CORRUPTIONAND ITS

CONTROL

Prof. Dr. Varagur S. Muralidharan

Visiting FellowAlagappa University,Karaikudi-630003.

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PrefaceThe purpose of this book is to create an awareness in the minds of people about

corruption and to tackle it. I have tried to state the important concepts clearly with adetailed discussion on every topic. An elementary approach to a highly complicatedinteresting emerging field is the main concern of this book. Numerous reviews andresearch papers over many decades on Corruption and Its Control added to theknowledge.

Ancient civilizations in Rome, Egypt, China and India suffered from the menace ofcorruption and had fallen. Corruption manifests itself in eight forms namely bribe, fraud,embezzlement, favouritism, extortion, discretion power, conflict of interest and illegalcontribution. Efforts are being made to combat corruption. Accountability, strict legaland regulatory power, e-governance, transparency in all government transactions andthe right to information are some of the effective corruption control measures. A strongpolitical will, role of media and anti-corruption education are needed to completelycombat the evil. Web searches were made and relevant references are included at theend of each chapter.

Author

ACKNOWLEDGEMENTSAt the outset let me offer my prayers to Almighty for successful completion of this

book. My daughters, Sowmiya Ramkarthik (CA,USA) and Shambavi Suresh kumar (MN,USA) supported me during my stay in USA. My grandkids Ajay, Swathi & Swetha gaveme company while writing this book. My wife, Sasikala, is sharing my misfortunes andfortunes for 4 decades. I thank them all. I thank my numerous friends across the globefor their suggestions and encouragement. My sincere thanks to Himalaya publishinghouse, Mumbai, India for bringing out this book. I thank the readers for purchasing thisbook.

Author

SYNOPSISCorruption is defined as the exploitation of natural resources for personal gains.

The first part of this book has nine chapters. Introduction is given as Chapter one.Ancient texts also mention about corruption. Ancient civilizations in Rome, Egypt, Chinaand India also suffered from corruption and it is presented in Chapter two. Varioustypes of corruption like petty, grand, grey, black and in police are defined in chapterthree. Chapter four discusses the eight forms of corruption viz., bribe, Fraud,embezzlement, favoritism, extortion, discretion power, conflict of interest and illegalcontribution.

Corruption costs. It has bad influence on business, public resources, wealth,fundamental rights, civil and political rights and international trades. These aspects aregiven as chapter five. Nearly all environments favor corruption. In government officeshowever small or big corruption prevails. Corrupt officers induce honest officers to becorrupt. Various situations promote corruption practices is presented as chapter six.

Attempts are being made to quantify corruption. Numerous internationalorganizations started to measure the extent of corruption. Various analytical methodsare being tried. Different organizations tried indicators and frame works. Objective,subjective and aggregate indicators are known. The difficulties in the measurement arealso summarized. Transparency international and World wide governance indicators arecompared and presented in chapter seven.

Various mathematical tools are being used to describe corruption. Well knownmodels like economic growth, game theory, multiple indicators and multiple causes andvarious simulation models are presented in Chapter eight. Globalization has its owninfluence on nations and is discussed in Chapter nine. Foreign investments and ethical& moral values affect citizens. Globalization affects a nation and the extent to which anation is influenced is also measured. Corruption becomes enhanced and there areindicators to which a nation gets corrupted. Human ethics is subjected to big causality.Multinational companies influence politicians and capture the economy of the nation andits resources.

Part two presents various corruption control measures in three chapters. Thetenth chapter elaborates how corruption prevails in government offices. Accountability,strict legal and regulatory sector, E-governance, transparency in all governmenttransactions and the right of citizens to know what government does is presented indetail. The role of society in curbing corruption is presented as chapter eleventh. Tocontrol corruption, a strong political will leadership, role of newspaper, television andinternet and other mass communication channels are necessary. Private companiesshould also contribute to control corruption. They should along with profits contribute tosocial programs to educate about the evils of corruption. Society should be educatedabout the evils of corruption. For nearly 30 decades numerous internationalorganizations like Transparency international European union and the World bank are

continuously creating corruption awareness among people. They measure the extend ofcorruption in each nation and the corruption perception indexes are published yearly.These details are given in Chapter twelfth.

Part three of this book presents four selected sectors where corruption drasticallyaffect human life and that of the nation are presented in part three as four chapters.Corruption in health and education affect human life while the revenue and defenseaffect the nation. Chapter thirteen deals with corruption in health care sector.Corruption in government hospitals, the roles of patient, physician assistants, doctorsand nurses are presented in detail. In health care sector pharmaceutical companies doplay a significant role. In this chapter various anticorruption methods are presented.

Chapter fourteen presents the status of present day school, college and universityeducation and the prevalence of corruption practices. Private universities also contributeto lowering of ethical and moral values. Corruption in university research andplagiarism in scientific research are also highlighted.

To run a government by lawful means is to levy taxes, proper collection of thesetaxes and effective tax administration are needed. Corruption control methods inrevenue sector is also presented in chapter fifteen. A strong nation and strongleadership are essential criteria for a nation’s security. However a nation’s defense sectorranks next to public works in corruption. Defense employee appointment, promotion andtransfer involve bribes. Procurement of cloths, food and ammunition provide fertileground for corruption. Defense offsets and procurement involve multiple actors andpromote corruption. These are discussed in chapter sixteen along with anticorruptionmeasures.

The purpose of this book is to educate the public, students and government officialsabout corruption and its influence on society. This book may be prescribed as a text bookin schools along with other teaching subjects in civics, economics and moral sciences.

Author

CONTENTS

PART ONE – CORRUPTION1. Introduction 3 – 52. Corruption in Ancient Periods 6 – 123. Typology of Corruption 13 – 174. Forms of Corruption 18 – 275. Cost of Corruption 28 – 316. Corruption Environment 32 – 357. Measurement of Corruption 36 – 478. Models in Corruption Research 48 – 519. Globalization and Corruption 52 – 60

PART TWO – CORRUPTION CONTROL10. Government 63 – 7111. Society 72 – 7912. Role of International Organizations 80 – 84

PART THREE – SELECTED SECTORS13. Corruption and its Control in Health Sector 87 – 9514. Corruption and its Control in Education Sector 96 – 10315. Corruption and its Control in Revenue Sector 104 – 11016. Corruption and its Control in Defense Sector 111 – 116

PART ONE

CORRUPTION

2 Corruption and its Control

Introduction 3

3

Vedas are Hindu sacred texts. Mention of Corruption is made in Soma Veda; anddescribes corruption as a hydra headed having nine heads. Rig Veda cautions all thosetaking bribes as thieves of God and get rebirth in the foulest womb(1). Ramayana, Indianepic, described the nine heads of Ravana as corrupt heads. In India during Dussara daysthe effigies of nine heads are burned. In the Fourth century, Kautilya (one of myforefathers) wrote a guide book for the King known as “Artha sasthra”. As the detectionof corruption is difficult the King should appoint persons of noble birth, highest honestyand intelligence. Thirukkural, a book of morals of ancient tamil literature, mentions thatking should live by virtue and restrain from all vices not leaving courage; he should rulewithout losing honor (2,3)

“In those who rule the land these three must never lapse:

Vigilance, valiance and virtuous living” (Division 39, couplet 384)

Corruption is not a new phenomenon. In recent years, corruption became populardue to media. When applied to human relations, corruption is a bad practice; a fall inmoral conduct and personal honesty. In administration, it is a shame to the office aperson holds and becomes unfit to hold the office. It is a behavior of a person to deviatefrom the rule; to gain wealth, power and status. It is the use of public office for apersonal benefit.

Those who need services have to pay a bribe to government officer. For a servicewhich is the right of the citizen one has to bribe. The bureaucrats may merely havediscretion over imposing costs on the citizen before granting the service. A bribe isdemanded to reduce the cost. This form of corruption is prevalent in a regulatory system.

Introduction

Chapter

1

4 Corruption and its Control

Once a regulatory system exists the bureaucracy promotes corruption. Political or Grandcorruption occurs due to corrupt dictator’s control over a country’s resource allocationand expenditure decisions. This leader will maximize his personal wealth rather thanthe welfare of the population.

Corruption is usually defined as the misuse of office for personal gains(3). Though in someareas it can be tolerated while in some areas it is crippling. Robert Kligard(4) equatedcorruption as C = M + D – A where M is the monopoly, D is the discretionary power and A isaccountability. When an organization has monopoly over goods or services and also havethe discretionary power to decide who will receive it then corruption starts. Lesser theaccountability more is the corruption. Corruption is the misuse of all natural resourcesfor private gain and is treated as crime. If bribes are high and the chances of gettingcaught is less, many officials will succumb to this crime. Whether bribe is small or big,penalties should be heavy. Corruption prevails in a government due to bribe:

1. There are rents associated with government regulatory powers

2. External controls on the bureaucracy

3. Weaker public institutions controlling corruption

In a society, corruption prevails due ten causes (Table 1.1).

Table 1.1Ten Causes of Societal Corruption

No Causes

1 Low levels of economical development

2 Unlimited consequences of economic liberalization

3 Unintended consequences of Foreign direct investment(FDI)

4 Morally weak institutions

5 Lack of accountability

6 Lack of transparency

7 Inequality

8 No real democracy

9 Offshore banking

10 International organized crime

There is a view in support of corruption as it smoothens the wheel (greasing thewheel of commerce). But corruptions may make one transaction easier but it worsen thesituation. Corruption makes more demand like almost adding sand to the machine.Corruption reduces economic growth. It affects the prices, supply and demand, affects

Introduction 5

5

the poor and the growth in social and political institutions. It deters investment as it cannegatively bias entrepreneurs’ assessment of the risks and returns associated with aninvestment. Corruption affects the quality of education and health associated withindividual’s needs. It reduces the peoples’ access to public related to goods. This wouldfavour the leaders of the society to adopt illegal and immoral activities. While domesticcauses of corruption are known and the role of multinationals deserves equal attention.In globalised economy corruption crosses the borders. Multinational companiescontribute to high levels of international corruption.

REFERENCES1. Rig Veda, Vol. 1, 126.1

2. Bloom field Maurice, “The religion of the Vedas”, Indo Logical Book House, Delhi,1972.

3. “Thirukural” translation by G.U.Pope, W.H. Drew, John Lauzarus and F.W. Ellis,Allen & Co., 1886.

4. Robert Kiltgard, “Controlling Corruption”, Berkeley, University of California Press,1987.

Keywords: Bribe, Vedas, Corruption, Robert Kiltgard.