A look at various kinds of corruption: Part 1

JANUARY 2 — Corruption is a word that Malaysians hear regularly. There are many other words that are often confused or used interchangeably with corruption. 

The World Bank has the following words that are often used interchangeably with corruption.

Corruption — a corrupt practice is the offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party.

Collusion – a collusive practice is an arrangement between two or more parties designed to achieve an improper purpose, including influencing improperly the actions of another party.

Coercion — a coercive practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or property to influence improperly the actions of a party.

Fraud — A fraudulent practice is any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain financial or other benefit or to avoid an obligation.  

Obstruction — An obstructive practice is deliberately destroying, falsifying, altering or concealing of evidence material to the investigation or making false statements to investigators in order to materially impede an investigation. 

Tina Soreide (2014) provides a glossary of terms related to corruption, in the World Bank publication, Drivers of Corruption: A Brief Review.

Crony capitalism — Success in business that depends on close relationship between business people, government officials, and politicians. It is associated with favouritism in the distribution of legal permits, government grants, special tax breaks, and other forms of state intervention. When it characterises government institutions, it is also called kleptocracy.

Embezzlement — Stealing state funds entails the misuse of public authority, yet strictly speaking it is not corruption. Embezzlement of state funds (that is theft) is sometimes facilitated by corruption, but can occur in the absence of corruption. When the supply of public services is restricted with the intention of securing bribe payments (that is, some form of extortion), it is sometimes called corruption with theft, and this blurs the distinction between embezzlement and corruption.

Extortion/extortive corruption — Demand for a bribe payment in exchange for a decision by a government institution that makes possible a service, licence, or approval otherwise offered free of charge or at low cost. It can also refer to a bribe demanded in exchange for the “opportunity” to avoid an undeserved disadvantage, such as paying a fine, even if no offence has been committed.

Facilitation payments — Extra payment for services that should be offered free of charge or at low cost. The distinction between a facilitation payment and extortion, though blurred, depends on the circumstances.

In contrast to extortion, a facilitation payment may serve as an informal price that clears the market (that is, it makes the supply of services fit the demand, given users’ willingness to pay).

However, compared with a formal price, it will usually cause distortions because its informal character will often make the size of the price unpredictable.

The degree of distortions will also depend on how substantial the additional costs are in the personal economy of most clients.

Kickback — Payment made secretively to a buyer or seller who has directed a contract or facilitated a transaction or appointment illicitly. It can also refer to the way a person in a supervisory position takes a portion of a worker’s wage in return for a certain benefit, as when a supervisor arranges for a worker to get a job.

Kleptocracy — An informal system of governance in which state institutions are controlled by a network of allies who use their authority to increase their personal wealth and political power at the expense of the wider population.

The term is associated with substantial embezzlement of state funds and unfair allocation of government-controlled contracts and rights.

Lobbyism/campaign finance — Refers to the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies.

When combined with payments to political parties, it is called campaign finance. Lobbying is legal; it is not a form of corruption.

Patronage — Civil servants and politicians who when exercising their authority, favour ethnic groups, relatives, or citizens from the same area of the country, instead of acting neutrally, as formal rules prescribe.

Such corruption is not necessarily motivated by greed; often it expresses low recognition of formal state structures and loyalty to allies.

Queue corruption — Bribes offered for a better position in the waiting line. It causes unfair allocation of rights, such as in accessing health services or obtaining some form of license.

Regulatory capture — The act of advancing the commercial or other special concerns of a particular interest group by a regulatory agency charged with regulating the industry or sector within which that interest group operates. Agencies acting under such circumstances are called captured agencies.

Rent-seeking — Obtaining “non-produced inputs or advantages,” that is economic rents, such as those gained by market distortions created by a regulatory agency.

The term refers to efforts to manipulate the social or political environment to obtain such benefits, rather than investing time and/or money in productive work and creating new wealth.

State capture — A form of political corruption in which private interest significantly influences a state’s decision-making processes to gain an advantage through illicit and non-obvious channels. Although similar to regulatory capture, it differs because of the wider variety of bodies through which it may be exercised.

Systemic corruption — Corruption so prevalent that it is part of the everyday structure of society. It reflects substantial institutional weakness, and not just the integrity flaws or some individuals.

When the consequences of working against corruption are too high for individuals, and even managers, in government institutions, they adapt, rather than react to the situation.

Tender corruption — Bribes offered to influence the outcome of competition for public procurement contracts. Bribery involved in government contracting is not associated exclusively with bidding; It can also take place at the planning/budgeting stage or agreed to be before the tender and later combined with renegotiated contracts or flawed quality controls. It sometimes facilitates cartel collaboration.

Have you experienced any of the above acts?

* In the next article, we explore a unifying description or definition to capture all these acts.

**This is the personal opinion of the columnist.