Corruption

Corruption is dead! Long live corruption! We are all convinced that corruption should be eliminated, both in government and in the private sector, however, corruption is alive and kicking.

Why does corruption survive?

The conditions for corruption to arise are ubiquitous. Its survival, however, depends upon four conditions:

The first condition necessary for the emergence of corruption is that there be ‘income opportunities’ associated with a government’s regulatory powers. Barring pathologically honest bureaucrats, an entrepreneur will collude with public officials to capture those opportunities. Potential losers from this exchange, which include competitors and consumers, will have incentives to prevent such sales. To prevent the private sale of public property, well developed public institutions are needed to coordinate the responses of the losers and hopefully be able to prevent such deals in the first place.

The second condition requires that corrupt bureaucracies be somewhat independent within the remaining (if honest) administrative structure of the government. External controls on the bureaucracy – whether imposed by the remainder of the administrative system or by society at large – must be weak.

If some agents seem to get away with acts of corruption, the internal dynamics of a corrupt bureaucracy will motivate other bureaucrats to expend more effort on increasing the level of their illicit income. I am happy to report that the ‘Integrity for Jobs’ project, co-funded by the European Commission and the Konrad Adenauer Foundation, has effectively created ‘integrity circles’, composed of participants from the LGUs, from business and from civil society, in 60 LGUs in the Philippines, clearly addressing the scenario described by the second condition.

The third condition requires the public institutions controlling corruption be weak and ineffective. These institutions include civic groups that exert moral pressures, political parties and the media that could expose the wrongdoing, and the legal system that would have the authority to prosecute and punish the guilty.

The fourth condition is a lack of whistleblower protection. It is obvious that strange deals between government and the private sector and private sector to private sector (price fixing, collusion in biddings, bribing technical and purchasing staff, etc.) will only become known if people inside those companies or government offices become whistleblowers. This is the reason why the Integrity Initiative advocates the approval of bills that protect whistleblowers in both Houses of Congress.

Societies going through rapid modernization and economic expansion resulting in innovation are prime targets for corruption. In this context, business in the Philippines is happy that the Philippine Competition Act was signed into law in 2012 and the implementing agency called Philippine Competition Commission (PCC) established in 2016.

Measures of economic and social development seem to correlate very strongly with a reduction in corruption, involving the type of legal system, colonial legacies and religion. While it is clear that the level of corruption in societies with well-developed political institutions is lower, it is difficult to establish the direction of causation. Does development (economic, political or social) cause corruption to decline or is development possible only when corruption declines? I am happy to report that NEDA Sec. Pernia, when he presented the Philippine Development Plan 2017 – 2022 some time ago, clearly outlined that the success of the implementation of the development plan hinges on integrity within government and the private sector.

It’s time that companies and individuals commit to Integrity. Be part of the solution (if not, you are part of the problem).

Comments are welcome; contact me at [email protected]