GOOD GOVERNANCE

AND
SOCIAL RESPONSIBILITY
chapter 2 …

Corruption and Its

Effects on Society
Corruption is the abuse of power by a public official for private gain.
Two General Kinds of Corruption:
1. Personal – one who disregards his moral and ethical values.
2. Institutional – those who through the exercise of their power
corrupts an organization.
Evils in Society Facilitated by Corruption
1. Human Trafficking – slavery or illegal trade of human for
sexual exploitation or forced labor.
2. Drug Trafficking – global black market – cultivates,
manufactures, distributes, and sells prohibited substances.
3. Money Laundering – conversion of dirty money to clean
money.
4. Organized Crime - highly centralized, organized, and
disciplined enterprise or international groups run by
criminals who engage in illegal transactions.
5. Mafia – criminal organizations around the world such as
the Sicilian mafia known as Cosa Nostra.
6. Crime – breach of laws that will ultimately prescribe a
conviction. Not every crime violates laws – not every
violation is a crime.
 Effects of Corruption on
Development
Constituents lose trust and confidence on
the government – since corruption derails
its legitimacy and weakens it as
procedures and resources are disregarded
and drained.
The 5 Realms Affected by Corruption
1. Politics
2. Elections
3. Legislative Bodies
4. Judiciary
5. Public Administration
Politics
Corruption weakens and destroys good
governance and democracy as it openly
Ignores, disobeys, shows contempt or
defies the law or convention – and
overthrows authority structures and
formal processes.
Public Administration
Services are inefficient and preferential
for corruptors than for those who have no
means to corrupt the system.

Judiciary
Rule of law is compromised, makes what is
wanted or desirable unattainable, injustice
prevails.
Election and Legislative Bodies
Representation in making policies is distorted and accountability
demolished.
Accountability - the liability or obligation for the failure
to perform one’s duties as expected.
Representation - duty to influence the political process by those elected to
represent their constituencies.
Policymaking - ensuring the country’s desirable future by addressing
issues through the political processes.
Distortion – falsify, destroy, misrepresent or mislead an idea or an
intention.
Effects of Corruption on the Economies of the Private Sector
❑ Increases cost of business through illicit payments, cost of

negotiations with officials, risk of breached agreements or

detection.
❑ Makes rules more difficult to cause unnecessary red tape
in order to raise bribes to covertly bypass rules and delays.
❑ Inflates business costs by shielding and Effects
sustaining firms
of Corruption on the Economies of the Public Sector
with connections from their competition. ❑ Focuses on capital projects to generate more kickbacks.
❑ Distorts public disbursements by increasing technical
complexity of capital projects to demand higher bribes.
❑ Granting permits to firms that do not or just partially
comply with construction, environmental and other rules
for a price.
❑ Reduces quality of infrastructures and services.
❑ Increases budgetary pressures on government as less
less funds are poured into public projects.
❑ Moves financial capital overseas instead of investing it
at home resulting into rent extraction (giving without
getting) and political instability (previous powers stash
money abroad before their term ends as new ones will
seize the illegally).
Effects of Corruption on Environment and Society
Corruption redounds into lack or non-enforcement of environmental
laws that results into destruction.
❑ Drought and natural events and calamities
❑ Erosion of wealth when officials steal from it
❑ Non-enforcement of social rights and protection of workers, non-
protection of labor, prevention of unionization to illegally gain
economic gains of Corruption on Health, Public Safety, Education,
Effects
Trade Unions and Other Which Can Be Dangerous for All.
❑ Reputed surgeons take bribes to prioritize surgery patients
❑ Car makers take bribes to accept poor quality connectors
for airbags and install deceptive air pollution devices
❑ Producers of life-enhancing machines for the heart install
poor quality capacitors
❑ Universities accept children of donors of various funds
❑ Executive board members accept money and vote bribes
from unions in exchange of employer-friendly positions
❑ Anti-doping bodies and international sports federations
take money for clearances and allocation of contracts and
competition venues
Conditions Favorable for Corruption
❑ Lack of transparency and freedom of information,
no freedom of speech and the press
❑ Lack of government control , lack of civil society,
weak rule of law and judicial independence, lack
of protection for whistleblowers, weak civil service
and dysfunctional democracy
❑ Opportunities and incentives such as routine cash
handling, large and unsupervised public funds,
privatization and sale of state-owned property,
poorly paid civil servants, costly and excessive
political campaigns, political patronage
❑ Social conditions such as old-boy networks, close
cliques, gift economy (China’s quanxi, Soviet’s biat
system) absence of personal integrity, education
and literacy lack, discrimination and bullying, and
favoring certain ethnic groups
❑ Lack of economic freedom forcing firms to buy
privileges and favors for licenses, credit bailouts,
access to low-interest loans, state ownership of
utilities
Other Conditions Favorable for Corruption
❑ Size of public sector as more regulations that
breed corruption, privatization and cronyism that
grant wealth to favorites lack of subsidiary
principle which gives smaller units authority and
funds that can encourage embezzlement making it
easy to discover missing funds
❑ Government corruption such as corrupt
dictatorship or exploitive dictator which often
disintegrates the rule of law and neologism
kleptocracy when the highest officials take
advantage of state funds
and other wealth of the nation
❑ Campaign contributions that make most
politicians beholden to individuals who they owe
political debts – France bans totally corporate
funding of political parties while the USA
requires full disclosure of contributions to
campaign funds
Measuring Corruption
❑ Transparency International
1. Corruption Perceptions Index – aggregating third-party polling of
public perception of how corrupt countries are.
2. Global Competition Barometer – survey of general public attitudes
toward and experience of corruption.
3. Bribe Payers Index – looks at the willingness of foreign firms to bribe.
❑ World Bank – collects data from 100,000 firms globally and a set of
indicators of governance and institutional quality.
❑ Worldwide Governance Indicators – measures corruption control or
extent to which power is exercised for private gain petty or grand, and capture
of state by elite and private ones.
❑ Millennium Challenge Corporation – grants funds to nations who are not
viewed as corrupt for development.
❑ Global Integrity and International Budget Partnership – 2nd
wave of metrics aiming to create policy changes via targeting
of resources effectively and creating incremental reforms.

Opposite of Corruption –
public policies that
prevent, expose discourage
corruption.
Youtube Link
• Power of corruption | Lucy Koechlin |
TEDxHSG
https://www.youtube.com/watch?v=29
5T3fUF1SM