The dogs of corruption at the gate

Just over a month ago, I wrote in this paper ("Stamp out corruption", June 9) that "corruption is as rampant in Malta as it is elsewhere, if not more". Little did I imagine that our society would be rocked by a corruption scandal of the first order, involving the Chief Justice and a senior judge.

Without going into the merits of a case which will have to work its way through our courts and in Parliament, I would like to revisit the issue and propose concrete measures how the ugly head of corruption can be attacked before it joins the myriad other problems which beset this country.

Corruption has been identified as a symptom of something gone wrong with the management of the state. The World Bank has defined corruption as "the abuse of public office for private gain". Such a definition would include bribery with government contracts, influencing government benefits, to reduce taxes owing, in issuance of licences, with registrations and permits, to change or not change laws.

Corruption undermines democratic institutions, weakens the rule of law, and represents a serious threat to social harmony and economic development. The phenomenon is universal and under no circumstance may it be considered as restricted to a particular group of societies.

It encompasses different spheres of social life, including cultural, social, political, economic, juridical and institutional aspects. The phenomenon can only be comprehensively tackled through the enhancement of probity and public ethics, while the consolidation of ethical values is itself crucial to the preservation and strengthening of the democratic system.

News media around the world daily report on corruption and recent events in Europe and North America have shown all too clearly that corruption is not something that is exclusively, or even primarily, a problem of developing countries.

Clearly, corruption is a complex issue. While its roots are grounded in a country's particular social and cultural history, political and economic development, bureaucratic traditions and policies, one can generalise to state that corruption tends to flourish when institutions are weak and economic policies distort the marketplace.

Corruption distorts economic and social development by engendering wrong choices and by encouraging competition in bribery rather than in the quality and price of goods and services. Moreover, evidence suggests that if corruption is not contained, it will grow and that, once a pattern of successful bribes is institutionalised, corrupt officials have an incentive to demand larger bribes, engendering a 'culture' of illegality that in turn breeds market inefficiency (Rose Ackerman 1996).

Corruption has been described as a "cancer". It violates public confidence in the state and endangers social cohesion. Grand corruption - where large sums of money change hands - is reported with increasing frequency in rich and poor countries alike.

Petty corruption is less reported, but can be equally damaging; a small bribe to a public servant for a government service may only involve a minor payment, but when such bribes are multiplied a million times, their combined impact can be enormous. If left unchecked, the accumulation of seemingly petty bribes can erode legitimacy of public institutions to the extent that even non-corrupt officials and members of the public see little point in remaining honest

Forms of corruption need to be contained for practical reasons. Faced with the challenge of at least maintaining, if not improving, standards of public service delivery, no country can afford the inefficiency that accompanies corruption.

While some may argue that corruption can help grease the wheels of a slow-moving and over-regulated economy, evidence indicates that it increases the costs of goods and services, promotes unproductive investments, and leads to a decline in the quality of public services (Gould and Amaro-Reyes 1983).

Indeed, recent evidence suggests that rather than expediting public service, corruption may be more like "sand in the wheels": recent corruption surveys in several countries showed that people paying bribes to public officials actually received slower service than those who did not.

Simply defined, corruption is the abuse of public power for personal gain or for the benefit of a group to which one owes allegiance. It occurs at the intersection of public and private sectors, when public office is abused by an official accepting, soliciting, or extorting a bribe. Klitgaard (1996) has developed a simple model to explain the dynamics of corruption:

C (Corruption) = M (Monopoly Power) + D (Discretion) - A (Accountability)

In other words, the extent of corruption depends on the amount of monopoly power and discretionary power that an official exercises. Monopoly power can be large in highly regulated economies; discretionary power is often large in developing countries and transition economies where administrative rules and regulations are often poorly defined. And finally, accountability may also be weak, either as a result of poorly defined ethical standards of public service, weak administrative and financial systems, and ineffective watchdog agencies.

Appropriate policies, which reduce the opportunity for corruption (or, in the above model, M - the monopoly power of officials), may be considered a prior condition for successfully curbing corruption. With regard to institutional strengthening, country strategies vary a great deal, but worldwide the policy responses to corruption typically involve one or more of the eight following institutions or "pillars":

¤ political will;
¤ administrative reforms;
¤ "watchdog" agencies (anti-corruption commissions; supreme audit institutions; ombudsman offices);
¤ parliaments;
¤ public awareness/involvement;
¤ the judiciary;
¤ the media;
¤ the private sector.

The eight institutions identified above are interdependent and together support the notion of a 'national integrity system', much the same as pillars might support the roof of a house.

Pushing the analogy further, if any one of these 'integrity pillars' weakens, an increased load is thrown on to the others. If several weaken, their load will tilt, so that the round ball of 'sustainable development' rolls off (Langseth et al. 1997). The general equilibrium of the pillars is therefore important, and a government has an incentive to keep the eight pillars in balance.

Experience indicates that no one institution, acting alone, can significantly reduce corruption. Indeed, the very concept of a 'national integrity system' highlights the linkages between institutions.

Government and our other institutions, including non-governmental ones, need to examine how they can strengthen probity and combat illicit behavior. With regard to the preventive aspects, I would suggest that the main instrument is education, formal and informal. Its task is to create ethical awareness and to enhance probity among citizens in general and in children and youth in particular.

With regard to the corrective aspects, which are closely linked to problems of criminal and administrative law, I would suggest that the main need is to eliminate impunity which, in this matter, constitutes an incentive and exacerbates the problem.

A comprehensive approach to the phenomenon of corruption implies consideration not only of civil servants' conduct but also the behaviour of those who, as individuals, are the necessary counterpart in illicit acts that run counter to the standards required by probity and civic ethics.

In this connection, special mention must be made of the private sector, with reference to recent experience with measures taken by business organisations to strengthen the ethical dimension of their members' activities; the idea being both to reaffirm important social values and to optimise conditions for business growth.

As regards legal aspects, it is important that the State be equipped with adequate juridical instruments to strengthen probity standards and to establish mechanisms designed to punish illicit acts, which means the enactment of rules to attack the phenomenon in its general aspects, or the drafting of laws geared to the punishment of certain specific forms of conduct.

The State must also have institutions to whom it can entrust the fight against corruption, granting them the independence and resources required for the adequate fulfilment of their functions.

Together with legal and administrative reforms, concrete plans and programmes ought to be designed to prevent and punish practices or acts at variance with probity and civic ethics. For example, in some countries there are specific mechanisms encouraging and facilitating denunciations by members of the public.

We should discuss the possibility of processing anonymous tip-offs, which are accepted in some countries and rejected by others. The setting up of certain mechanisms of information for the users of certain services, including the courts, to simplify paperwork and make procedures more transparent, might make it more difficult for illicit acts to be committed.

Civil society institutions can be integrated in the strategic plan to fight against corruption, for example by setting up committees and voluntary associations, made up of independent recognised figures, whose function would be both to disseminate a culture based on honesty and ethical values as well as to serve as a point of contact between the public and the State agencies in charge of preventing and punishing conduct at variance with the demands of probity and ethics. Two initiatives could be the creation of "anti-corruption mail boxes" to receive complaints and the setting up of free telephone lines for the same purpose.

Public officials, including the Judiciary, already have codes of ethics. But not enough is being done to ensure that such codes do not remain dead documents. Indeed, the recent controversy over Marin Hili's conflict of interest, whether real or supposed, regarding his dual role as chairman of Malta Freeport and a majority shareholder in the Port of Venice, shows that we are still adopting dualistic attitudes to probity and ethics in public service. Though The Times has called on Mr Hili to resign, the Prime Minister himself still believes that there is nothing improper in the affair.

A well-functioning judiciary is essential for development. It underpins the rule of law and fosters economic growth. Neither the fundamental rights of the citizens, nor the application of the laws can be guaranteed without an effective, independent and competent judicial branch.

Establishing a balance between the twin necessities of judicial independence and accountability is a challenge achievable only with the active participation of interested parties inside and outside the judiciary. The judiciary's ability to wage a successful fight against corruption in its ranks and more broadly in society is a useful gauge of the extent to which the judiciary has taken its proper role in the creation of the rule of law. Public confidence in the judiciary is eroded by irresponsible or improper conduct by judges.

The Prime Minister has very deftly defused the case of Judges Arrigo and Vella of any political controversy by making it a non-partisan national issue. On his part, the Opposition Leader has recognised that the scandal threatens to sap the foundations of an institution which is vital to our civil well-being.

Both now need to continue working together so that the impact of the scandal is attenuated, but even more so to develop a fabric of measures which can restore the public's trust in the judiciary and ensure that corruption is eradicated.