countries.[91]

Corruption tourism[edit]

See also: Kleptocracy Tour

In some countries people travel to corruption hot spots or a specialist tour company takes them on corruption city tours, as it is the case in Prague.[92][93][94][95] Corruption tours have also occurred in Chicago,[96] and Mexico City[97][98]

Legal corruption[edit]

Though corruption is often viewed as illegal, there is an evolving concept of legal corruption,[5][99][original research?] as developed by Daniel Kaufmann and Pedro Vicente. It might be termed as processes which are corrupt, but are protected by a legal (that is, specifically permitted, or at least not proscribed by law) framework.[100]

Examples of legal corruption[edit]

In 1977 the USA had enacted the Foreign Corrupt Practices Act (FCPA)[101] "for the purpose of making it unlawful... to make payments to foreign government officials to assist in obtaining or retaining business" and invited all OECD countries to follow suit. In 1997 a corresponding OECD Anti-Bribery Convention was signed by its members.[102][103]

17 years after the FCPA enacting, a Parliamentary Financial Commission in Bonn presented a comparative study on legal corruption in industrialized OECD countries[104] As a result, they reported that in most industrial countries even at that time (1994) foreign corruption was legal, and that their foreign corrupt practices had been diverging to a large extent, ranging from simple legalization, through governmental subsidization (tax deduction), up to extremes like in Germany where foreign corruption was fostered, whereas domestic was legally prosecuted. Consequently, in order to support national export corporations the Parliamentary Financial Commission recommended to reject a related previous Parliamentary Proposal by the opposition leader which had been aiming to limit German foreign corruption on the basis of the US FCPA.[105] Only after the OECD Anti-Bribery Convention came into force, did Germany withdraw the legalization of foreign corruption in 1999.[106]

Foreign corrupt practices of industrialized OECD countries 1994 study[edit]

The Foreign corrupt practices of industrialized OECD countries 1994 (Parliamentary Financial Commission study, Bonn).[104]

Belgium: bribe payments are generally tax deductible as business expenses if the name and address of the beneficiary is disclosed. Under the following conditions kickbacks in connection with exports abroad are permitted for deduction even without proof of the receiver:

  • Payments must be necessary in order to be able to survive against foreign competition
  • They must be common in the industry
  • A corresponding application must be made to the Treasury each year
  • Payments must be appropriate
  • The payer has to pay a lump-sum to the tax office to be fixed by the Finance Minister (at least 20% of the amount paid).

In the absence of the required conditions, for corporate taxable companies paying bribes without proof of the receiver, a special tax of 200% is charged. This special tax may, however, be abated along with the bribe amount as an operating expense.

Denmark: bribe payments are deductible when a clear operational context exists and its adequacy is maintained.

France: basically all operating expenses can be deducted. However, staff costs must correspond to an actual work done and must not be excessive compared to the operational significance. This also applies to payments to foreign parties. Here, the receiver shall specify the name and address, unless the total amount in payments per beneficiary does not exceed 500 FF. If the receiver is not disclosed the payments are considered "rémunérations occult" and are associated with the following disadvantages:

  • The business expense deduction (of the bribe money) is eliminated.
  • For corporations and other legal entities, a tax penalty of 100% of the "rémunérations occult" and 75% for voluntary post declaration is to be paid.
  • There may be a general fine of up 200 FF fixed per case.

Japan: in Japan, bribes are deductible as business expenses that are justified by the operation (of the company) if the name and address of the recipient is specified. This also applies to payments to foreigners. If the indication of the name is refused, the expenses claimed are not recognized as operating expenses.

Canada: there is no general rule on the deductibility or non-deductibility of kickbacks and bribes. Hence the rule is that necessary expenses for obtaining the income (contract) are deductible. Payments to members of the public service and domestic administration of justice, to officers and employees and those charged with the collection of fees, entrance fees etc. for the purpose to entice the recipient to the violation of his official duties, can not be abated as business expenses as well as illegal payments according to the Criminal Code.

Luxembourg: bribes, justified by the operation (of a company) are deductible as business expenses. However, the tax authorities may require that the payer is to designate the receiver by name. If not, the expenses are not recognized as operating expenses.

Netherlands: all expenses that are directly or closely related to the business are deductible. This also applies to expenditure outside the actual business operations if they are considered beneficial as to the operation for good reasons by the management. What counts is the good merchant custom. Neither the law nor the administration is authorized to determine which expenses are not operationally justified and therefore not deductible. For the business expense deduction it is not a requirement that the recipient is specified. It is sufficient to elucidate to the satisfaction of the tax authorities that the payments are in the interest of the operation.

Austria: bribes justified by the operation (of a company) are deductible as business expenses. However, the tax authority may require that the payer names the recipient of the deducted payments exactly. If the indication of the name is denied e.g. because of business comity, the expenses claimed are not recognized as operating expenses. This principle also applies to payments to foreigners.

Switzerland: bribe payments are tax deductible if it is clearly operation initiated and the consignee is indicated.

US: (rough résumé: "generally operational expenses are deductible if they are not illegal according to the FCPA")

UK: kickbacks and bribes are deductible if they have been paid for operating purposes. The tax authority may request the name and address of the recipient."

"Specific" legal corruption: exclusively against foreign countries[

A political cartoon from Harper's Weekly, January 26, 1878, depicting U.S. Secretary of the Interior Carl Schurz investigating the Indian Bureau at the U.S. Department of the Interior. The original caption for the cartoon is: "THE SECRETARY OF THE INTERIOR INVESTIGATING THE INDIAN BUREAU. GIVE HIM HIS DUE, AND GIVE THEM THEIR DUES."
The Kaunas "golden toilet".
Euro bank notes hidden in sleeve.

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