Deciding to Fight Corruption
| Published date | 01 March 1999 |
| Date | 01 March 1999 |
| Pages | 26-35 |
| DOI | https://doi.org/10.1108/eb025917 |
| Author | Denis Osborne |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 7 No. 1 — Analysis
Deciding to Fight Corruption
Denis Osborne
INTRODUCTION
The context
Honest people the world over have always fought
corruption. 'Everyone', everywhere, complains
about it. Now there is increasing awareness of the
damage caused by corruption to the economy and
to society, and a greater concern to act. This may
be attributed, in part, to increasing levels of literacy
and general education over the past generation, and
to the increasing levels of information brought to
most people in most countries over the past decade.
In many countries and organisations decisions have
been taken recently to intensify the fight. The public,
the media, politicians and officials have decided that
'something should be done about corruption'. Decid-
ing what to do is a more difficult task. Because the
success of policies and actions requires support from
society, those decisions may need to differ from
place to place and from time to time. Deciding
how to fight corruption after it has become systemic
in an organisation or nation is especially difficult. The
purpose here is to identify an agenda for decision
makers and suggest relevant considerations. That
agenda could identify research and studies that
would be helpful. The dire consequences of corrup-
tion make action essential, and bring urgency to
studies that could guide decisions about what action
to take.
THE CONSEQUENCES OF
CORRUPTION
The consequences of corruption are summarised in
Box 1.
The economic consequences are greater than might
at first appear. A S100 bribe might save an importer
and lose the government many thousands of dollars
in customs duty. Bribes render competition and qual-
ity control invalid, enabling contractors to win unfair
profits and give governments poor value for money.
Here too the loss to society is often far greater than
the value of the bribe. The losses are compounded
because investors tend to shy away from countries
they perceive as corrupt,1 and international agencies
have made convincing action against corruption a
condition for aid.
BOX 1
Corruption makes governments and com-
munities:
uneconomic, because
less
revenue is
collected,
with the loss to government
much greater than the individual gains
more money is paid for the goods and services pro-
cured
policies are distorted to maximise corrupt gains,
usually in favour of capital-intensive spending
resources are
diverted away from social and develop-
mental priorities
investment is
discouraged;
unstable, because
people become angry, including the poor who
cannot afford to pay bribes and who get hurt
the most, and others whose human rights are
violated
the rich provoke resentment, through wanting more
riches and flaunting their corrupt gains they make
corruption a political issue;
unsafe, reducing individual and state security,
because
bribes protect criminals and facilitate drug smug-
gling, gun running, terrorism
bribes make the protection of society fail, because
people pay bribes to avoid compliance with the
requirements for health, safety and the environ-
ment.
The political significance of corruption has been
seen in many countries — in Britain with charges
of sleaze against one government and the resignation
of some of its ministers, and charges of cronyism
against its successor, followed by further resignations
as reported, for example, in The Times in 1994 and
1998.2
The threats to state security, personal safety and the
environment have, arguably, the greatest long-term
international significance. Agarwal and Narain3
describe ways in which corruption distorts the
making of laws, as well as their enforcement, to the
disadvantage especially of the rural poor but causing
environmental damage that goes far beyond their
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