Corruption and socio-political economic structures: a case of Nigeria

Date07 January 2019
Published date07 January 2019
AuthorOlatunde Julius Otusanya,Sarah G. Lauwo
Corruption and socio-political
economic structures: a case
of Nigeria
Olatunde Julius Otusanya
Department of Accounting, Faculty of Management Sciences, University of Lagos,
Lagos State, Nigeria, and
Sarah G. Lauwo
Institute of Management Studies, Goldsmiths, University of London, London, UK
Purpose Corrupt practicesis a recurring feature of media coverage. The paper seeks to encourage
debates about the inuence of institutional structures on agency to break away from methodological
individualism. This paper aims to encouragereections on the role of both the structures and actors which
have shapedthe continuous expansion of corrupt practicesin Nigeria.
Design/methodology/approach Whilst recognising that deviant behaviour by some individuals is
always possible, this paper has rejected methodological individualism and shows the value of locatinganti-
social practices within the broader socio-political and historical context. Within a socio-political framework,
this study adopts the theories of critical realism, developmental state and globalisation to understand the
relationship between social agency and society, focusing upon the institutional structures and the role of
social actors.
Findings The evidence showsthat socio-political and economic development,politics, power, history and
globalisation have continuedto reproduce and transform the institutional structuresand actors which have
facilitated anti-socialpractices in Nigeria. The paper concludes that largesums of government revenue have
been undermined by the anti-social practices of the Nigerian political and economic elite (both local and
international),which have enriched a few, but impoverished most, Nigerians.
Practical implications As a consequence of recurring corruptpractices in Nigeria, there is a pressing
need for reform to curb thesepractices which have had, and continue to have, a serious effect on Nigeriaand
its future development.
Originality/value It provides a frameworkfor understanding and explaining the inter-relationsof actors
and institutionalstructures and the linkages and inuences that have shapedthe practices in Nigeria.
Keywords Bribery, Corruption, State, Elite, Institutional structure, Money laundary
Paper type Research paper
1. Introduction
Corruption has become a recurring feature of media coverage. The coverage relates to a
wide range of activities, such as bribery, money laundering, favouritism, embezzlement,
fraud, conict of interest, identity theft, white-collar crime, abuse of power and other
activities.Incommonwithother socially constructed practice, the study of corruption
presents considerable challenges because it is conducted in the secret. The contemporary
literature, often from the western world, offers a variety of competing and overlapping
denitions, causes and solutions. For example, the literature identies varieties of
corruption covering political, social, economic, legal, electoral, institutional and other
scenarios (Rose-Ackerman, 1978;Johnston, 1983;Mbaku, 1996;Gyimah-Boadi, 2004). In
Journalof Financial Crime
Vol.26 No. 1, 2019
pp. 330-371
© Emerald Publishing Limited
DOI 10.1108/JFC-01-2018-0003
The current issue and full text archive of this journal is available on Emerald Insight at:
general, corruption is considered to be a negative activity; in other words, something
which undermines social welfare (Amundsen, 2006;Bakre,2007a, 2007b;Sikka, 2008). Its
destructive capacities have been captured by metaphors such as cancer(Wolfensohn,
1996;González de Arag
on, 2004), virus(Elliott, 1997;Hoa and Johnston, 2002;
Underkufer, 2005)anddisease(Klitgaard, 2000;Underkufer, 2005;Neutze and
Karatnycky, 2007).
Some writers associate corruption with the recurring misuse of public ofce for private
nancial gain (Rose-Ackerman,1978;Zakiuddin and Haque, 2002;Klitgaard, 2002;Olurode,
2005), but this is not exclusively so because corruption also exists in both (small and large)
private enterprises (Klitgaard, MacLean-Abaroa and Parris, 1996;Tanzi, 2002;AAPPG,
2006;Akindele, 2005;Otusanya, 2010). Their gains arise because of fraud, bribery,
exploitation, embezzlement and abuses and conicts of interest (Sikka, 2008;Otusanya,
2010). Corruption is frequently associated with the activities of politicians, presidents,
dictators, bureaucrats and public ofcials (AAPPG, 2006;Bakre,2007a, 2007b;Sikka, 2008;
Otusanya,2012a, 2012b). Its outcomes are associated with loss of taxes, public revenues,
economic devastation, lack of investment in public goods, emergence of gangs and private
armies, loss of faith in law and institutions,poor quality of life and even a decline in average
life expectancy (Christian Aid, 2005;Sikka and Hampton, 2005;AAPPG, 2006;Otusanya,
Attention has been focused on thedemand side (the receiver) (Tanzi, 1998;TI, 2004) and
the supply side (the giver) (FCPA, 1977;[1] Convention OECD, 1997;[2]Hellman et al.,2000;
UN Ofce on Drugs and Crime, 2005), and much of the reform is aimed at controlling the
discretion and power of public ofcials (Convention OECD, 1997;UN Convention Against
Corruption, 2003). In contrast, a large part of bribery and corruption occurs at the interface
between the private and publicsector, between government ofcials and companies seeking
competitive opportunities to earn excessive prots by offering kickbacks and secret
commissions to intermediaries (US SenateSub-Committee on Investigations, 2005;AAPPG,
2006;Bakre,2007a,2007b;Sikka, 2008;Otusanya, 2011a;Otusanya et al., 2012).
The social, economic and political effects of corrupt practices are signicant as huge
amounts, often dwarng the gross domestic product (GDP) of many nation states, are
involved. The World Bank estimatesthat between US$1tn and US$1.6tn is lost each year to
various illegal activities, including corruption, criminal activities and tax evasion (World
Bank,2007a, 2007b). It has been estimated that every year between US$500bn and US
$800bn leaves Southern countries due to criminalactivities, corruption, tax evasion and tax
avoidance practices(Baker, 2005).
Corrupt practices are not just the prerogative of developed economies. They are also
encountered in developing countries. As a result of these informal economy[3] activities,
African countries have been estimated to be losing US$500bn (£270bn) a year in revenue
(Christian Aid, 2005)[4]. Corruption and the transfer of illicit funds have, therefore,
contributed to capital ight from Africa, with more than US$400bn havingbeen looted and
stashed away in foreign countries (UN Ofce on Drugs and Crime, 2005). The former
chairman of the Economic and Financial Crimes Commission (EFCC), Nuhu Ribadu,
disclosed that pervasive corruptionin Africa bleeds the continent of US$148bn[5] each year,
representing 25 per cent of its grossnational product (GNP). It is also estimated that corrupt
African political elites hold somewhere in the range of $700 to $800 billion in accounts
outside the continent(AAPPG,2006, p. 15). It has been argued that, in many cases, western
companies and western agents have been guilty of offering and paying bribes to
government ofcials to secure contracts and other advantages (AAPPG, 2006;Sikka, 2008;
Otusanya, 2010;Otusanya, 2011a). Corrupt practice is continually depriving the African
economy of sums large enough to make a real difference in social investment in education,
transport, pensions, housing, health care and for freeing people from poverty and squalor
(Oxfam, 2000;Fillingand Sikka, 2004;Sikka, 2008;Otusanya, 2011c).
The global anti-social practicesindustry has attracted the increasing attention of
international organisations and policy-makers[6] and scholars,[7] but comparatively little
scholarly attention has focused on the role of multinational companies (MNCs) facilitating
corruption in developing countries (Sikka, 2008;Bakre,2007a, 2007b;Otusanya, 2010). A
number of other studies have paid attention to exploring the impact of a range of
explanatory variables (such as investment, bureaucratic efciency, growth, scal termites
and ethnolinguistic fractionalisation, etc.) on some aspects of corrupt practices generally
(Mauro, 1995;Tanzi, 2002;Akindele,2005). The literature in this area is diffuse. Whilst there
is considerable research on the relativelynarrow aspects (causes, effects and consequences)
of anti-social practices in developing countries (Akindele, 2005;Peel, 2006;Martens, 2007),
broader accounts of corrupt practices as impediments for sustainable development in
developing countries are scarce. A number of literature sensationalised it and focus on key
individuals. In recent years, considerable scholarly attention has focused on the expansion
and growth of corrupt practices (Everettet al., 2006,2007;Bakre,2008a, 2008b;Sikka, 2008),
but there is little exploration of the institutional, political, social and economic context. The
paper seeks to encourage debatesabout the inuence of institutional structures on agency to
break away from methodological individualism. In particular, it seeks to encourage
reections on the role of both the structures and actors which have shaped the continuous
expansion of corrupt practices. Such practices are located within the broader dynamics of
institutional structures where the socialrelation is more a function of wider institutional or
organisational and historical processes. Applied to the politicaleconomic relationship,
institutionalismstresses how their relationship is embedded in a larger institutional context.
The paper is divided into four further sections. Section 2 provides a framework for
understanding and explaining the inter-relations of actors and institutional structures and
the linkages and inuences that have shaped the practices in Nigeria. Section 3 focuses on
elements of Nigerian socio-political and economic context to appreciatehow the institutional
structures might have persuadedand facilitated the political and economic elite to engage in
predatory practices. Section 4 provides some evidence to show the role the political and
economic elite have played in corruptpractices in Nigeria. The nal section summarises the
paper and discusses its signicanceand need for reforms.
2. Structure and agency
A number of previous literaturehas tended to sensationalised corrupt practices and focus on
individual social actors and paid comparatively little attention to social structures and
institutions which shape their actions (Tanzi, 1998;Mbaku, 1996;Osoba,1978, 1996). This
paper does not deny the need to look at individuals, but it submitted that there is nothing
inevitable or predetermined about the actions of individuals. There is no evidence to show
that there is anything in theirgenetic structure which predisposes them to engage in corrupt
practices. Corrupt practice is generally connected with the activities of actors (such as the
economic and political elite and professionals)and the enabling institutional structures and
norms shaped by the socio-political and economic development which provide both the
opportunity and motive for engagingin activities that are prescribed as anti-social (Mitchell
et al.,1998;Bakre,2007a, 2007b;Sikka, 2008;Otusanya,2010,2011b;Otusanya et al., 2012).
In taking account of the inuence of structure, Durkheim world views also offer
guidance. Durkheim argued that social structures determine individuals. However, if the
social structure determines an individual, it then leaves very little scope for individuals to

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT