Sunday, July 14, 2013

The Hidden Costs of Corruption

 Many of us tend to adopt a simplistic view of corruption.  We tend to see corruption as a mere transaction that involves people who illegally enrich themselves by taking bribes or kickbacks and others who pay the bribes voluntarily for some bigger benefits or because they are compelled to do so. 
 Corruption in this case is reduced to a transaction between two parties and third parties (i.e., the public at large) who are not involved in this transaction are often tempted to adopt either of two stands or a combination of both:  (a) they acknowledge the immorality or illegality of the transaction; (b) they are indifferent to it because they are not personally involved.   In any case, they do not think there is much they can do about corruption.
 This article tries to establish that corruption involves more than a simple illegal transaction –  it has a significant long-term pernicious impact on ALL of us.We thus cannot afford to remain indifferent to this curse.   Some of the direct and indirect implications of corruption are discussed below.  Readers may decide for themselves whether and to what extent they are applicable to the Mauritian situation.
Substandard products and services
 Someone who has taken a bribe or a kick back from a supplier or a contractor is more likely to be less critical of the quality of the product or services being offered.  This poor quality may later result in injury and/or death of innocent people.   After all, the supplier will need to absorb the amount paid as bribe and one way to do this is to compromise on the quality offered.  This can also include delays in delivery.  One often sees infrastructure works that last excessively long causing excessive inconvenience to the public.
Increased prices and poor public service
 Suppliers and contractors sometimes increase their prices to include the bribe being paid.  Given that that the person being bribed is less likely to negotiate too hard, some suppliers may charge excessively high prices and again it is the public   that ends up paying the extra costs.  Corruption becomes an indirect means that some individuals in positions of power use to steal tax payers’ money, our money.  We ALL pay VAT which represents the largest revenue of the state.
 This has other indirect consequences – the fact that public funds are being siphoned away means that there will be less available to ensure the smooth running of essential services like health and education and in a decent salary for doctors, nurses, teachers and policemen and / or proper maintenance of public infrastructure.   The problem of poor services is exacerbated by the appointment the incompetent and undeserving people at various levels – another form of corruption.    
 Finally, price increases by suppliers and contractors often result in higher public debt that will have to be paid back by future generations.   All these indirect consequences have a significant long-term negative impact on public welfare.
Negative impact on the ecosystem
 Concessions are often granted to local parties or more often to multinationals to enable them to exploit the natural resources of the country.  Examples would include activities like mining, fishing, state lands for development, or exploitation of forests.   These concessions are often granted against relatively low payments to the state while the difference is often pocketed by individuals involved in the decisions and/or in the granting of relevant permits.  This often represents a significant shortfall for the state and thus reduced funds available for state expenditure with consequences similar to those discussed in Section 3 above.
 More importantly, the fact that bribes have been paid and received often results in over-exploitation of the natural resources which remains unchecked, large-scale destruction of the natural environment, sudden displacement of local populations from areas they have occupied for generations or excessive pollution.   Readers would already be familiar with numerous such examples.   Again it is the public at large that pays a very high price, and that too for many years, for the corrupt practices of a few individuals.
Weakening of democratic institutions
 Many of the individuals who benefit from corruption are often in positions of power or close to people in power.  These individuals tend to use a portion of the proceeds of corruption to retain power or help those close to them to remain in power so that they may continue to indulge in /  benefit from the corrupt practices without any restraint - thus closing the vicious cycle of corruption and indirectly perpetuating corruption.  One common way to retain power is to directly or indirectly buy votes by bribing voters, (e.g., by paying their utility bills on the eve of elections). 
 Other practices include lavish spending during pre-election rallies, banners and other communication tools, and entertainment for potential supporters.   This lavish expenditure is often financed by a part of the kickbacks accumulated by politicians in the years preceding the elections   (it should be noted that the bulk of the kickbacks are often stashed in foreign banks), or by large political donations that are nothing less than advance kickbacks – these local or international donors would subsequently be rewarded by jobs that they may not deserve or contracts that would either be over-priced and/or be associated with substandard products or services (as discussed in Section 2 above).  
 It is clear from the discussion above that if we adopt a systemic view of the situation we would realize that corruption is more than just a simple transaction between two individuals resulting in the illegal enrichment of one or both of them.  It has far-reaching social, economic, environmental and political implications.  It involves long-term costs to society at large, to the eco-system, and in extreme cases, it may even result in loss of innocent lives.  If the above premise is correct, it would be criminal on our part to be indifferent to the curse of corruption.  It is also clear that the solution would not reside in sporadic actions that only address the relatively insignificant symptoms of the problem while neglecting the systemic dimension and the root causes like those discussed above.

The vicious cycle of corruption

Article published in Le Mauricien on 16 May, 2013

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