Bribery and Corruption in the Public Sector Are Endemic and Unavoidable in All Societies - Essay Example

Bribery and corruption in the public sector is endemic and unavoidable in all societies Introduction Bribery is considered to be an act of persuading someone by offering money or other benefits to influence the person. Universally, there is no accepted definition of these because of the differences in the legal procedures, social history and ethical and political systems of the countries. Yet, they are considered to be acts of criminal offence in all countries. Corruption has two aspects in its definition, namely the behavioural aspect and aspect of trust between the parties involved (Lawer, 2012). It can be broadly said that bribery is a subset of corruption. Corruption is seen as a problem because according to research work conducted by various sources, it leads to poor economic growth and low political stability, which can severely impede the long-term economic development of any country. The purpose of this essay is to establish that bribery and corruption have become endemic in the public sector as well as the universal truth for all societies. Literature Review Corruption in public sector is more divisive than that in the private sector. Corruption in the public sector means that image of the government in mind of the public is tarnished, as it lowers the standard of public services in the country. The role of the governments in public sector corruption is formidable as the acts take place in their departments. Yet, the problem of corruption remains very strong in the public sector. The UK committee of public accounts have found that breaches of existing rules were the most common form in which corruption was carried out in the country. The other factors that have been found to be responsible for the existing bribery and corruption in the public sector includes factors like, inexperienced staff, poor monitoring, failure to pursue money owed and to make regular review and possible conflicts of interest (Preston and Sampford, 2012). The main reasons of why corruption is considered to be a major problem are described below: Firstly, corruption leads to inefficient contracting by the government and ineffective privatisations. Corruption distorts economic efficiency by preferring people on the basis of superior connection and not on productive efficiency. Only those with better connection with the government officials are allowed to enter the bidding. Secondly, the rising corruption in public sector can reduce efficiency even in private sector. This is because the private producers have been found to bribe the government officials to overlook dangerous working conditions and provide unfair permits that reduce the quality of services. Thirdly, the receipt from bribery is largely used by the top bureaucrats for conspicuous consumption and they are also sometimes diverted to illegal businesses, which propels higher corruption. Fourthly, the corrupt contracting and privatisation can lead to lion’s share of the gain accrue to the winning bidders and the government officials. This promotes inequality in the society. The state has to compensate for the higher contract prices and unsatisfactory revenue by increasing the rate of taxes. Fifthly, bribery and corruption reduces the legitimacy of the government in a democracy, thereby adversely affecting the political stability of the country. Lastly, all these factors act in a cumulative manner to retard the economic development of the country and this factor is self-perpetuating, unless corruption is eradicated (Elliott, 1997). The existing literature review concentrates on the quantifiable extent of fraud. However, no major attempt has been made to understand the level of corruption. The problem is more pronounced in case of public sector because of the close association of this sector with the value of money. In most of the incidences of corruption, it has been found that public money is diverted from public uses towards private gain by the top bureaucrats, who have the power to do so and then hide the action. The ill-effects of such corruption are often unnoticed as they tend to appear after a considerable lag. Favouritism is one of the major problems of corruption in the public sector that often goes unnoticed. Nonetheless, this particular problem is evident more widely in developing countries than the developed ones (Jones, 2004). Understanding of key issues and Analysis It has been observed that in public sector, the opportunity of corruption is a function of three factors, namely the size of rent under the official’s control, discretion of the official in allocating the rent and accountability that the official has for the decisions. The difference between the formal and informal rules, that guides the governance of public sector, is the main reason that can be attributed to the corruption, which has been thriving in this sector. It has been found that where corruption is systematic, the formal rules remain in place, yet the main decisions are taken based on the informal rules. Even though it is an established convention to punish a public official for accepting bribe, but in practice, this rule is seldom applied. There can be two probable reasons for the difference in the public and private sector. Firstly, in some countries, the problem can be traced to the nation’s political system in the way the power is exercised. Secondly, in some countries, the underlying cause of the problem is the weak management of public system and inefficient policies (The World Bank Group, 1997). If the public sector has been governed by long patron-client relationship, then the incidence of bribe becomes entrenched and is very difficult to remove from the society. The demand side of corruption involves the demand of bribes by public servants and the supply side represents the supply of those bribes by the companies and businesses. The demand-side consequences of corruption include information failures to level the consequences of corruption, non-existence of alternatives and collective action problems. On the supply side, barriers to entry play an important role in the failures of democracies. In case of public sector, the demand for bribes mainly arises because the political parties want to fund their campaigns and other political agendas that are costly. The problem lies in the fact that the supply comes almost as easily as the demand. The major fund for the corruption originates from public administration itself as the government budgets are under the control of civil servants. It has been observed that countries, with presidential forms of government, are characterized by large number of administrative posts and these become the growing hub of bribery and corruption. Finally, favouritism may create conditions of obligations, where civil servants are bound to use the resources for benefitting the politicians (Gingerich, 2013). The impacts of the corruption are: Macroeconomic stability of the government is harmed. The foreign investments of the country suffer as corruption increases the cost of doing business. The poor of the country suffers the most with corruption seeping in, as they are left with no options, but to pay high taxes. The small entrepreneurs of the country are also marginalized as corruption increases. As has been already discussed, corruption as such is not quantified like frauds in a country. The extent of corruption is higher in developing countries compared to the developed ones. According to estimates, the level of fraud in Middle East and Africa is highest with 39% and lowest in North America with 9%. There has been a wide consistency in the form that corporate frauds take across continents and the most recurring form is the theft of physical assets and information attacks. In this regard, the score of USA is lowest (Wallace, 2008). In Europe, it has been observed that the countries of Western Europe have lower levels of corruption than Eastern Europe. The two exceptions are Italy and Greece, which lags behind the countries of the Eastern Europe (Slovenia and Estonia). Western Europe can be further divided to south and north and corruption is lower in the latter. UK’s rank in the CPI, in 2008, was 13th. Corruption in Eastern Europe is related to political arrangements and can be associated with very high level of organized crime. Despite best efforts of the government, the level of corruption in US is still high and in the business community, the US companies have been most frequently making headlines in the corruption scandals. The rank of USA was 18th in CPI. The government has been trying its level best to reduce the level of bribery that has become deep-seated in the economy. In UK, the introduction of the Bribery Act in 2010 has been quite successful in reducing the level of corruption. The Bribery Act in UK had replaced the previous offenses with four new ones. The general offenses component of the act concentrated on prevention of the acceptance of bribe by the government officials. The discrete offense component focused on bribery of foreign government officials and the corporate offense component had stressed on preventing corporate offenses. The jurisdiction of this Act was huge and it has been quite successful in reducing the level of corruption, compared to previous levels. The scope of this act was devised in such a way that it can improve the then existing conditions of corruption (Adeyeye, 2012). The US had implemented the FCPA Act in 1977 to prevent the rising incidents of corruption. However, one of the major problems with this act was that it was under-enforced, which had somewhat restrained its performance than what it could have achieved. It was an act which was good in theory, but not quite effective in practice. Though it cannot be denied that the act has reduced the level of corruption to some extent, but has not been quite successful in delivering the promise it had made. For example, the “routine governmental action” that is described by the act, is ambiguous to describe which activities are considered to be bribe and which are not, thereby undermining the performance (Segal, 2006). Conclusion This essay has focused on the inherent corruption in public sectors, mainly in USA and UK. The factors that are responsible for corruption in the public sector have been discussed in details. It has been observed that the level of corruption in Europe is quite uneven and countries of Eastern Europe are more corrupted than those of Western Europe. The negative impact of bribery and corruption has revealed that slowing down of long-term economic growth is the most severe consequence of corruption. Finally, it has been observed that the government policies in practice have not been quite efficient in combating the problem. Reference List Adeyeye, A., 2012. Corporate social responsibility of multinational corporations in developing countries: perspectives on anti-corruption. Cambridge: Cambridge University Press. Elliott, K. A., 1997. Corruption and the global economy. Washington D. C: Peterson Institute. Gingerich, D. W., 2013. Political Institutions and party-directed corruption in South America: stealing for the team. Cambridge: Cambridge University Press. Jones, P., 2004. Fraud and corruption in public services: a guide to risk and prevention. Aldershot: Gower Publishing Ltd. Lawer, D., 2012. Frequently asked questions on anti-bribery and corruption. New Jersey: John Wiley & Sons. Preston, N. and Sampford, C., 2012. Public sector ethics: finding and implementing values. London: Routledge. Segal, P., 2006. Coming Clean on Dirty Dealing: Time for fact-based evaluation of the foreign corrupt practices act. Florida Journal Of International Law, 18, pp. 170-175. The World Bank Group, 1997. Corruption and Economic Development. [online] Available at: [Accessed 21 January 2013]. Wallace, E. P., 2008. Construction guide: accounting and knowledge-based audits. Nashville: CCH. Read More