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Understanding Corruption

Corruption is commonly defined as the misuse of entrusted power for personal or private gain.  Common examples of corruption include cash or other payments to secure a governmental or commercial contract (bribery), improper political or charitable contributions (political financing), kickbacks, excessive gifts and extortion.  Corrupt conduct can take many forms including:

  • taking or offering bribes
  • dishonestly using influence
  • fraud
  • theft
  • embezzlement
  • misuse of information.

 

Understanding the rationale behind Managing Corruption

Corruption is a considerable obstacle to economic and social development around the world. It has negative impacts on sustainable development and particularly disproportionately affect the most vulnerable people in society.

Globally, the World Economic Forum has estimated that the cost of corruption is about US$2.6 trillion a year. Widespread corruption deters investment, weakens economic growth and undermines the rule of law. Corruption leaves its impact on each and every components of our society.

Individuals

  • legal risks e.g. costly fines, penalties, criminal charges and imprisonment
  • reputational risks e.g. ruins careers and reputations 
  • social risks e.g. erodes the quality of life

Businesses

  • leads to legal risks e.g. costly fines, penalties, prosecutions and criminal charges 
  • causes loss of business reputation
  • causes damage to employee morale
  • increases cost of doing business
  • undermines innovation since bribes, instead of performance, determine project award
  • jeopardises mergers & acquisitions and inhibits ability to conduct capital market transactions
  • debars firms/businesses from tenders (government, development banks)

 

Governments / markets

  • undermines democracy, good governance and the rule of law 
  • hampers the development of markets and drives away investments
  • leads to loss of confidence in institutions and the de-legitimisation of government
  • leads to political patronage and misuse of discretionary power
  • causes damage to public officials morale
  • increases costs of services/products and lowers the quality of services as contracts are not ordinarily awarded to the appropriate bidder
  • allows wastage of public resources and taxpayers money
  • Leads to inefficient public sector
  • allows organised crime, terrorism and other threats to human security to flourish