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Corruption of Powers in Current Organizational Models - Essay Example

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The essay "Corruption of Powers in Current Organizational Models" focuses on the critical analysis of the major issues in the corruption of powers in current organizational models. Corruption can be identified as the misuse of power for personal gain…
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Corruption of Powers in Current Organizational Models
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?Assignment New Organisation Models for Civil Servant Unions in Austria and Germany Under the Special Consideration of Strategic Alliances, Lobbyism and Stakeholder Value The research conducted for this study contributed to the understanding of current organisational models within Austria and Germany. More importantly, the information obtained in this study demonstrates that current internal structures are inefficient in promoting optimal organisational success. The new challenges presented to today's civil service and union organisations require massive changes to the internal structure in order to react better to dynamic processes. The research conducted in this study points to the lack of assertiveness in political and social goals which risks political irrelevance. Methodologies The researcher conducted quantitative research of existing literature related to many aspects of the civil service organisation/union. Firstly, the researcher conducted a review of actual standards through publications of the Public Service Union, and German Civil Servants' Union (DBB). The researcher then considered the organisational structure of these associations, taking into account the principle-agent theory. Next, the researcher addressed the role of lobbying in the trade union environment on order to explain the basic tasks of interest group representatives, and to evaluate the significance of the associations. Through this analysis, the researcher documented the operating techniques of lobbyists. The researcher, throughout this process, gained insight into the potential influences of planning association, financing, personnel policy and leadership. The researcher then began investigating the importance of strategic alliances and networks by listing selected alliances and networks and then constructing a block model analysis.In order to assess stakeholder networks, the researcher narrowed down the subject to one important field of activity which is non-profit marketing. This activity includes finding considerations which take buy-out-reflections into account. The researcher further investigated the application of risk management and corporate governance. Through the investigation of existing literature and current organisational examples, the researcher was able to summarize theoretical results and future challenges and how organisations can meet those challenges through organisational re-structuring both in the organisation and through its networks and alliances. Contextualisation of Research The research conducted in this study does not aim to define a single solution; its main intention is to document the role of lobbying in within the union environment and the related need for the use of strategic alliances and networks. As such, the researcher aimed to reflect upon theoretical analytical foundation, also known as stakeholder value. The research conducted can be helpful in the design of sustainable lobbyist work and the optimization of organisational ideas. It also opens the doors for improved operational and organisational structures. The primary research result of this study is the importance of transparency within organisations; meaning there is a need for clear and specific communication of objectives both internally and externally. Currently, organisations lack clearly defined objectives and networks and organisational structures are not efficient. Therefore, the goal of organisational success should be to increase efficiency within organisational structures and networks through the clear definition of objectives; which includes: Legal objectives Economic goals Social goals Target group This also requires improved approaches to representation inside and outside of the organisation, which can be achieved through increased transparency and respect both for and by the unions. The overall objective of this research was achieved and the researcher is excited about the implications of this research on further study or organisational restructuring as it pertains to the civil service organisation. Research Results The researcher determined that improvement activities on the part of for-profit and nonprofit entities are needed in order to derive benefits and avoid the noted disadvantages. It was also found that nonprofit entities are more readily able to make changes in organizational performance. Transparency is the key to meeting organizational structure and performance improvement; as it is the fundamental change agent. Trade unions and nonprofit entities must use overall objectives to fulfill their purpose and mission. There objectives will move the organization along long term. The overall objectives of the entity are the cornerstone to necessary for realignment of operational modifications and improvements. Results indicate that stakeholders should be the basis for the principle change agent, meaning that stakeholders must be the primary consideration when creating and implementing operational and performance changes within a trade union or nonprofit entity. In order to do this, communication must be transparent between the organization and the stakeholders. One primary method of transparent communication is the transparency of business processes; without this, there will not be effective improvements made. It was found through this study, that the best way to implement transparent organizational change is for the organization and stakeholders to work together in creating a new organizational structure. This will not only improve organizational performance but reduce corruption as well. In this study it was found that when trade unions and nonprofits in general, have organizational problems, including poor performance, it was due to the organization’s poorly practiced business model. The primary problem found was a lack of effective communication within the organization as well as the organization’s effective communication with stakeholders. Implementing training in effective communication was found to be positively correlated with organizational success. Effective communication in the nonprofit sector will increase donor relations which will result in increased donations. The nonprofit entity is under more pressure today in terms of accountability to stakeholders which, according to the study results, can be achieved through financial transparency. While some of the experiences and research strategies discussed in the study are theoretical, there was adequate proof that practical principles of dynamic systems were derived. Such systems, for example, include the decentralization of power in an effort to increase transparency; this will also improve financial aspects of an organization. After considerable research into existing nonprofit organizational strategies, it was determined that each entity must be unique in its structure, but that any strategy used must be flexible in its processes and protocols. This includes balancing conflicts of value and the appropriate participation of stakeholders. The sustainability of an organization depends on the stability of its structure. It was found that network-like structures that support mutual relationships, that include leadership roles, will foster optimal performance and innovation. The overall results indicate that while there is no “one-size-fits-all” strategy for trade unions and nonprofit entities, there are key factors that contribute to organizational success which include transparency and accountability. Assignment 2 Power Corrupts, but it is Power that Attracts the Corruptible Corruption can be identified as the misuse of power for personal gain. Those in positions of power who exhibit corrupt behaviour, misuse their power of authority to increase their personal gain and do not use their power of authority for the good of public interest. The illusion of power can affect a person's behaviour and thinking, causing one to feel they can achieve more, or in fact, deserve more because they are in a position of power. It can be difficult to expose corruption when self-serving actions can be hidden under the guise of good public policy. The phrase, “power corrupts, but it is power that attracts the corruptible” will be critically assessed in the following essay with reference to police, specifically the European Police Office (Europol), as an example of a public sector organisation with the potential for corruption. Word Analysis In order to best assess this statement, one must first analyse the word “power”. In its simplicity, power can be defined as a controlling influence. Someone who has power can be considered to have a controlling influence over particular situations and others. Jacob (2010), provides an accurate description of the potential of corruption due to positions of power; stating that there is evidence those that believe their position of power is deserve “are morally pliable and more prone to abuse their privileges” (p.1). Jacob (2010) also believes power and hypocrisy are correlated; he writes, Studies have documented that power and hypocrisy go hand in hand as the powerful feel a sense of entitlement; their sense of privilege become private law. The culture of entitlement results in double standards, one for themselves, their family and friends, and the other for the general population (p.1). Europol, has enormous power which has continuously increased since its inception in 1993 and has the ability to conduct investigations in twenty-seven member states of the EU(Wolverton, 2010). Prior to 2010, Europol was seen as an extension of EU national intelligence and law enforcement communities (2010). As of 2010 however, Europol has “the plenary powers of a full EU agency” and it now considered an “official criminal intelligence-gathering branch of the EU government” (2010, p. 1). Europol now has the power to enormous amounts of personal information found on the EUs most information sensitive databases, such as the world's largest database that is maintained by the government of Prime Minister Gordon Brown. This can be concerning, as Europol now has access to all types of information, including “political affiliation, routine, places frequented, DNA, tax obligations, voiceprints and sexual preferences” (Wolverton, 2010, p.1). Europol is not subject to national law. While there have been efforts to protect non-public information through Europol's confidentiality rules, many people feel this is not enough (IAPP, 2010). Power can attract those who seek to benefit themselves more than they desire to use the power to benefit the public. The second half of the statement to be analysed is, “but it is power that attracts the corruptible.” This part of the statement focuses not on power being the variable which corrupts the person in power but that the component known as power will attract someone who is apt to be corrupted. Someone who is apt to be corrupted is someone who seeks personal benefits more than overall good for public, or society as a whole. The viewpoint that power attracts corruptible people can lead many to believe that all positions of power are filled with corrupt people – as those are the individuals seeking the power and personal benefits achievable through positions of power. While this is not the case, there are individuals who seek positions of power with the intention of misusing their power for personal gain. Police and Corruption According to Newburn (1999), police in the UK have been caught in a number of corrupt behaviours including “the concealment of serious crimes, bribery, the fabrication and planting of evidence” (p.1). To best understand corruption, and how it relates to policing, a brief discussion of the typology of corruption is needed. Roebuck and Barker (1974) provide an excellent description and thorough typology of corruption (See Figure 1). Type Dimension Corruption of Authority “When an officer receives some form of material gain by virtue of their position as a police officer without violating the law per se (e.g. free drinks, meals, services)” (Newburn, 1999, p. 4). Kickbacks Receipt of goods, services or money for referring business to particular individuals or companies (Newburn, 1999, p. 4). Opportunistic Theft Stealing from those considered victims, ie. arrestees. Shakedowns “Acceptance of a bribe for not following through a criminal violation i.e. not making an arrest, filing a complaint or impounding property” (Newburn, 1999, p. 4). Protection of Illegal Activities The protection of those involved in illegal activities by the police so that an illegal business can continue operations. The 'Fix' “Undermining of criminal investigations or proceedings, or the ‘loss’ of traffic tickets” (Newburn, 1999, p. 4). Direct Criminal Activities A police officer commits a crime against person or property for personal gain ‘in clear violation of both departmental and criminal norms’ (Newburn, 1999, p. 4). Internal Payoffs “Prerogatives available to police officers (holidays, shift allocations, promotion) are bought, bartered and sold” (Newburn, 1999, p. 4). 'Flaking' or 'Padding' The planting or adding of evidence. Figure 1. Typography of Corruption (Roebuck & Barker, 1974). While defining police corruption is difficult and challenged by many, one element of definition that is not challenged is that corruption involves abusing one's power. Punch (2004) provides interesting insight into police corruption, as he believes police corruption to be a persistent and recurring hazard that is “generated by the organisation itself” (Abstract). Punch (2004) believes that while police corruption is persistent there are means to combat it through “strong leadership, a multi-faceted organisational strategy, a well-resourced internal affairs unit, proactive techniques of investigation, and persistent efforts to promote professional standards” (Abstract). Interestingly, as further discussion will demonstrate, Europol is lacking in areas defined by Punch (2004) as necessary for anti-corrupt behaviour. About Europol & Its Potential for Corruption Established in 1995, the European Police Office, otherwise known as Europol, was created in order to “improve the effectiveness of, and cooperation between, the competent authorities in Member States in preventing and combating international organised crime” (Europa, 2009, p. 1). Europol facilitates the information exchange and technical assistance (concerning information databases) between EU Member States, collects and analyses intelligence and when crime connections are identified from collected information, Europol notifies the appropriate Member State(s) (2009). Europol aids in investigations within Member States, as well as in the training of competent authorities. A database of collected intelligence is maintained by Europol; they are the primary contact for the combat of euro counterfeiting (2009). Europol's criminal coverage has expanded tremendously since the organisation's inception (Kesselman, ie. 2008). According to Europa (2009), the site for legislative summaries, Europol becomes involved in the investigation of crimes in Member States when any of the following are present: Drug, nuclear/radioactive, or human trafficking Terrorism Smuggling of illegal immigrants Motor vehicle crime Counterfeiting and forgery Money laundering Europol is administered by four primary bodies, the management board, the director, the financial controller and the financial committee (Europa, 2009). The management board has “observer status,” which consists of determining the organisation's priorities, and the rights and obligations of liaison officers, and the establishment of data-processing rules and work files. The member board also examines any issues brought to attention by the joint supervisory board (2009). The management board meets only twice per year when they examine Europol activities and discuss Europol's future activities based on the operational and budget requirement of Member States. The EU is given all reports which are then reported to the European Parliament. The director of Europol holds the position for four years, with one renewable term, after being unanimously voted into the position (Europa, 2009). The director is influential on the actions taken by Europol, as he or she makes the decisions as to what actions will be pursued and evaluating the performance results (Council of the European Union, 2010). This person is also in charge of the daily management of administration and personnel and is accountable to the management board, as well as Europol's legal representative (Europa, 2009). The financial controller is appointed by, and accountable to, the management board. The financial committee is made up of one representative from each of the Member States. Notably, Europol does work with other police and government organisations which has been noted by researchers as cause for power struggles (Schalken & Pronk, 2002). There are issues of not only power struggles but legal boundaries, corruption between agencies and more. Walsh (2006) explains further that there is mistrust in intelligence sharing among the three primary institutions, the Berne Group, Europol and the European Union Military Staff. The most concerning element of Europol by the public is the almost unlimited access to public and private information of citizens of Member States. The information obtained by police organisations on private citizen information has been a public concern that has been the focus of many researchers (Davis, 1999 and Brady, 2007). Other research indicates that there is concern among citizens and States that the abundance of information collected, stored and shared could lead to increased identity theft (Van der Meulen, 2007). It is important to understand the collection and use of intelligence by Europol. An IT database is maintained by Europol and this database cannot be linked to any automated processing system with the exception of national unit systems (Europa, 2009).The security of the data-processing equipment is carried out by the national units; as well as the regular checks on storage and file deletion. There are three components to the database system, which are as follows: The Information System. This system only stores, modifies and utilises data used by Europol to perform its duties outlined above. Related criminal offences are not kept in the information system; only those suspected of committing a crime (Europa, 2009). It is concerning to the public that this system also contains data of persons that Europol suspects are planning to commit a crime (2009). Current research shows, there are no limitations or guidelines as to what constitutes placing a name in the information system of those who are suspected of planning a crime. The information system contains names/aliases, birth date, place of birth, nationality, gender and physical characteristics of people who are suspected of committing, or planning to commit, a crime. There is unsubstantiated information held in the information system which can lead one to wonder the accuracy of the data as well as the ability of a person to corrupt the data. While the information system contains justifiable data such as criminal offences, departments in charge of the case (s) and convictions; there is a lot of speculative information such as data referring to “means that were or may have been used to commit the crime” and “suspected membership of a criminal organisation” (Europa, 2009, p.1). These speculations allow room for error, and manipulation of information which may be used for corrupt purposes. Work Files. Work files are used for open cases, or files on people who have not been convicted of a crime, but are suspected of some form of criminal activity (Europa, 2009). Work files also house information on crime victims for particular Europol cases and information on witnesses. There are, according to EU legislation, time limits for examining these open cases and for how long Europol can store this information; however, while there is a three year limit as to how long data can be held, Europol reviews the information yearly and determines if the data should be kept longer for reasons unspecified in published legislation. The time limit therefore serves no purpose if the organisation keeping the data can create its own rules to exempt the time limit rule. The inputting of data into work files can only be done by analysts, however any Europol official, liaison official or Member State expert can access the data (Europa, 2009). What this means is that anyone in and involved with Europol can potentially “dig up dirt” on anyone in the system; and use that information for corrupt purposes. Index System. The index system for data is a typical database index used by Europol for searching purposes. The top authorities have access to the index which includes the director, deputy director, authorised Europol officials and liaison officers (Europa, 2009). Information collected by Europol is passed on to the national units of the related Member States (Euopa, 2009). Data protection is the responsibility of each Member States and must be monitored to the level established by the Council of Europe Convention of 28 January 1981 (2009). It is unclear how safe data really is under these provisions. There is potential for data corruption due to inappropriate or out-dated security measures. Individuals may have difficulty in obtaining data within the Europol system that concerns them. While it is the right of the individual to request such information, there are instances where Europol and national authorities do not have to comply which are vague and easily manipulated; such as Europol feels that to release a person's information will risk the public order in Member states (Europa, 2009). Europol has been cited by many as the “new European FBI;” as the public sector organisation has continuously grown in responsibilities and abilities. Europol police have the ability “to investigate any case of terrorism, illegal immigration and subversive activity” with free operational reign (Do or Die, 1998, p. 132).While this may be a civil rights issue to many, there is equal concern as to the high level of power given to these public servants. The organizations growing power allows innumerable freedoms and abilities not afforded to the public. Europol have the power to investigate and collect intelligence on any number of EU inhabitants. According to the Do or Die Journal, “Europol officers carry their own diplomatic immunity passes [because] they cannot be prosecuted for corruption by national justice court”. While Europol has a management board which meets twice a year, the regular authority and disciplinary position is held by the director of the agency (Europol, n.d.). That is a lot of power held by one person and allows a lot of free reign to the police. This would indicate that there is not much supervision of the actions of Europol and therefore corruption may be easily covered. Europol is involved in many areas of the criminal justice system, as mentioned previously, and have access to personal data that can be blackmailed or even wiped clean, should an officer be inclined. Europol is heavily involved in the fight against organized crime, however, for those police that have taken this position of power for personal gain, rather than public good, are apt to corruption and could potentially “work a deal” with organized crime leaders. Another form of potential corruption within Europol is the organisation's use of public procurement, which allows the organization to purchase works, supplies and services from suppliers; which encourages competition (Europol, n.d.). It can also encourage corruption through bribery; for example, if a potential supplier bribes a Europol officer for a job. Anti-Corruption Policy There have been incidents of corruption in Europol, such as the arrest of an official who was misappropriating funds into a secret account in Bermuda (State Watch, 2001). There is also evidence that Europol's conduct is often kept secret, as the organisation's yearly reports to Parliament only reveal public-approved accountability of the organisation's actions (State Watch, 1999). Due to the growing amount of authority given to Europol, it is essential that this organisation, as well as government, creates a system of checks and balances that can hold the actions of the organisation accountable for its actions. Currently, there are not enough regulations that control the activities and results of Europol. There is numerous research on the anti-corruption strategies of police organisations in the EU, however little has been discussed specifically about Europol (Rose-Ackerman, 1999 and Lipford, 2004). There are twenty-seven Member States in which Europol is in charge of collecting data on and taking action towards criminal offences and yet there is very little management of the organisation (Europol, 2007). There are virtually no laws or guidelines as to what constitutes as permissible for capturing someone's information and cross checking them within the Europol database. Is it possible then, that an individual could be either wrongly subjected to criminal investigation? Or that corruption within Europol could lead to the false conviction of an individual or group of individuals? Europol has excessive power and authority over citizens of Member States with little restrictions on how to use that power. There is a lot of controversy over the amount of intelligence that Europol is allowed to access with little restriction as to what they are allowed to do with this information. It is suggested that more regulations concerning their ability to access, and act on, the information they obtain from their numerous databases and other sources. Europol's almost unlimited access to those residing in EU member states is cause for civil rights violations and therefore an open window to corruption; without strict regulations, those with the need for personal gain will undoubtedly misuse their authority through means such as bribery and fraud. There is potential for corruption within Europol due to the lack of restrictions; and what restrictions are set, are essentially able to be over-ridden by Europol. The time restriction on work files, for example, is a perfect example of Europol's ability to change the rules as they see fit. Therefore, there must be a “higher power” over Europol's restrictions and regulations. Europol must be held accountable by someone other than those within the system such as the management board. Europol has taken some measures to insure that the public feels more confident in Europol's ability to protect the public and collected data through establishing and maintaining alliances with trusted public organisations. Europol is connected and works cooperatively with the European Central Bank, Eurojust, the European Commission, the European Monitoring Centre for Drugs and Drug Addiction and the European Anti-Fraud Office (OLAF) (Europa, 2009). The connection with these other organisations allow Europol's actions to be held more accountable and gives the public more reassurance that their information and well-being is protected. Policing is an area which has been examined for corruption over the past several decades. While public scandals often lead to the announcement of a handful of corrupt officers; there are effective strategies in place for policing in the UK (Newburn, 1999). What is troubling is that Europol appears by description, to be above and beyond basic policing. This can be dangerous, as there appears not to be many anti-corruption strategies in place. Closing Statements The examination of potential corruption within Europol and the possible preventative measures to combat corruption within the organisation has demonstrated corruptive capabilities of public organisations due to internal and external perceptions of power. When examining such a statement as,“power corrupts, but it is power that attracts the corruptible,” one must remember that while there are those who will seek a position of power because of its potential for increased personal benefits, not all individuals in a position of power are apt to misuse it. It must also be realized, however, that a position, even a perceived position, of power has the potential to create corruptive behaviour in a person. It must be understood that in order to avoid corruption in positions of power, one must have high morals and be solely in the position of power to do good for the public and society. There will always be a potential for corruption in positions of power because not all people are in those positions for the right reasons. References Brady, H. (2007). Europol and the European Criminal Intelligence Model: A Non-state Response to Organised Crime. Real Instituto Elcano. http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content? WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/ari126-2007 Council of the European Union. (2010). Europol 28. www.register.consilium.europa.eu/pdf/en/10/st12/ st12312.en10.pdf Davis, R.W. (1999). Public Access to Community Documents: A Fundamental Human Right? European Integration Online Papers. Vol. 3 (8). http://eiop.or.at/eiop/texte/1999-008.htm Europa. (2009). Legislative Summaries. http://europa.eu/legislation_summaries/fight_against_ fraud/fight_against_corruption/l33301_en.htm “Europol”. Do or Die. Iss. 7. p.132-133.Retrieved from: http://www.eco- action.org/dod/no7/europol.html . Europol. (2007). Annual Report: 2006. www.europol.europa.eu/publications/Annual_Reports/EuropolAnnualReport2006.pdf International Association of Privacy Professionals. (2010). Europol Confidentiality Rules Now Adopted. Data Protection Digest. https://www.privacyassociation.org/publications/2010_01_15_europol_confidentiality_ rules_now_adopted/ Jacob, K.S. (2010). Power, Privilege, Corruption, Hypocrisy. Klosi News. Retrieved from: http://www.klosi.org/news/klosi_news_society/1873.html Kessleman, M., Krieger, J., Allen, C.S. and Hellman, S. (2008). European Politics in Transition. Florence, KY: Cengage Learning. http://books.google.com/books? id=FGK0Ht0OM_IC&dq=Europol's+amount+of+coverage+has+expanded+tremendously &source=gbs_navlinks_s Lipford, J.W. (2004). Susan Rose-Ackerman, Corruption and Government: Causes, Consequences, and Reform. Public Choice. Vol. 104 (1-2), 196-199. http://www.springerlink.com/content/t100453043653h34/abstract/ Newburn, T. (1999). Understanding and Preventing Police Corruption: Lessons from the Literature. Police Research Series, 110. http://rds.homeoffice.gov.uk/rds/prgpdfs/fprs110.pdf Punch, M. (2004). Police Corruption and Its Prevention. European Journal on Criminal Policy and Research. Vol. 8 (3), 301-324. http://www.springerlink.com/content/vv5x0143017n1541/ Roebuck, J.B. and Barker, T. (1974). A Typology of Police Corruption. Mississippi State University. http://www.jstor.org/pss/799909 Rose-Ackerman, S. (1999). Corruption and Government: Causes, Consequences, and Reform. Yale Law School; Cambridge University Press. http://papers.ssrn.com/sol3/papers.cfm? abstract_id=189828 Schalken, T. and Pronk, M. (2002). On Joint Investigation Teams, Europol and Supervision of Their Joint Actions. European Journal of Crime Crim. L. & Crime Justice, Vol. 70. http://heinonline.org/HOL/LandingPage? collection=journals&handle=hein.journals/eccc10&div=12&id=&page= State Watch. (2001). Europol Corruption Scandal: French Europol Official Arrested for Alleged Fraud and Money-Laundering. Retrieved from: http://www.statewatch.org/news/2001/jun/03europol.htm State Watch. (1999). Where Now for Accountability in the EU? Retrieved from: http://www.statewatch.org/news/2001/mar/07accountab.htm Van der Meulen, N. (2007). The Spread of Identity Theft: Developments and Initiatives within the European Union. Police Chief. http://www.policechiefmagazine.org/magazine/index.cfm? fuseaction=display_arch&article_id=1190&issue_id=52007 Walsh, J. I. (2006). Intelligence-Sharing in the European Union: Institutions are Not Enough. Journal of Common Market Studies. Vol. 44 (3), 625-643. http://onlinelibrary.wiley.com/doi/10.1111/j.1468-5965.2006.00638.x/abstract Wolverton, J. (2010). Europol Granted Frightening Investigative Power. The New American. Retrieved from: http://www.thenewamerican.com/index.php/world-mainmenu-26/europe- mainmenu-35/3221-europol-granted-frightening-investigative-power Assignment 3 DEALING WITH POLITICAL INFLUENCE The Experience of Fraud and Corruption in the EU Author Course Instructor Date Course School Year SUMMARY The Prime Minister has assembled a Task Force to combat fraud and corruption. The following report investigates areas of political influence on fraud and corruption and suggests ways in which the Task Force may approach these two issues. The research conducted for this report indicates that transparency and accountability are two primary elements that must be incorporated into any anti-fraud and corruption strategy. As politically influenced corruption and fraud was found to be present in the EU, the researcher suggests implementing strategies related to present anti-corruption strategies by OLAF, Transparency International and the World Bank. INSERT PAGE NOs before submitting Assignment 3 to your instructor CONTENTS Page no. Summary .................................................................................... Contents ..................................................................................... 1 Introduction .............................................................................. 2 The Experience 2.1 Issues 2.1.1 Issue 1 ................................................................ 2.1.2 Issue 2 ............................................................... 2.1.2.1 Donor Strategies ....................................... 2.1.2.2 Transparency ............................................ 2.1.3 Issue 3 ............................................................... 2.1.4 Issue 4 ............................................................... 3 Conclusion ................................................................................ 4 Appendices ................................................................................. 4.1 Appendix A ..................................................................... 4.2 Appendix B ..................................................................... 5 References ................................................................................ 1. INTRODUCTION This report is intended for the Task Force for the combat of fraud and corruption in both public life and in the international context established by the Prime Minister of the UK. The report examines political influence on the fraud and corruption in the EU and focuses on four interdependent issues which are listed below. The political and economic development of many countries are undermined by political corruption. This report examines the following issues pertaining to fraud and corruption in EU politics. The scale of the problem of fraud and corruption in the international context and whether it really is a major concern. The strength and weaknesses in the strategies employed to deal with fraud and corruption in the international environment. Areas of outstanding practice and the extent to which they are transferable to other international contexts. Whether a model counter fraud and corruption strategy is feasible in the international environment and if so what it might include. In order to effectively analyse the above mentioned issues, the research had to employ a critical analysis of the different types of measurements for fraud and corruption in the international environment. This report has been approached in a quantitative manner, as it examines existing literature as it relates to politically influenced fraud and corruption. The research collected is then used as a basis for determining the level of fraud and corruption with the EU political system and what measures could be taken to reduce those levels. 2 THE EXPERIENCE OF FRAUD AND CORRUPTION IN THE EU In order to determine how political influence effects fraud and corruption, the researcher had to first define political authority and political influence; and how the two differed. Political authority can be defined as the legally established right of power to govern society; allowing the government “to make and enforce decisions on public policy” (Way, n.d.). It is important to differentiate political authority from political influence; as political influence is not a legal right of authority. Political influence is the ability of individuals and groups of power to influence political authorities to make or enforce certain public policy decisions (Way, n.d.). Politically influential people can control the decision-making behaviour of government which opens the door to fraud and corruption (Anechiarico & Jacobs, 1996). 2.1 Issues 2.1. Issue 1: Is fraud and corruption a concern in the EU? “Political corruption is a phenomenon that defies direct measurement as well as clear-cut definition” (Amundsen, 2006, p.5). In order to determine the level of fraud and corruption in the international context, the researcher investigated published literature related to the measurement of fraud and corruption; as well as the Corruption Perception Index. According to Transparency International's Corruption Perception Index, 2010 results indicate that three-quarters of the 178 participant countries scored a five or lower (TI, 2010). The scale used holds 10 as “highly clean” score and 0 as “highly corrupt;” therefore indicating that the majority of these countries are corrupt. The researcher investigated the 2010 CPI Scores of EU Member States and the lowest scored States were as follows (for a complete list of MS results see Appendix C): Bulgaria (3.6) Czech Republic (4.6) Greece (3.5) Hungary (4.7) Italy (3.9) Latvia (4.3) Romania (3.7) Slovakia (4.3) Lambsdorff (1999), Sampford (2006) and Philp's (2006) research was instrumental in the understanding of fraud and corruption measurement. It is evident that there is no one set way of measuring corruption; one must rely on empirical evidence. A 2006 study reported a number of countries who allegedly embezzled funds (See Appendix B). This embezzlement was conducted through bribery, taxation, favouritism, patronage politics and privatization processes (Amundsen, 2006, p.5). It is not surprising that embezzlement is a major issue within the EU based on the abundant research currently available on the subject. Buchanan's (2004) research was instrumental in the understanding the high number of fraud cases within the EU, as was Kasum (1996) and Nelken and Levi (1996); all of which indicated the need for improved strategies to combat fraud in the EU. Bribery is a common form of political influence. South African Arms Deal Scam “Deputy president Jacob Zuma allegedly solicited bribes from an arms company in return for protecting the company from investigation and giving it his ‘per­manent support’.” (Amundsen, 2006, p. 6). Costa Rican Presidential Scandal A bribery scheme between president Rodrigues and Alcatel (French telecommunications company) in which the president and other politicians demanded US2.4 million in exchange for an awarded contract to improve cellular phone systems within the country. Alcatel has been cited in two other alleged bribery scams as well. Another form of political corruption is the building-up of private businesses by owners who are in political power. Military-Political Corruption in Uganda Former Tri-Star company owner was accused of being a front for President Museveni after receiving generous governmental favours. There was a second case in which the Zimwe Construction Co. Ltd. had incredible success due to government favourtism in construction bidding. It is also common for those in power to steal or embezzle public resources using off budget transfers and the manipulation of privatisation processes (Amundsen, 2006). A large privatisation process can be seen in the creation of the Russian oligarchs; as well as: the advancement of Ugandan forces into eastern Congo benefiting the government financially from the plundering of natural resources (p.6). The Goldenberg Affair has allowed the Kenya government to loot government resources. This was not the only fake contract scheme to be conducted in Kenya by the government. Political corruption can be used to preserve ones power and can be visible through “favouritism, clientelism, co-optation (the buying-out of rivals), patronage politics and vote buying (Amundsen, 2006, p.7). The means in which to conduct these behaviours can be both monitory (including gifts and rents) and symbolic; such as status. Brazil's minority labour party was accused of paying congressmen monthly allowances in return for their votes (2006). The government of Angola was accused of stripping non-compliant parliamentarians of privileges in an attempt to split rival parties (co-optation). There have also been many cases of vote-buying in areas of Latin America (2006). 2.1.2 Issue 2: Anti-Fraud and Corruption Strategies in an International Context The anti-fraud and corruptions strategies were investigated by examining the efforts of international organisations related to the subject. The following discussion in this section reviews the primary organisations and their anti-fraud and corruption strategies. The European Anti-fraud Office (OLAF), is an independent investigation service of the EU, established in 1999. OLAF investigates fraud and corruption that affect the financial interest of the EU; as well as plan and develop preventative and anti-fraud methods (OLAF, n.d.). OLAF is responsible for external and internal investigations in Member States and third countries (EC, 2003). Internal investigation responsibilities is defined under Article 1(3) of Regulations (EC) No 1073/1999 and (Euratom) No 1074/1999, as: ...fighting fraud, corruption and any other illegal activity affecting the financial interests of the European Community” and “investigating to that end serious matters relating to the discharge of professional duties such as to constitute a dereliction of the obligations of officials and other servants of the Communities liable to result in disciplinary or, as the case may be, criminal proceedings, or an equivalent failure to discharge obligations on the part of members ... or members of the staff of institutions, bodies, offices or agencies not subject to the Staff Regulations ...” (as cited by EC, 2003). OLAFs external investigations are aimed at fraud prevention and are implemented with Member State partnership in which there is a shared responsibility for financial protection of the Community (OLAF, 1999). This type of investigation happens at the Community and national levels. The definition of the external investigations of OLAF is found in Article 2 of Regulation (Euratom, EC) No 2185/96,23; and states that external investigations are “for the detection of serious or transnational irregularities or irregularities that may involve economic operators acting in several Member States” and for the detection of irregularities (EC, 2003, p.12). This may require unannounced checks and inspections. In an effort to make OLAFs international anti-fraud efforts more effective, the organization has collaborated with Europol and EuroJust. Europol deals with serious crimes of corruption; EuroJust however, does not have investigative power but coordinates the judicial cooperation between Member States regarding criminal matters (EC, 2003). The organisations mentioned above have difficulty in working together effectively, as they each have their own set of priorities in different areas of crime. There are other databases and organisations that work towards catching and preventing corrupt behaviours pertaining to political influence. The World Bank, for example, has several anti-corruption initiatives which are outlined in the Governance and AntiCorruption (GAC) Implementation Plan (2007). The World Economic Forum has partnered with the International Chamber of Commerce, Transparency International and the UN Global Compact in an effort to combat corruption in an anti-corruption initiative called Partnering Against Corruption Initiative (PACI) (WEF, n.d). A major global organisation for anti-corruption efforts is the Transparency International (TI), who published the Corruption Perception Index (CPI) and the Bribe Payers Index (BPI). According to TI the cost of corruption effects political, economic, social and environmental areas; the political cost is a major obstacle to democracy and rule of law (TI, n.d.). While it is detrimental in established democracies, it is more so in emerging ones (n.d.). TI recommends that countries who are scoring low on the CPI should more strictly adhere to United Nations Convention Against Corruption (UNCAC) guidelines; as it is “the only legally binding universal anti-corruption instrument” (UNODC, 2010, p.1). The UNCAC covers five areas: Prevention Criminalization Law Enforcement Measures International Cooperation Asset Recovery Technical Assistance Information Exchange UNCAC works using the above mentioned activities to uncover and respond to many types of corruption, both in the public and private sectors (UNODC, 2010). 2.1.2.1 Donor Strategies One way to address political corruption is to address the ways in which donors interact with political parties. Amundsen (2006) suggests three donor strategies, the support of democratisation processes, the improvement of information and analysis, and strengthening donor coordination. Support Democratisation Processes In order to combat politically influenced fraud and corruption the democratisation processes must be supported (Sung, 2004). The support of democratisation processes includes a system of checks and balances and a system of clear communication (Amundsen, 2006). The checks and balances systems are often weak, especially in developing countries as it requires the collaboration of government, judicial, legislative and institutional organisations. Parliamentary autonomy must be protected through constitutional reform that will allow parliament to act and react to checks and balance systems without government interference and pressure; this will also increase accountability. The judicial branch must also undergo constitutional reform that would enhance autonomy and provide transparency in judicial decisions (2006). Improve Information and Analysis By conducting political economic studies of a given country, one can understand what resources are available or influential and donor potential. Two types of research have been instrumental in carrying out this type of research; the Drivers of Change (DoC) analysis and the National Integrity Systems study. The DoC approach has been used in the UK's Department for International Development (DFID) to apply “political economy analysis to the development of donor strategies” (Amundsen, 2006, p.19). This type of analysis allows countries to determine the political structure, influences and donor strategies in order to implement needed change. In a holistic approach to combating corruption, Transparency International implemented the National Integrity System which consists of “key institutions, laws and practices that contribute to integrity, transparency and accountability in a society” (Amundsen, 2006, p.19). The NIS provides a framework that allows for the analysis of the extent and cause of corruption on a national level as well as the effectiveness of national anti-corruption efforts (2006). Strengthening Donor Coordination Donor coordination is happening at international and lower levels and is seen as a pivotal approach to influencing political corruption (Lateef, 2009). Donor coordination allows for unity and collaboration in order to speak with a united voice. It is important the donors are collaborative and cooperative in nature, as this strengthens the programmes and projects being pursued. 2.1.2.2 The Importance of Transparency The Transparency International (TI, n.d.) organisation defines transparency as a principle that allows those affected by administrative decisions, business transactions or charitable work to know not only the basic facts and figures but also the mechanisms and processes. It is the duty of civil servants, managers and trustees to act visibly, predictably and understandably (p.1). Transparency is an essential element in the formation of anti-corruption strategies by the Prime Minister and Anti-Corruption Task Force. Transparency is a primary element to addressing fraud and corruption within governments and civil service sectors. Although many “academics, international organisations and local non-governmental organisations (NGOs), as well as the media” have made the government more transparent through various initiatives, there has not been enough effort from official election management bodies (EMB) (Fontana, 2007, p.1). This is an important issue, as these bodies are responsible for the accounts of parties and candidates. In the funding of political parties, those countries implementing transparent financial practices are less likely to partake in financial fraud and corruption (2007). In democratic societies, money influences eligible candidates, political agendas and voting power. As Fontana (2007) explains, money can distort the democratic ideals of fair competition through unbalanced access to public and private resources, thus upsetting one of the principal cornerstones of democracy – the concept of ‘one person one vote’ (p.1). Powerful public interest groups can also influence political positions of power. During non-voting periods, money has equal influential powers through the bribery of congressman, “legislating with campaign donors in mind”, appointing civil servants not on the basis of merit but by the repayment of favors, and by politicians focusing more on the need to secure funding for the next election (Fontana, 2007, p.2). All these acts take away from the interests of the public and focus primarily on the needs of politicians and those in power. It is therefore crucial that the political financial system be transparent. One exemplary initiative to combat fraud and corruption within the political system is the Crinis project. This comprehensive approach to political corruption focuses firstly on transparency which is conducted through a two part system. This first part is the reporting of financial accounts to the EMB; the second is the disclosing of this information to the public (Fontana, 2007). Secondly, field tests, via interviews are conducted with key political actors, including “political party accountants, elected politicians, electoral judges, watchdog groups, EMB auditors and business people” (p. 2). This helps identify areas in need of reform. The results of the Crinis (See Appendix C) are given to the country and Transparency International then uses the information depicted in the matrix to work with government institutions, political parties and potential candidates and donors to “advocate for reform and increase[d] transparency in the political finance system (Fontana, 2007, p. 3). This is a system that can be replicated. Fontana's (2007) research indicates that the primary issue of corruption internationally is the lack of disclosure; with campaign periods being the least transparent moments. Interestingly, Fontana's (2007) research also reveals that individual candidates are worse at reporting campaign money than political parties, as their money is collected through a committee. Many countries only require the reporting of public funds and not the private funding of campaigns, leaving more room for corruption. 2.1.3. Issue 3: Areas of Outstanding Practice and International Transferability. Transparency and accountability were the two primary subjects addressed in relation to anti-fraud and corruption strategies. As such, strategies to combat political forms of corruption should contain both elements. Fontana's (2007) and Amundsen's (2006) research were instrumental in determining the level of corruption and fraud, as well as the strategies to combat them. Both researchers indicated the importance of transparency and accountability within anti-fraud and corruption strategies. The most transferable strategies for use by the Prime Minister's Task Force would be the Crinis and the use of donor-related strategies. In order to promote transparency, the Prime Minister should adopt a plan similar to the Extractive Industries Transparency Initiative (EITI), which relies on specific procedures for the reporting and documentation of payments from governments and political/public powers and properly recorded revenues (Amundsen, 2006). It is also suggested that stricter adherence to UNCAC be enforced. In an effort to reduce demand-driven political corruptness, an adoption of the Publish What You Pay Campaign (PWYP) is suggested. The international NGO initiative, of 280 NGOs, applies “pressure on international companies to publish what they pay in taxes, bonuses, fees etc. to the governments of certain mineral-rich countries” Amundsen, 2006, p.22). 2.1.4 Issue 4: Is an International Anti-Corruption Strategy Feasible? It is feasible for the Prime Minister to implement an international anti-fraud and corruption strategy, as there is ample evidence supporting similar strategies being implemented on national and international arenas. As many countries have now began to implement their own strategies, it is highly probable the the EU would be not only willing, but inclined to collaborate on even more defined strategies with the Prime Minister and Task Force. There are several strategies and initiatives in place such as the PWYP, UNCAC, and EITI and organisations such as OLAF, Transparency International, the World Bank and others that are successfully combating fraud and corruption. It is therefore reasonable that the Prime Minister's goals for anti-fraud and corruption strategy can be achieved through collaboration. It is also recommended that to directly combat the corruption that occurs through political influence, that donor strategies be implemented. 3 Conclusion The researcher was happy with the results of the research conducted as it led to a clear understanding of the amount of corruption and fraud within the EU and the steps needed to be taken in order to correct the issues. While it is obvious that corruption and fraud is present in various levels among Member States, it should be noted that many States scored highly on the CPI; indicating low levels of corruption. With this said, the researcher would suggest focusing anti-fraud and corruption strategies first on the lowest scoring States; by first pinpointing the most influential characteristics of corruption in the given States and then adjusting strategies accordingly. The researcher heavily supports the given donor strategies as these are proven effective and can bring CPI scores up significantly when implemented. 4 APPENDICES 4.1 Appendix A 2006 Countries of Alleged Embezzlement (Amundsen, 2006, p.3) 5.3 Appendix B Example of Crinis Project Matrix (Fontana, 2007, p.3) 5.4 Appendix C CPI 2010 Scores of EU Member States EU Member States CPI Score Austria 7.9 Belgium 7.1 Bulgaria 3.6 Cyprus 6.3 Czech Republic 4.6 Denmark 9.3 Enstonia 6.5 Finland 9.2 France 6.8 Germany 7.9 Greece 3.5 Hungary 4.7 Ireland 8.0 Italy 3.9 Latvia 4.3 Lithuania 5.0 Luxembourg 8.5 Malta 5.6 Netherlands 8.8 Poland 5.3 Portugal 6.0 Romania 3.7 Slovakia 4.3 Slovenia 6.4 Spain 6.1 Sweden 9.2 United Kingdom 7.6 REFERENCES Amundsen, I. (2006). Political Corruption. U4Brief 6. http://www.u4.no/document/publication.cfm?2565=political-corruption Anechiarico, F. and Jacobs, J. (2004). The Pursuit of Absolute Integrity: How Corruption Control Makes Governmnet Ineffective. Chicago: University of Chicago Press. http://books.google.com/books? id=okzVXOhqCwUC&dq=political+organization+Jacobs+1996&lr=& source=gbs_navlinks_s Buchanan, B. (2004). Money Laundering – A Global Obstacle. Research International Business and Finance. Vol/ 8 (1), 115-127. http://www.sciencedirect.com/science? _ob=ArticleURL&_udi=B7CPK-4CNCXFF-7&_user=10&_coverDate =04%2F30%2F2004&_rdoc=1&_fmt=high&_orig=search&_origin= search&_sort=d&_docanchor=&view=c&_searchStrId=1650442369&_ rerunOrigin=scholar.google&_acct=C000050221&_version=1&_urlVersion= 0&_userid=10&md5=316d3e17710494f6c64050c99f221b7d&searchtype=a European Commission. (2003). Evaluation of the Activities of the European Anti- Fraud Office (OLAF). Commission Report. http://ec.europa.eu/anti_fraud/reports/eval_en.html Fontana, A. (2007). Transparency in Action. U4Brief, 10. http://www.u4.no/document/publication.cfm?2743=money-in-politics- transparency-in-action Governance and AntiCorruption (GAC) Implementation Plan. Operations. (2007). Policy and Country Services. http://siteresources.worldbank.org/INTGOVANTICORR/Miscellaneous/ 21519459/GAC_ImplementationFinal_Oct2007_English.pdf Interpol (2010). Interpol and Corruption. http://www.interpol.int/Public/Corruption/corruption.asp Interpol (2010). Operational Police Support Services. http://www.interpol.int/Public/ICPO/corefunctions/polsupport.asp Kasum, A.S. The Relevance of Forensic Accounting to Financial Crimes in Private and Public Sectors of Third World Economies: A Study from Nigeria. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1384242 Lateef, K.S. (2009). Working Towards Common Donor Responses to Corruption. OECD. http://www.oecd.org/dataoecd/26/51/45019629.pdf Nelken, D. and Levi, M. (1996). The Corruption of Politics and the Politics of Corruption: An Overview. Journal of Law and Society. Vol. 23 (1), 1-17. http://www.jstor.org/pss/1410464 Philp, M. (2006). Corruption Definition and Measurement. ed. Charles J. G. Sampford, Measuring Corruption. United Kingdom: Ashgate Publishing, Ltd. http://books.google.com/books? hl=en&lr=&id=k06ImKacaqEC&oi=fnd&pg=PA45&dq=politica l+fraud+and+corruption+measurement+in+the+EU&ots=sJTXsLXTiL& sig=HyvOGzRbRiZ7G7KMeEaMK_QU8U8#v=onepage&q&f=false Sampford, C.J. Measuring Corruption. United Kingdom: Ashgate Publishing, Ltd. http://books.google.com/books? id=k06ImKacaqEC&dq=political+fraud+and+corruption+measurement+ in+the+EU&lr=&source=gbs_navlinks_s Sung, H.E. (2004). Democracy and Political Corruption: A Cross-National Comparison. Crime, Law and Social Change. Vol 41 (2), 179-193. http://www.springerlink.com/content/j18mhv5473g75178/about/ Transparency International. (n.d.). Frequently Asked Questions About Corruption. http://www.transparency.org/news_room/faq/corruption_faq#faqcorr6 Transparency International. (2010). Corruption Perception Index 2010 Results. http://www.transparency.org/policy_research/surveys_indices/cpi/2010 /results United Nations Office on Drugs and Crime. United Nations Convention Against Corruption. http://www.unodc.org/unodc/en/corruption/index.html? ref=menuside Way, A.L. (n.d.) Politics and Government: The Essentials.Cyberland University of North America. http://www.proconservative.net/CUNAPolSci201PartOneC.shtml World Economic Forum. (n.d.). Partnering Against Corruption Initiative. http://schwabfound.weforum.org/en/initiatives/paci/index.htm Assignment 4 Performance Management: The Need for a Focus on Public Value Performance management of the policing sector consistently fails to take account of the most important resources in delivering performance people – the public. Research indicates that the primary problematic issue of police performance management is the unclear description of its culture and social outcomes which lead to poor performance and public mistrust. Current literature has only begun to start addressing the importance of social outcomes and public value; two crucial standards for performance measurement. This essay investigates performance management issues within the policing sector and the importance of including public value as an important resource to utilize in the performance management of the police sector. Public organisations, such as the policing sector, face significance challenges to optimal performance management (Winstanley & Stuart-Smith, 1996). The primary issue of effectively managing performance in the public sector is the challenge of embedding it within the organisation's culture (Accenture, 2009). Another challenge to many public sectors is the lack of focus on social outcomes (Moore & Braga, 1997). The policing sector, and other public sectors are facing increased pressures to meet government goals, citizen expectations and increased productivity and efficiency. It is argued that public sectors are not considering the importance if social outcomes. As Accenture (2009) explains; To deliver value to the people they serve – citizens, taxpayers, service users and consumers – public service organisations must align and focus resources and employee behaviour to provide real and beneficial social outcomes to the public, their ultimate customers” (p.5). An improvement in the efficiency and effectiveness of public safety is a primary social outcome for the policing sector. Public sectors, such as the policing sector, have mission statements and objectives that are not aligned with social outcomes. In a detailed study of public sector performance management, Accenture (2009) determined that “performance management is not being used in a strategic or proactive way to anticipate, respond to and mitigate performance issues before they escalate into problems” which results in merely reporting accomplishments and failures and not methods of improvement (p.9). Research also indicated that there is too much focus on the financial departments of public sectors as a drive for performance activities which deters behavioural change and performance improvement in other departments (Accenture, 2009). The economic conditions are causing more pressure on public service sectors; resulting in reduced budgets and increased public expenditure. Ideally, performance management in the public sector should allow organisations to focus management efforts and resources on social outcomes so that there is a greater value for tax payer money. This would also enable organisations to spread limited funds further through activity and outcome-aligned budgets. Perhaps most importantly, effective performance management provides greater individual and departmental accountability and efficiency. As service performance levels are increased, the level of waste and inefficiency decreases. The launch of the Operational Efficiency Programme in 2008 by the Chief Secretary of the Treasury was integral to the push for greater efficiency in the public sector (Accenture, 2009). The Programme highlighted the need for improved accountability and performance management. In order to improve and motivate public sector performance, the UK government implemented public service agreement (PSAs) which based budget allocations on agency performance (2009). The implementation of performance management improvement programmes for public sectors have been initiated in Canada, Australia, and the US. The problem however, with this approach, is the reliance of statistical assessments of performance as a driver, rather than the social outcomes. It is important that the policing sector hold social credibility and legitimacy in the public eye which is obtainable through positive social outcomes. Performance Management in the Public Sector Public sector performance management is much different than that of the private sector. Whereas private sector performance heavily focuses on profit maximization as an indicator of performance, public sectors do not. The public sector is not concerned as much with the “bottom line” as those in the private sector (Boland & Fowler, 2000). Unlike the private sector, the public sector, such as the policing sector, obtains its principle source of money from the public in the form of taxes. The public's perception of the necessity of the police organisation, influences legislations use of tax collection towards police financial capital and operating revenues (Moore & Khagram, 2004). The importance of public and legislative support is summarized by Moore and Khagram as; Government managers secure the resources they need to operate not by selling products and services to individual customers, but by selling a story of public value creation to elected representatives of the people in legislatures and executive branch positions. It is important to understand the importance of public value, as this value will determine the resources allocated to police organisations. Therefore it is crucial that public value be a goal in performance management strategies. Private sectors rely on their revenue of goods to determine value; this is not the case with public organisations however, they must rely on alternative methods of determining value as they do not sell their services. Early attempts to understand Read More
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