Global nature of corruption and the futile war against it

Monday May 20 2013



By BAMUTURAKI MUSINGUZI [email protected]

John Githongo, who became known as one of the most outspoken critics of corruption in Kenya, is recognised for his role in exposing the Anglo Leasing scandal, which is estimated to have cost the exchequer more than 15 per cent of government expenditure. Githongo later fled to England, claiming that his life was in danger.

In Nigeria, the director general of the National Agency for Food and Drug Administration, Dr Dorothy Akunyili, waged a heroic battle from 2001 to 2008 with both local counterfeit drug manufacturers and wholesale imports of counterfeit drugs from China. She estimated that more than half of both locally-produced and imported drugs were of no value to the consumer and were potentially harmful.

Assassination attempt

Akunyili braved an assassination attempt and many attacks on her position and reputation, to contribute to cleaning up drug distribution in Nigeria. While she has had a major impact, many of the drugs in use in the country remain ineffective. The illicit distribution system continues to be profitable to those who control it.

Italians Giovanni Falcone and Paolo Borsellino, the heroes of the fight against the in Sicily and chief prosecutors in the Maxi Trial of 474 Mafia suspects in 1986, were both tragically assassinated in 1992.

As head of the Economic and Financial Crimes Commission (EFCC) in Nigeria from 2004 to 2007, Nuhu Ribadu conducted a whirlwind campaign during which many of Nigeria’s senior political figures had charges brought against them. Between 2004 and 2006, Ribadu’s team investigated 2,000 cases, made a similar number of arrests, prosecuted more than 200 cases, achieved 88 convictions, and recovered more than $5 billion in stolen assets.

A 270-page book, Global Corruption: Money, Power and Ethics in the Modern World, written by Laurence Cockcroft and published by L.B. Tauris late last year, analyses the causes of corruption, its current characteristics and trends, and its threat to the poor and overall economic growth.

According to Cockcroft, the heroic efforts of individuals epitomised by Githongo, Falcone, and Ribadu have had a major impact in raising the profile of the fight against corruption. At the same time, they demonstrate the limits of individual action.

Githongo did not succeed in having the several contracts collectively known as Anglo Leasing cancelled, but his actions added to the demands for Kenya’s new Constitution (approved at referendum in 2010) to have an explicit anti-corruption strategy by appointing non-elected individuals as heads of ministries.

Falcone and Borsellino dealt a major but not fatal blow to the Sicilian Mafia, as nearly three-quarters of the defendants at the Maxi Trial had their sentences shortened or repealed.

Nuhu Ribadu established the principle of the liability of Nigeria’s state governors for prosecution on corruption-related charges, but saw most of those cases withdrawn in Olusegun Obasanjo’s last months in power and his own career as a prosecutor dramatically curtailed.

“Individual action of this kind in an endemically corrupt environment will hardly ever achieve long-term success,” Cockcroft writes in his book.

In the many countries where corruption is a key or determining factor in the national economy, the costs to economic growth have also been high. In Nigeria, for example, corruption has condemned most of the population to an income of less than $2 a day in a country with an average annual income from oil of $30 billion since 1970.

The wealth generated by oil in Nigeria has risen to $1.2 trillion from 1980 to 2010 (or $10,000 per head of the current population). The temptation for the elite to acquire a slice of this for personal use has proved to be irresistible. But some of this access has been shared much lower down the social scale in a process known as “bunkering”, which means illegal siphoning of oil from the major pipelines.

Nigeria loses six million barrels of oil worth about $1.5 billion every year through this method in a racket from which the “big men” receive huge benefits and workers far down the scale are kept “on side”.

In Peru, corruption in the 1990s under Alberto Fujimori diverted resources to such an extent that only about half of the expected revenue reached the government.

In the Democratic Republic of Congo (DRC), the pattern of gigantic corruption initiated by former president Mobutu Sese Seko from 1961 to 1997 was synonymous with the diversion of resources away from the state to fund a patronage system, which eliminated any serious investment in health, education, and basic infrastructure.

The total sum stolen by Sani Abacha

The total sums stolen by Sani Abacha in Nigeria amounted to about five per cent of the country’s GDP during his four-year reign as head of state, a figure similar to the one attributed to Fujimori during his 11-year presidency in Peru.

In his analysis, Cockcroft, who is a former chairman of Transparency International UK, observes that the common characteristics of corruption in today’s world include the close relationship between personal enrichment and political survival, the willingness of international partners to participate in corrupt stratagems, and the extent to which dual systems facilitate this and make it difficult for formal institutions to control the corruption at the heart of the process.

The accelerated globalisation of the world economy in the past 30 years, Cockcroft says, has stepped up corruption in different ways and facilitated secret and unrecorded flows. Secret and hidden corners of the world trading system have experienced a massive flow of funds, much of which are ultimately “washed” into formal trading and banking channels.

Organised piracy, which has developed since 2005 off Somalia, the mining of coltan in eastern DRC, and a much broader spectrum of global trading in drugs, humans, and counterfeit goods, all fall into this category and feed the corruption in a range of countries, he adds.

“The case for combating corruption relentlessly is that it is a force which drives poverty, inequality, dysfunctional democracy, and global insecurity. Its most consistent victims are the poor, who constitute the majority of the population in low-income countries, and its most dramatic victims are the subjects of human trafficking. Its everyday victims are the citizens of the many countries where political funding is generated by corrupt means and where their voice is lost in the rush by elected politicians to pay off their backers,” Cockcroft observes.

According to the author, the shared ingredients of corruption often include the need for political finance, either to fight an election or to secure a regime in power, the personal enrichment of a head of state and his close family and associates, and the continued expansion and success of networks that depend on political cover from the state but work towards personal enrichment.

Close relations with organised crime

In many cases, members of the network have close relations with organised crime, may be engaged in illegal trade, and are able to deposit their corruptly gained funds in “secrecy jurisdictions” from where it may be recycled into the domestic economy.

Cockcroft’s book also discusses the main factors that drive corruption.

At the level of small-scale or petty corruption, individuals are confronted with major pressures in a context that may prove to be overwhelming. Once they succumb to these, corruption proves to be contagious.

At a national level, the key drivers are political funding, the interplay between organised crime and governments, and the role which local and multinational companies can play in using corruption to increase market share.

According Cockcroft, political funding is probably the largest single driver of large-scale corruption. Deals which appear to be straightforward examples of grand corruption apparently tailor-made for the pockets of an individual or small team are in fact designed partly to secure the interests of a political faction or party — or simply a well-embedded governing elite. These interests may include bribing unsympathetic members of a congress or parliament to ensure the passing of specific legislation.

“Once funds are directed from these various sources to a party that achieves power, its obligations to local and multinational companies, and perhaps to organised crime, constitute a cocktail which will tend to stimulate rather than enable it to constrain corruption,” he warns.

In its Corruption Perceptions Index 2012 report, Transparency International observes that corruption is a major threat facing humanity. “Corruption destroys lives and communities and undermines countries and institutions. It generates popular anger that threatens to further destabilise societies and exacerbate violent conflicts. Corruption translates into human suffering, with poor families being extorted for bribes to see doctors or to get access to clean drinking water. It leads to failure in the delivery of basic services like education or health care. It derails the building of essential infrastructure, as corrupt leaders skim funds.”

Corrupt tendencies can lead to the total degradation of a state. “A combination of highly corrupt procurement procedures, the diversion of budgetary funds from social expenditure, irresponsible foreign investment, and the accelerated degradation of natural resources can create the circumstances for a ‘failed state.’

Examples of this in the recent past include Sierra Leone, Liberia, and the Democratic Republic of the Congo,” Cockcroft writes.

In the book Public Accountability and Good Governance in East Africa, Kituo Cha Katiba (KCK) singles out lack of government commitment, manifested by poor implementation or enforcement of policy, legal, and institutional framework, and a culture of impunity, as key factors that have thwarted the anti-corruption crusade in East Africa. The other factor that complicates anti-corruption efforts in the region, KCK adds, is the fact that the officials mandated to fight corruption participate in it themselves. Immense government interference continues to thwart anti-corruption efforts.

“This makes corruption one of the worst governance issues in the East African countries,” KCK observes.

Cockcroft’s book shows that, in spite of some progress, all forms of action in combating corruption still have a long way to go. The international community needs to recognise that so far, reform of corruption has been extremely limited. The momentum needs to be maintained. The challenges of this century can only be met successfully if the corruption dimension is built into policy action.

“Without this, action to combat it at country level will be flawed and progress on the issues of the 21st century will be hostage to the many and burgeoning forces of corruption,” Cockcroft warns.