Is Corruption Getting Worse?

...."The recent G20 round resulted in a strong set of recommendations to strengthen the fight against corruption. Through the B20 process, business leaders articulated recommendations to G20 governments across a range of areas including the development of collective action and sectoral initiatives, model codes of conduct to SMEs, good practices to incentivize self-reporting and common principles on enforcement of bribery legislation. Together, these recommendations can spur tangible efforts under a framework of support from countries among and beyond the G20, becoming the basis for a model legislative framework."......"The growing number of prosecutions and resulting fines as a result of the US Foreign Corrupt Practices Act and more recent UK Bribery Laws are setting a new bar for enforcement. Greater transparency is no longer an option, but an imperative to create sustainable competitiveness environments that serve the public and foster an ethical and competitive marketplace."

Source: http://www.huffingtonpost.com/robert-greenhill/is-corruption-getting-wor_b_2257016.html

Comment: I think that nations aspiring to have attractive business environments for foreign investment  must fight corruption in all its forms. Failure to fight corruption has disastrous and catastrophic socio-economic   and political negative consequences that will take long time to correct. 

Nations can no longer avoids fighting corruption. The 1980s and 1990s eras are by far different from our current era. 

What Should We Know About Corruption in the Public Sector?

Corruption is a form of fraud. It is a misuse of public office for private gains. The process of corruption usually has three parties involved: the public official who is entrusted by the public to carry our specific duties, the public who entrusted the public official, and citizen or a firm. Each of us knows for a fact that corruption has significant negative impacts on growth: all kinds of growth. Empirical studies have shown that corruption reduces incentives to invest, worsens the public infrastructures and services, decreases tax revenues and distorts the composition of government spending.

Corruption usually leads to bribery or extortion. Bribery is a situation when a person or entity gets something illegally that (s)he / it is not entitled to. Extortion is a situation when a person or entity pays to get what  (s)he / it  is entitled to. This distinction is very important especially for government officials who are responsible to set up strategies to fight corruption. 

What a government should do to fight corruption? What public should do to fight corruption? 

Among what a government can do are the following:

1. Establish and maintain effective anti fraud commission (AFC). The legal system should enable the AFC maintains its independence. Otherwise, the effectiveness of the AFC would be impaired.

2. Establish and maintain internal control systems that are designed specifically to deter, prevent, and detect corruption.

3. Establish a whistle blow system in each governmental entity. This is one of the most effective tools to discover corruption.

4. Promote fraud and corruption educational programs at the national level.

5. Engage universities and academia in fighting corruption.

6. Provide a healthy environment to enable the civil society play its normal monitoring role regarding the performance of the public sector.

7. Enhance the legal system to provide a strong framework for all stakeholders.

8. Establish code of ethics in each governmental entity that promotes anti corruption practices.

9. Instill accountability for each post in the government. Transparency is a prerequisite to have accountability functions as intended.

10. Promote good governance

11. Obtain a financial position of the public official at the time (s)he starts business in the government and when  (s)he  leaves  (s)he  post.

12. Fight the conflicts of interest that  prevails in too many corrupted governments worldwide

Fighting corruption is not a program that will start at a point and ends at another. It is a national strategy that should start soon and does not stop at any time in the future. Corruption will never be eliminated. It will stay as there are societies alive. A government should not manage corruption, it should minimize it.

Corrupted people are not corrupted by nature. They were not born corrupted. There were motives and opportunities that helped them to pursue their corrupt acts. However, what motivates a fraudster in Mexico may not motivate a fraudster in Cameron. Therefore, Corruption should first be diagnosed professionally and properly, then policies should be established based on strategies to minimize this phenomenon.

The answer to the question I raised regarding what you should know about corruption in the public sector is it depends on where you stand in the process: public official, public, citizen or a firm. It is evident that if there is no citizen or a firm in the process, there will never be corruption. That is why the public (the government) should ensure that they listen to its citizens and its firms.

If you are a government official, do not say it is complex and cannot be solved; you should say why we have corruption and how we should fight it. Unless you face it seriously, you may end with a situation like Egypt or at the best like Greece.

Mohammed J. Masoud, CPA, CFE, CICA, MBA

Managing Director

Birzeit Consulting ME

Tempe, Arizona

USA

Email: mmasoudcpa@bzconsult.com

Published on June 9, 2011 in the Financial Gazette newspaper-Harare as a part of the 3rd Forensic Conference for Africa “Fighting Fraud/Corruption and Money Laundering in Africa Using Investigative Skills". The title of the paper we presented was “Preventing and Detecting Fraud/Corruption in the Public Sector."

Report: South Carolina government is ripe for corruption - KansasCity.com

Report: South Carolina government is ripe for corruption - KansasCity.com

This news tells a lot about what makes corruption in any state or public sector entity. If this happens in the US, I think that it may be worse in other parts of the world especially in developing countries.

Good leadership key to containing corruption, says DPM Teo - Channel NewsAsia

Good leadership key to containing corruption, says DPM Teo - Channel NewsAsia

"SINGAPORE: Public sector employees account for an average of 7.5 per cent of the total number of people prosecuted by the Corrupt Practices Investigation Bureau (CPIB) over the past three years.

Deputy Prime Minister Teo Chee Hean, who revealed this in Parliament on Thursday, said this figure has remained stable.

He outlined various outreach efforts by CPIB in curbing corruption, including talks to government agencies, business community and even schools.

Mr Teo, who is also Minister-in-Charge of the Civil Service, said while the Civil Service is governed by a Code of Conduct, what's important is good leadership at the top.

Mr Teo said: "Our zero tolerance approach to corruption in the public and private sectors can only work if Singaporeans continue to be imbued with the right values, and recognise that whilst corruption may be a fact of life, it is not our way of life in Singapore.

"There are a number of factors which contribute to this. Good, competitive salaries in the public sector are a key pillar. And I think we need to maintain that. But that is not enough.

"As Professor (Eugene Tan) Tan has said, strong enforcement is necessary as well. We also require good leadership by example at the top, as well as a population which rejects corruption and does not accept any form of corruption at all.""

My Comments:

Tone will always be at the top. This is the basic and most important parameter that forms the foundation for an effective fighting fraud and corruption in both public and private sectors. I would like to reassert what has been stated above regarding the effective fighting fraud and corruption so that one can benchmark other countries with those of Singapore:

1. While the Civil Service is governed by a Code of Conduct, what's important is good leadership at the top.
2. Our zero tolerance approach to corruption in the public and private sectors can only work if Singaporeans continue to be imbued with the right values, and recognise that whilst corruption may be a fact of life, it is not our way of life in Singapore.
3. Good, competitive salaries in the public sector are a key pillar. And I think we need to maintain that. But that is not enough. 
4. Strong enforcement is necessary as well
5. Good leadership by example at the top
6. Population which rejects corruption and does not accept any form of corruption at all